In Q3 of 2019, the SalMar Group harvested 35,800 tonnes of salmon, compared with 36,100 tonnes in the Q3 of 2018

SalMar sees operational profit fall by 34% in Q3

NORWAY
Monday, November 18, 2019, 02:00 (GMT + 9)

SalMar ASA posted an operational profit (EBIT) of NOK 613.5 million (USD 66.7 million) for the third quarter of 2019, compared with NOK 939.1 million (USD 102.2 million) for the same period last year.

The company highlighted the stisfactory result for Fish Farming Central Norway, but somewhat higher costs due to the start-up of harvesting the autumn-2018 generation.

SalMar said that, as expected, Fish Farming Northern Norway had an operationally challenging quarter, with high costs and weak results.

Sales and Processing’s price achievement was good in a period of sharply declining prices, and the segment posted a strong result.

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The company maintais its forecast of 145,000 tonnes in Norway and 10,000 tonnes in Iceland for 2019.

“For the SalMar Group, the third quarter was a mixed experience, Central Norway posted satisfactory results, in line with our expectations. Sales and Processing achieved good results on the back of efficient operations and a good allocation of volumes in a challenging period with declining prices. However, Northern Norway’s performance was very weak,” says SalMar’s CEO Gustav Witzøe.

“In SalMar we are always looking for possibilities to improve our operational performance. Through the creation of SalMar Ocean the we aim to coordinate and strengthen our efforts within offshore fish farming. We see a significant potential within offshore fish farming and by doing this we want to maintain our leading position in this area both with relation to technological developments and biological production. This will contribute to an environmentally sustainable development of Norwegian aquaculture industry in the years to come,” he adds.

SalMar generated gross operating revenues of just under NOK 2.8 billion for the quarter, on a par with the corresponding period last year. The Group harvested some 35,800 tonnes, 300 tonnes less than in the same period in 2018. SalMar’s Operational EBIT per kg came to NOK 17.12 for the third quarter of 2019, a decrease of NOK 8.91 per kg compared with the same period last year. The lower profit margin is largely attributable to lower salmon prices and poor results in Northern Norway.

Fish Farming Central Norway posted satisfactory results. The fish harvested were largely salmon that had been transferred to sea farms in the spring of 2018, a generation that has performed well biologically. Towards the end of the period, in order to reduce the risk posed by salmon lice in Central Norway, SalMar chose to start harvesting fish transferred to sea farms in the autumn of 2018 earlier than planned. This had a negative effect on costs, average weight and price achievement for the quarter. For the same reason, the segment’s costs are expected to be slightly higher and volume somewhat lower in the fourth quarter.

Fish Farming Central Norway is SalMar’s largest business segment. It covers the Group’s operations in Møre & Romsdal and Trøndelag and includes 68 wholly owned operating licences

In recent quarters, Fish Farming Northern Norway’s cost level has been disappointing, and its performance in the third quarter was very weak. This is mainly due to biological challenges. Illness and the risk of illness has resulted in fish being harvested earlier than planned, which has negatively affected both price achievement and costs. The sites that had biological challenges was emptied out by the end of the third quarter and SalMar therefore expects a substantially lower cost level and a higher volume the fourth quarter where one will harvest from sites that have performed better biologically and have lower costs than those harvested in the third quarter.

Fish Farming Northern Norway covers the Group’s operations in Troms and Finnmark and includes 32 wholly owned operating licences.

Arnarlax posted yet another positive result. High average weight for the fish harvested led to good price achievement, while production costs remained at the same level as earlier in the year. Compared with last year, Arnarlax’s result in the period was a sharp improvement due to better biological performance and operational improvements. Arnarlax expects costs and volume to remain at the same level in the fourth quarter.

Arnarlax is Iceland’s largest producer and processor of farmed salmon. The company is fully vertically integrated, with its own hatchery, sea farms, harvesting plant and sales force.

SalMar’s Sales and Processing segment made an operating profit of NOK 102.3 million for the third quarter of 2019. Good allocation of sales and efficient operations produced good results in a period of falling prices. At the same time, lower prices resulted in higher margins on fixed-price contracts. As at 13 November 2019, SalMar has secured fixed contracts covering 20 per cent of its planned sales volume in the fourth quarter.

The Sales and Processing segment sells all the fish that the Group harvests in Norway. The harvested volume is sold primarily to markets in Europe, Asia and America. InnovaMar is SalMar’s main facility for industrial processing. 

SalMar maintains its expectations to harvest a total of 145,000 tonnes of salmon in Norway and 10,000 tonnes in Iceland in 2019. In 2020, the company expects to harvest 152,000 tonnes in Norway and 10,000 tonnes in Iceland.

(1 NOK = 0.10881 USD)

Click here to see the complete report and presentation for the third quarter 2019


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