North Atlantic Holdings, the UK arm of Dutch pelagic giant Cornelis Vrolijk, saw its overall profit nosedive 73 percent in 2019, mainly due to “heavily reduced” quotas for its main target species.
According to the group’s latest earnings filed on Companies House, profit for the year amounted to €1.4 million ($1.7 million), down substantially from €5.2 million ($6.3 million) in 2018.
Turnover also fell 8 percent to €24.7 million ($29.9 million), while operating profit sank 58 percent to €2.8 million ($3.4 million) -- all before COVID-19 was a household acronym.
The principal activity of North Atlantic Holdings is pelagic trawling, and in 2019 the main commercial quota allocations in UK and EU waters were heavily reduced from the year prior, said the group.
This included a 20 percent decrease in WC mackerel and NS mackerel quotas; a 36 percent decrease in NS herring quota; and a 20 percent decrease in Northern blue whiting quotas.
While the group benefitted from a 20 percent increase in WC horse mackerel quota, being less valuable and more difficult to catch this was “of limited value,” it said.
Despite contributing less to the group's overall results, the demersal quota allocations are also important and have broadly remained the same during 2019 with the main target species of NS plaice having increased by 11 percent and NS sole having reduced by 20 percent.
Importantly in the first full year of the “Landing Obligation,” quotas for certain key species were also reduced.
This included a reduction of NS cod by 32 percent and haddock by 22 percent “making fishing and quota management difficult,” said the company.
Fishing conditions were also challenging with many North Sea fishing areas closed and categorized as Marine Protected Areas (MPAs), it said.
Selling conditions improve
Nevertheless, in spite of the Marine Stewardship Council (MSC) accreditation for NE Atlantic mackerel being suspended on March 2, 2019, pelagic fish prices remained good during the year.
Additionally, “selling conditions in the main market of Nigeria continue to recover with currency becoming available to importers and the relaxation of restrictions on import quotas,” said the group.
Fuel prices were volatile during 2019 but showed signs of easing towards the end of the year. Overall fuel did not have a significantly adverse effect on profitability.
The principal risks and uncertainties facing the business are its susceptibility to changes in the UK and global economic and political factors that can affect the global market and prices of fish and the price of fuel, one of the group's main costs.
In addition, UK/EU fish quota changes and fisheries management regulations will have an impact on the company’s results.
Nevertheless, “the outlook for pelagic quotas within the UK/EU waters remains positive,” it said.
The global demand for frozen pelagic fish remains good, while the prices of demersal species show positive signs and will most likely continue to prove profitable for North Atlantic Holdings Limited in 2020, it said.
Keeping an eye on COVID and Brexit
Meanwhile, the group’s management is carefully monitoring the events surrounding the COVID-19 virus and is “taking necessary measures to ensure the health and safety of staff and crew.”
With the main product of the group being frozen pelagic fish, it will be possible to continue fishing and hold product in storage should supply lines become disrupted by COVID-19.
Since the decision in 2016 by the UK to leave the EU, North Atlantic Holdings has followed developments in negotiations carefully.
This has involved making plans for a potential “no deal” scenario whereby the UK leaves the EU with no agreed terms but automatically resorts to trading on World Trade Organisation (WTO) terms.
“It is the group's hope that there will be an agreed trading relationship between the EU and the UK in the future, however, in the meantime different scenarios are being studied by the group to cope with alternative outcomes from negotiations,” it said.