Putting the disastrous results of 2016 algae bloom behind them, Chilean salmon farmers saw their costs fall and sales prices rise during 2017, helping consolidate the industry on a path towards a “normal” growth scenario in 2018.
Blumar, AquaChile, Australis Seafood, Multiexport Foods and Carmanchaca have all reported their 2017 results, and there is a clear trendline that shows it was a good year to be a salmon farmer in Chile. This improvement came as prices rose for Atlantic salmon and in many cases, costs fell, and the aquaculture business shined in comparison to other of these firms’ business units.
Better prices, lower costs in 2017
For example, in the case of Multiexport, the firm said in its 2017 earnings statement the average price it received on Atlantic salmon grow 14 percent year-over-year to reach USD 6.34 (EUR 5.12) per kilogram on average in 2017. In its case, the increased prices and increased sales volume of both Atlantic and Coho salmon helped improve results. The firm said that part of this increase was also due to the negative impact of the algae bloom in 2016 which drug down numbers for that year.
Australis had similar results, seeing an average sales price of all three salmon species of around USD 6.66 (EUR 5.38) per kilogram, even though its sales volume fell. The firm said in its 2017 earnings summary that prices hit a high in the first quarter of 2017, and even though they adjusted downward later that year, prices stayed at “historically high rates.”
This price improvement led to gains in EBIT and EBITDA calculations, which were substantial for the year. Blumar grew EBIT by 66 percent and EBITDA by 35 percent. In Multiexport’s case, operational EBIT reached USD 122.9 million (EUR 99.3 million), nearly double the USD 65.2 million (EUR 52.7 million) registered the year before. For its unit operational EBIT for Atlantic salmon, the firm saw USD 1.74 (EUR 1.41) per kilogram WFE, compared to only USD 0.85 (EUR 0.69) per kilogram WFE in the same period of last year. This result was a result of lowered production costs and the improved sales prices in its final markets.
The largest EBITDA improvement went to AquaChile, which saw its EBITDA (before fair value) at USD 141.9 million (EUR 114.7 million), well above the USD 56.2 million (EUR 54.4 million) in 2016. This stemmed from its on average 13 percent cost reduction and greater efficiency in the operation, which improved its sales margins for all its products.
Aquaculture shines
In the case of Blumar, the firm said improvements in 2017 over the previous year came primarily from its aquaculture business, led by a 14 percent increase in Atlantic salmon (USD 5.55 [EUR 4.49] per kilogram average), which it said is a consequence of the lower prices in 2016 due to that year’s algae bloom. This trend was seen in all the firms which also participate in other wild catch, mollusk and processed products segments. Aquaculture and salmon production stood apart.
This was contrasted by Blumar’s other business units. The company saw a rise in costs for its fishmeal and fish oil segments, while prices fell on average over 2017. The price drop for fish oil over the year was 28 percent, and sales volumes were also down.
In the case of Camanchaca, the aquaculture business also outperformed other units, favored by a 18.7 percent increase in salmon prices and a nine percent drop in costs. The firm said in its statement that the fourth quarter of 2017 demonstrated that the effects of 2016 algae bloom have largely been overcome. Its mortality rate, for all biomass in its centers, was 1.39 percent. For the year the rate was 3.8 percent, which it said is a historically low rate for the company.
Notwithstanding, the beginning of 2018 did see an alert from authorities and some reported losses from salmon farms, although nowhere on the scale of 2016. Nor did the presence of damaging algae seem to persist.
All these firms surveyed posted profits for 2017. Blumar posted a reduction in profits, falling 50.2 percent to USD 21.9 million (EUR 17.7 million), which it said was due to fair value adjustments on its balance sheet. AquaChile posted a significant 754 percent increase in profits, which totaled USD 58.9 million (EUR 47.6 million). Camanchaca had a modest increase of 16 percent to USD 15.8 million (EUR 12.8 million) for the whole of 2017.
Heading to Oslo
Among the biggest recent development for Chile’s salmon industry is a trend to hold IPOs on Norway’s Oslo Bors exchange. The first IPO might not have occurred in 2017, but the year did lead to Camanchaca’s successful issue of shares in February. The listing raised USD 108 million (EUR 87.2 million) in capital from investors in Oslo and Santiago. This IPO came in the leadup before authorities expressed concern on the new presence of harmful algae, but investors do not appear spooked and have not shed the stock since.
Others are following. AquaChile plans to raise up to USD 200 million (EUR 161.7 million) in capital through an offer, a move which has now been formally approved by their shareholders. Other firms are rumored to be planning similar actions.
These listings clearly show the interest in Chilean salmon and its prospects for the immediate future. The fresh capital from the listings will be used to grow the salmon business, both organically and through acquisitions.
In the case of Camanchaca, the firm’s general manager, Ricardo Garcìa Holtz, said that if 2017 served to extend its existing capacity, 2018 will be a year to consolidate and “return to the scale of harvest we had in 2015, and for 2019 and 2020, we will be using all of the concessions and capacities.”
Photo courtesy of SalMar
