Norway-based SalMar, the world’s second largest salmon farmer, posted a 13 percent jump in operating earnings in the fourth quarter of 2022, capping off what it described as “an eventful year” of mergers and acquisitions.

Total operational earnings before interest and tax (EBIT) increased 13 percent to NOK 1 billion (€91 million/$96.9 million) in the quarter, while its total harvest volume climbed 11 percent to 62,700 metric tons, resulting in average earnings per kilo of NOK 16.05 (€1.50/$1.60).

Operating revenue was up 37 percent to NOK 6.4 billion (€582.6 million/$620.1 million).

The record high harvest volume in the quarter was mainly due to the incorporation of NTS, Norway Royal Salmon and SalmoNor, which the group absorbed through a series of transactions during the year. These results were consolidated into the group's financials beginning in November.

However, one-off costs related to the transactions amounted to NOK 120 million (€10.9 million/$11.6 million), inevitably affecting results for the fourth quarter.

Through the acquisition of NTS, SalMar also became the owner of aqua services group Froy, for which it is now performing a strategic review, and is considering selling.

Mixed results

During the quarter, the operational EBIT for SalMar's Norwegian operations amounted to NOK 956 million (€87 million/$92.6 million), with a harvest volume of 56,700 metric tons.

SalMar said the fourth quarter was marked by continued solid performance in northern Norway, strong capacity utilization and solid operational performance in its sales division, as well as record-high harvest volumes in Iceland through its subsidiary Icelandic Salmon.

Results in central Norway and Scotland with its Scottish Sea Farms, on the other hand, were weak due to biological challenges.

For the full year of 2022, total harvest volume for the group amounted to 193,700 metric tons, with an operational EBIT of NOK 4.5 billion (€409.6 million/$436 million) and operational EBIT per kilo of NOK 23.05 (€2.10/$2.20).

Revenue for the year increased 34 percent to just over NOK 20 billion (€1.8 billion/$1.9 billion).

New investments on hold

In 2023 the company said it will continue to invest in already-approved projects, but new investments are on hold in light of the uncertainty surrounding a new tax proposal presented by the Norwegian government last fall.

In 2023, SalMar expects to invest NOK 2.1 billion (€191.2 million/$203.5 million), it said.

Norway's government has proposed resource tax on aquaculture. If approved by Parliament, the new tax will have major impact on innovation and investments in Norway's aquaculture industry.

SalMar CEO Frode Arntsen warned the tax proposal, if implemented, would divert investments from aquaculture in Norway to other countries and other industries.

“It is still unclear to us what framework conditions we have to deal with two months into 2023, this is unsustainable for one of Norway's most important export industries," Arntsen said.

Significant volume growth in 2023

For 2023, SalMar is keeping its volume guidance for Norway at 243,000 metric tons and for Iceland at 16,000 metric tons. For Scotland, guidance is reduced to 37,000 metric tons.

For the first quarter of 2023, however, the company expects significantly lower volumes than in the previous quarter and a similar cost level.

“In the fourth quarter we have also implemented the operational structure for "new" SalMar in Norway, and we will during 2023 optimize our operations to take advantage of the potential we see in the acquisitions we have made," Arntsen said.