Contract ties, low volumes hit NRS profits for Q2

Norway Royal Salmon has paid a heavy price for its dependence on contract sales, the company’s second quarter results show.

NRS, now part of the SalMar group, today reported an operational EBIT or profit of NOK 32m (£2.7m) against NOK 94m (£8.1m) for the same period last year. The April-June period this year was marked by exceptionally high salmon prices which resulted in several companies reporting record profits, but NRS was unable to gain much advantage from that situation.

CEO Charles Høstlund said: “NRS has harvested a low volume and, as announced in the previous quarterly presentation, we therefore have an unusually high share of the Norwegian volume on fixed price contracts.

“The price achievement in relation to the spot price has thus been low and this significantly affects the result in this quarter.”

On the plus side, NRS has reported a solid financial position with NOK 1,694 (£147m) in unutilised credit facilities and NOK 80m (almost £7m) in bank deposits.

Farming Norway posted an operational EBIT of NOK 34.8m (£3m) in the quarter, compared with MNOK 96.3 (£8.4m) last year. The operational EBIT per kg gutted weight was almost four times higher at NOK 48.16 compared with NOK 12.49 in Q2 2021. However, the Norway harvest, which was hit earlier by winter sore issues, was 56% lower at 3,442 tonnes. Farming Iceland fared better, posting an operational EBIT of NOK 37.9m (£3.2m) in the quarter, compared with NOK 17.6m (£1.5m) 12 months ago.

Commenting on the SalMar deal, CEO Høstlund, said: “The foundation is therefore in place and the merger provides an even stronger basis for value creation and employment in the areas where NRS operates.”