Despite posting “solid” profits for three consecutive years, Royal Greenland said falling sales prices for cod and rising salmon costs negatively impacted the company’s earnings.
The company posted net profit of DKK 100 million (USD 18.3 million, EUR 13.4 million) on increased revenues of DKK 5.3 billion (USD 969.3 million, EUR 710.3 million) (up from DKK 5 billion the previous year). The EBIT of DKK 168 million (USD 30.7 million, EUR 22.5 million) is down slightly compared to DKK 180 million (USD 33 million, EUR 24 million) in the previous year.
“The group’s strong position in its core businesses — cooked and peeled prawns, shell-on prawns and halibut — has been retained, which is highly satisfactory, especially in the light of declining prawn quotas and the significantly higher tariffs on Greenlandic fisheries in the Group's principal species, for which Royal Greenland paid DKK 54 million (USD 9.9 million, EUR 7.2 million) in 2012/2013, compared with just half as much the previous year,” the company said.
Declining sales prices for cod and rising raw materials prices for salmon have had a significant negative impact on the company’s earnings, which showed a drop of a total of DKK 60 million (USD 11 million, EUR 8 million) compared to the previous year.
“The rising quotas for cod, not least in the Barents Sea, have meant that prices have fallen by about 20 percent compared to the previous year, resulting in an earnings decline of DKK 30 million (USD 5.5 million, EUR 4 million). Cod is now a loss-making activity for Royal Greenland. In the short term the Group has only limited possibilities to reduce its costs in this activity, which ceteris paribus will require the closure of a number of production sites in Greenland. In the longer term, however, Royal Greenland expects increased processing of coastal cod to form part of the solution to the depressed world market prices,” the company said.
