Estonian-based seafood group PRFoods announced it is shuttering a “deeply unprofitable” processing plant in Finland as it restructures operations.

Heimon Kala Oy, a subsidiary of AS PRFoods, will close the Kokkola fish processing plant in Finland and all 35 employees of the plant will be laid off, the company said.

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The one-off redundancy costs amount to approximately €0.7 million ($794,624) and will be carried over six months.

The closure of the plant will save the group around €2.3 million ($2.6 million) a year, the company said.

At the same time, the closure of Kokkola will decrease the wholesale and trading turnover of fresh salmon in Finland by between €8 million ($9.1 million) to €10 million ($11.4 million) ($11.4 million).

“Wholesale has been a very low-profit business in Finland and has not been a significant part of the group's strategy and does not support our other activities in Finland,” said PRFoods.

The fresh fish business of the group will rely mostly on its own farmed fish in future.

The wholesale of salmon in the Baltics will continue from the group’s Saaremaa factory in Estonia. The Saaremaa factory has taken over the filleting needs for the group and necessary equipment has been transferred back to Estonia where additional jobs will also be added.

“The Kokkola plant has been deeply unprofitable in recent years and the main reason why the Finnish unit's financial results have been negative,” said PRFoods. “The closure of Kokkola will help Heimon Kala Oy to regain profitability in 2022.”

Heimon Kala Oy will continue to sell fresh fish to retail clients but will cease trading operations in Finland.

PRFoods, an integrated salmon and trout producer, which operates in Estonia, Finland, the UK and Sweden, said it grew sales by 11.5 percent in the third quarter of 2021 to €14.2 million ($16.1 million), and its net loss decreased by 50 percent to minus €0.7 million ($795,355).

Problems stem from management mistakes

The company blamed its current losses on poor management of its Finnish operations.

“Unfortunately, there are many things that unearthed massive management mistakes in Finnish unit,” it said.

“As of today, we have completed 100 percent the change of management and key people in Finland, that we started in summer and decision to close loss-making Kokkola factory. These steps build base for renewal of profitability in 2022.”

The COVID-19 pandemic accelerated “the unearthing of weaknesses” in the Finnish unit, and “unfortunately the previous management did not want to acknowledge their mistakes or correct them.”

As of October, PRFoods said it was back to being profitable, also in Finland.

Heimon Kala Oy posted earnings before interest depreciation and amortization (EBITDA) of €28,000 ($31,785) in October.

The UK unit, which includes the Scottish subsidiaries, John Ross Jr and Coln Valley, performed “very well,” it said, and fulfilled its EBITDA target in the sum of €172,000 ($195,251).

Estonian EBITDA was still a loss of €150,000 ($170,277) in the third quarter due to loss-making Finnish sales.

PRFoods’ target is to achieve 10,000 metric tons of biomass by 2023, which should give group sales of €40 million ($45.4 million) to €50 million ($56.8 million).

“Having cut our teeth now for second year in corona crisis, we know that it is not sustainable to rely on outside help and all tough decisions need to be taken sooner than later,” said PRFoods.

It noted the fish market has started much stronger this year and is more predictable and demand for the group’s products is growing.

“The only objective of new financial year is profit and everything that blocks our road to profitability must be eliminated,” it said.