Scottish salmon producer Loch Duart saw its operating profit fall 58 percent in the financial year to March 31, 2018, as disease problems took their toll on production.

The company posted an operating profit of £3.7 million (€4.2 million/$4.9 million) for the year, down 58 percent from £8.8 million (€9.9 million/$11.6 million) in 2017.

Turnover was flat at £42.4 million (€47.6 million/$55.7 million) compared with the year prior, and overall, profit for the financial year was £2.6 million (€2.9 million/$3.4 million) down 68 percent from £8.2 million (€9.2 million/$10.8 million).

The principal activity of the group and company is that of salmon farming in the Northwest of Scotland, with the business and brand built on a foundation of providing whole gutted fish to trade outlets in a variety of countries. As a result, the majority of sales are exports.

“In comparison to the prior year the profit is lower, but that prior year was a result of exceptional circumstances from which the company was well placed to benefit,” Loch Duart said in its latest financial results.

“Although the company’s priorities seek to place it in the position to take advantage of such a situation should it recur, the year to March 2018 produced a level of profitability closer to the sustainable normal range of potential."

Since the year end the company has continued to trade profitably, it added.

R&D, fish health a priority

For its operations in Scotland, the company said it is continuing to invest heavily in research and development (R&D) to improve various areas of production.

During the year the company diverted and dedicated significant capital and operating expenditure to investing in the prevention and tackling of potential environmental and fish health concerns.

According to the annual results, net cash used in investing activities amounted to more than £5 million (€5.6 million/$6.6 million) in 2018.

“Shareholders supported the approach of putting investment ahead of dividends and so the company has been able to prioritize investment in equipment, processes, and people to identify and install new technologies,” it said.

Although the year saw a continuation of the high prices noted in the prior year, Loch Duart experienced increasing prevalence of gill health challenges which affected the company’s fish, with poorer biological performance than would be considered normal.

“The prices achieved allowed a credible result to be delivered, but has left the company with some work to do to repeat the harvest volume in the following year,” it said.

The directors do, however, have confidence that volumes produced will allow a profitable next year.

Farwell, Canada

In Canada, the previously reported and long awaited Canadian revised application process for sea farming sites is yet to produce anything substantial on which to base the company’s progress in the country, it added.

As a result, the company previously wrote-down the values of its interest in the area to the immediately realizable tangible assets and is “unconvinced of the merits of a continued presence in the country."

“The company retains little more than licenses to operate and the Canadian operations will be wound down as soon as practical,” it said.

Finance

Loch Duart profit shrinks on disease, Canada write-down