Norway Royal Salmon takes earnings hit

Covid-19 is set to take quite a toll on the performance of salmon farming companies this year, the latest figures from Norway Royal Salmon indicate today.
NRS is the first of the big producers to publish its 2020 third quarter results and the company has announced an operational EBIT of 35 million in Norwegian kroner NOK (£2.8 million), and an EBIT of NOK 4.21 per kg. The corresponding earnings figures for the July to September period last year were NOK 131 million (£10.6m) and NOK 19.60 (£1.59) per kg, falls of 73 per cent and 78.5 per cent respectively.
Given the impact of coronavirus on the restaurant and catering trade In Europe, the results were not unexpected and the company was in positive mood. It also said it plans to strengthen its stake in its Iceland investment.
CEO Charles Høstlund said the market price of salmon has, as normal, been seasonally low during the summer months, but had also been impacted by the pandemic and high production costs.
He added: “Our margins in this quarter are therefore affected by this. We have had good growth throughout the quarter, and by starting to harvest a new generation we expect lower production costs in the next quarter. NRS has a strong financial position with NOK 1,103 million (£89m) in unutilised credit facilities at the end of the third quarter. After the end of the quarter, NRS was offered NOK 800 million in an increased loan facility with a sustainability term loan, which will further increase the group\’s financial headroom.
Farming posted an operational EBIT of NOK 42.3 million (£3.42 million) compared with NOK 138.7 million (£11.2 million) in the corresponding quarter last year, down 69.5 per cent. Harvest volumes were up by 42 per cent to 10,058 tonnes, gutted weight. For 2020, the harvest volume is expected to be 32,500 tonnes gutted weight and for 2021 the harvest volume is estimated at 40,000 tonnes, an increase of 23 per cent on 2020. The estimated smolt put to sea for 2020 is 10 million smolts. Sold volume from the sales business in the quarter was 27,110 tonnes salmon, 10 per cent higher than in the corresponding quarter last year.
Høstlund added: “NRS has high expectations from our aquaculture investment in Iceland, through Arctic Fish which we own 50 per cent. We want to take this company a step further and have therefore engaged financial advisers to explore a potential listing of Arctic Fish on (the Oslo) Merkur Market. A possible result of the process is that NRS will surpass majority ownership in Arctic Fish after the transaction.”