ISI first quarter results hit by high salmon prices

Raw material inflation, especially for salmon, has had an impact on Iceland Seafood International’s first quarter results.

But the company adds, in its report for Q1, that there are signs of a more balanced external environment on the horizon.

ISI reported a 23% increase in sales from a year to €123.1m (£107m), along with a slightly lower net margin of €9.8m (£8.52m) leading to a net loss of €2.2m (£1.9m) against €0.8m (£695,000) in Q1 2022.

The Q1 report said the quarter was marked by prices increases in key import factors, mainly salmon, which is important in its Spanish and Irish businesses.

The report said: “Steep price increases in salmon negatively impacted sales volume in the quarter. Price increases offset the impact of lower volume, leading to a slight growth in sales in Euro terms.

“These increases in salmon prices caused similar challenges as in the same period last year, as it takes time to push cost increases through to customers.

“Based on current forward prices, the price of salmon peaked in March this year, compared to the beginning of May 2022. The outlook for the remainder of the year is good, as salmon prices are expected to come down and stabilise.”

The group said seafood prices are still high and have increased more than prices of other animal protein.

“This has decreased demand, reflected in lower volumes. After strong sales in S-Europe in March, demand fell in April.

“The outlook for the coming tourism season in Spain is good, which should positively impact demand. Salmon prices have stabilised after a sharp increase in Q1 23 and are expected to ease further in the coming months.”

ISI put on hold the sale of its Grimsby production site late last year after it failed to find a suitable buyer. The loss from that operation was €2.3m (£2m) which was in line with budget.

The company added: “Significant steps have been taken towards improved operation in the period, in line with what was previously communicated. “

The process of recovering inflationary costs had come through as planned, production efficiencies and the installation of new equipment.

But “a negative market trend” where volume has declined through significant consumer price increases had a significant negative impact on sales.

“It needs to be seen if these impacts are temporary or long-term, but this will delay the point where IS UK will reach a positive cash flow,” ISI said.