After a booming third quarter, Norway Royal Salmon reported a drop in earnings in the fourth quarter of 2019, with higher prices failing to compensate for burgeoning production costs.

The group's operating earnings before interest, tax, demortization and amortization (EBITDA) fell 37 percent to NOK 159 million (€15.7 million/$17.2 million) on the back of lower revenues and higher costs.

Harvest volumes fell 34 percent to 9,070 metric tons and sales volumes were down 11 percent to 24,726 metric tons. Some 8,243 metric tons was harvested in Region North and 826 metric tons in Region South.

Revenues meanwhile also fell 19 percent to NOK 1.3 billion (€128.7 million/$140.4 million), equating to a 5.8 percent drop in EBIT per kilo to NOK 16.71 (€1.60/$1.80). Estimated harvest volume for 2020 is 37,000 metric tons, an increase of 36 percent compared with the volume of Region North in 2019.

The sale of Region South was completed in December, with NRS carving up and selling the subsidiary to three salmon farming companies, a move applauded by salmon industry analysts at the time.

Norway Royal Salmon reached a deal with Tombre Fiskeanlegg, Lingalaks and Eidesvik Laks regarding the sale of all shares in Sør Farming for NOK 1.2 billion (€121 million/$132 million).

The sale came as a result of a process instigated by Norway Royal Salmon with the aim of selling off its assets in southern Norway.

Norway Royal Salmon's move out of higher-cost farms in southern Norway to focus on operations in northern Norway is likely to change perceptions of the company in investors eyes, according to Danske Equities Analyst Knut-Ivar Bakken.

Finance

Rising production costs hang heavy on Norway Royal Salmon earnings in Q4