SalMar reports big Q3 profit drop – and reveals new acquisition
SalMar’s performance during the high summer months continued to be beset by biological and jellyfish problems as it unveiled lower third quarter revenues and operational profits today. It also announced it had taken a controlling share in a smaller Norwegian salmon farmer, AS Knutshaugfisk.
The SalMar group produced an operational EBIT or profit of NOK 1,041m (£74m) against 2,300m (£164m) 12 months ago.
Profit before tax was NOK 839m (£60m), down from NOK 2,304m (£164m) last year. Given the scale of SalMar’s current issues, the results are being hailed by analysts as better than expected.
SalMar, which is the world’s second largest producer of Atlantic Salmon, said the farming segments were affected by biological challenges which will adversely affect volume expectations.
It also said Icelandic Salmon was still being affected by low volumes and high costs.
In fact the main bright spot in SalMar’s Q3 report was Scottish Sea Farms, which it said enjoyed “another good quarter with increased slaughter volume, higher slaughter weight and good biological status in sea in all regions”.
SalMar CEO Frode Arntsen said: “Although the result is affected by challenges at sea, the result also shows that the structure we have in SalMar is solid and rigged to handle challenging periods, which means that the financial results are acceptable for the period.
“Going forward, we are fully focused on improving performance and exploiting the potential that we see lies in the value chain.”
Knutshaugfisk NabCat 1350 workboat (photo; Moen Marin)
He said the company was strengthening its presence in Norway and this month it had entered into an agreement for the acquisition of a controlling stake in AS Knutshaugfisk, through a combination of settlement in shares and cash.
AS Knutshaugfisk currently has licences for a total of 3,464 tonnes and four farming locations in production area six in central Norway.
Arntsen described Knutshaugfisk as a well-run family company with which SalMar had developed a close and value-creating collaboration over many years.
He said; “SalMar’s purchase of a significant stake in the company is a natural continuation of this collaboration.”
Completion of the transaction is subject to regulatory approvals and is expected to be completed in January 2025.
The CEO also said there was significant potential for cost savings identified in the group value chain: “After the realisation of synergies following the acquisition with NRS, NTS and SalmoNor was completed in 2023, during 2024 SalMar has analysed the entire value chain for how to further optimise the entire new company.
“This work has identified NOK 1.2bn (£85m) in potential savings in the value chain.
“Through improved operational structure and increased efficiency, this is expected to be realised by 2029.
“The work going forward to further improve operations and increase efficiency in all parts of the company will make us even stronger going forward. We see a strong demand for our products and our job is to produce this in as efficient and sustainable a way as possible,” Arntsen added.
Because of the various biological challenges, the group volume guidance for 2024 has been reduced to around 217,000 tonnes in Norway.
The group’s offshore farming operation, SalMar Aker Ocean, has finished its harvest for the year, recording 6,900 tonnes in total.
Frode Arntsen, CEO SalMar Group
