SalMar earns lower profits from Scotland

SALMON farming giants SalMar posted impressive second quarter operating profits of almost a billion kroner, but there were lacklustre results from its Scottish Sea Farms business which it shares with Lerøy Seafood.

Scottish Sea Farms (SSF), or Norskott Havbruk as it is called in Norway, generated operating revenues of NOK 407.4 million (£37 million) during the three months between April and June, compared with NOK 405.2 million (£36.8 million) in the first quarter this year and NOK 479.3 million (£43 million) in the second quarter last year.

SSF harvested around 5,800 tonnes of fish in the quarter, compared with 4,800 tonnes in the first quarter this year and 6,200 tonnes during Q2 2018. SalMar’s share of the volume harvested came to 2,900 tonnes.

The company said: ‘Operations during the quarter were affected by the earlier than planned harvesting of fish to reduce the risk of biological issues.

‘This resulted in a lower average weight for the fish harvested, which affected both costs and price achievement.

‘Contract sales accounted for 47 per cent of the company’s volume. Operational EBIT per kg gutted weight came to NOK 18.37 in the second quarter, compared with NOK 22.78 per kg in the previous quarter and NOK 27.98 per kg in the same period last year.

‘The company expects to harvest around 30,000 tonnes in 2019 as a whole. This forecast is unchanged from that issued at the close of the previous quarter.’

SalMar’s share of post-tax profits from Scottish Sea Farms was NOK 49 million (£4.4 million) compared to NOK 76 million (£6.9 million) a year ago.

Overall, the SalMar group posted an operational EBIT of NOK 989.8 million (£90 million) in the second quarter 2019, compared to NOK 878.6 million in the same period last year.

It said the improvement is attributable largely to effective operations, lower production costs and a higher volume harvested by Fish Farming Central Norway.

At the same time, biological challenges resulted in a more demanding quarter than expected for Fish Farming Northern Norway.

Gross operating revenues totalled NOK 3.3 billion in the second quarter of 2019, up from NOK 2.9 billion in the same period last year.

The group harvested 41,400 tonnes during the quarter, compared to 34,000 tonnes in the second quarter 2018.

SalMar achieved an operational EBIT per kg of NOK 23.90, down NOK 1.90 per kg on the same period last year.

The decrease is largely attributable to weaker results from Fish Farming Northern Norway, as well as the consolidation of the Icelandic producer Arnarlax from February 1 this year. Arnarlax performed well during the period.

SalMar CEO Olav-Andreas Ervik said: ‘It is very good to see that Central Norway continues the positive trend and shows that good biological performance gives good financial results.

‘Biological challenges made the quarter demanding for Northern Norway, where we chose to harvest the fish earlier than planned to minimise the biological risk, but we see a clear improvement from the fourth quarter.’

The group’s harvest forecast for the year is 155,000 tonnes.