Kristiansund, Norway-based seafood-processing technology firm Stranda Prolog filed for insolvency on 5 September, 2022, in Norway’s Møre og Romsdal district court.
Marel, which purchased a 40 percent ownership stake in the company in January 2021, said it would take an estimated EUR 7 million (USD 7 million) impairment in its Q3 2022 financial accounts as a result of the move.
Founded in 1946, Stranda Prolog manufactures helix tanks, fish pumps, stunners, fish care products, and net-cleaning solutions. It had EUR 25 million (USD 25 million) in annual revenue and around 100 employees pre-COVID, and enjoyed relationships with many of the world’s largest salmon-processing firms.
“Stranda Prolog was prepared for continued growth and had a large order backlog when COVID-19 hit. Order intake was good at the start of the pandemic but gradually softened. Limited order intake, significant cost increases on legacy contracts, and a lack of raw materials and labor to complete the projects gradually affected profitability and liquidity,” Stranda Prolog said in a press release. “The management team and employees have worked hard to reduce costs and complete projects. Despite some positive signs, there have been continuous delays in ongoing projects and contract negotiations. At the same time, the number of outstanding requests and quotes has never been greater than now.”
Marel and Stranda Prolog collaborated on numerous projects around the world and Marel’s acquisition of a minority share of the firm was intended to facilitate the launch of a deeper strategic relationship, according to Marel.
“The strategic partnership with Stranda Prolog was based on their superior knowledge of raw material handling and quality processing solutions for primary salmon processing,” Marel said.
However, the economic impacts of the COVID-19 crisis proved to be too much for Stranda Prolog to overcome, it said.
“This unfortunately has been true for many smaller operators, who despite their innovative niche technology and strong orders, have encountered difficulty in navigating the challenging environment in the past years,” it said.
The next step for Stranda Prolog is the assignment of an insolvency administrator by the court to assume control of the company’s operations and find the best path forward for the firm.
“The board of Stranda hopes there is a basis and interest for all or parts of the business to be resumed and more clarity is expected in the coming weeks,” Stranda’s board said. “Marel is a minority shareholder in Stranda, and together with the other shareholders is looking into the possible options available.”
Marel said it will not be hit with an impact on its earnings before interest and taxes (EBIT) from Stranda Prolog’s bankruptcy filing due to its categorization of its holding in Stranda as an “investment in associates.”
While Marel said the insolvency would impact its net result, the company remains on firm financial ground it said.
“Marel's business model has proven to be resilient during times of turbulence, where our local presence, with sales and service engineers servicing customers in over 140 countries, has proven to be a key differentiating factor in supporting our customers,” it said. “Marel has a balanced revenue exposure to global economies and local markets through its global reach, innovative product portfolio and diversified business mix. With pro-forma full-year revenues 2021 of EUR 1.5 billion [USD 1.5 billion], Marel is enjoying accelerated orders received and revenue growth of over 20 percent, that is well-balanced from both a segment and geographical perspective, although profitability has been hampered by supply chain complexity and inflation.”
Photo courtesy of Stranda Prolog
