All-time high prices help to offset Norway Royal Salmon's biological woes
‘Big biological challenges’ at the group’s Icelandic operation – Arctic Fish – cost it $13.4 million in mortalities alone during the first quarter.
NRS was expecting to post operational earnings before interest and taxes (EBIT) of NOK 115 million (€11.3 million/$11.9 million) for the first quarter due to "a low price achievement in the quarter and certain non-recurring costs."
However, on May 25 the group said its operational EBIT -- less the depreciation of the Arctic Offshore Farming equipment -- more than doubled to NOK 133 million (€13 million/$13.9 million) for the first quarter of 2022, achieving an EBIT per kg of NOK 20.65 (€2/$2.20).
Operational earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 70 percent to NOK 164 million (€16 million/$17.1 million) during the quarter, while revenue increased 21 percent to NOK 1.7 billion (€165.9 million/$177 million).
“Throughout the quarter we have seen all-time high prizes, providing a solid basis for profitability and a very positive market view for salmon in the future,” said interim CEO Charles Hostlund.
“Unfortunately, we have had biological challenges in both Norway and Iceland that significantly affected the results in this quarter.”
Lower harvest volumes in Norway
The group’s farming operations in Norway posted an operational EBIT of NOK 210.3 million (€20.5 million/$21.9 million) in the quarter, compared with NOK 77.2 million (€7.5 million/$8 million) in the corresponding quarter last year.
EBIT per kilo in Norway was NOK 25.30 (€2.50/$2.60) compared with NOK 6.04 (€0.59/$0.63) in the same period a year ago.
Farming Norway harvested 10,137 metric tons in the quarter, a decrease of 13 percent from the same quarter last year, while sold volume from the sales business was 17,568 metric tons, 18 percent lower than a year ago.
High mortality in Iceland
The group’s Icelandic operations – Arctic Fish -- posted an operational EBIT of NOK 86.3 million (€8.4 million/$9 million) in the quarter, compared with NOK 21.5 million (€2.1 million/$2.2 million) in the corresponding quarter last year.
EBIT per kilo was NOK 20.43 (€2/$2.10) compared with NOK 5.67 (€0.55/$0.59) in the same period a year ago.
Farming Iceland harvested 4,221 metric tons in the quarter, an increase of 11 percent from the corresponding quarter last year.
Measures were taken to deal with the situation, among other things by accelerating the harvest of salmon at these two locations.
The total mortality amounted to 2,512 metric tons and resulted in a non-recurring cost of NOK 129 million (€12.6 million/$13.4 million), said the group.
The Norway Royal Salmon (NRS) group owns 36,085 metric tons of maximum allowable biomass (MAB) for salmon farming located in Troms and Finnmark, and 21,800 metric tons of MAB for salmon farming and 5,300 MAB for trout farming in Iceland through the company Arctic Fish.
In addition, the group has minority interest in two associated Norwegian fish farming companies which together own nine fish farming licenses.
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