Norway’s salmon industry reports record profits, say analysts
Norway’s salmon industry may be wrestling with rising costs and various biological issues, but it managed to achieve record-breaking profit levels in 2023, according to the monitoring organisation Kontali Analysis.
Earnings per kilogram of head-on gutted (HOG) salmon increased by 15-20% to close to NOK 30 compared with the previous year, it says.
The total harvest was 1.479m tonnes in 2023 with the value of exports hitting a record 122.4bn Norwegian kroner (equivalent to sterling £8.7 bn), an increase of NOK 16.7 billion (£1.2bn) or 16%, despite lower volumes.
Kontali says that at the macro level, a weak krone and the resource rent tax also affected income.
Norway retained its position as the largest producer of salmonids, but the 2% drop in production contributed to a 1% decline in total global harvest compared to 2022. Chile, the second largest producer, harvested 1.1 million tonnes, accounting for 34% of the global market.
Filip Szczesny, salmon analyst with Kontali, says: “2023 was an outstanding year for the Norwegian salmon industry achieving an all-time high in earnings. Prices and profits were up, though production declined marginally, down for the third consecutive year.
“At the regional level, North Region did excellently with the highest earnings per kilogram (EBIT/kg), reflecting exceptional profitability. Mid Region led in operational efficiency with the best capacity utilisation, while South Region surpassed Mid Region in EBIT/kg for the first time since 2017.”
Among the top performers , Mowi South emerged as the leader, reporting the highest operational EBIT of 38.1 NOK/kg, a significant improvement from 24.3 NOK/kg the previous year.
SalMar North followed with an EBIT of 36.7 NOK/kg, slightly below its 2022 figure of 39.8 NOK/kg.
Kontali said the dip in production contributed to driving prices upward, with the weighted average price of fresh Atlantic salmon increasing by 13% to 93 NOK/kg. Price volatility was significant, with fluctuations of approximately 80% between the lowest and highest points. Segment-specific variations in price were also notable, with salmon over 7kg reaching a high of 140 NOK/kg at one point.
Price dynamics were further shaped by a fluctuating Norwegian kroner (NOK) which reached historically low levels against the Euro.
While price achievements for fresh whole salmon rose by 4% in euros, the weaker NOK led to an 18% increase in NOK prices, amplifying the financial impact. European markets remain the most important for Norwegian salmon, absorbing 70% of its total exports.
However, the US and other markets saw the biggest increase in export share, rising to 7% and 17.4%, respectively.
Impact of the salmon tax
A resource rent tax (RRT) on salmon farming was introduced (also known as the “ground rent tax” or “salmon tax”), impacting company income across Norway.
Kontali’s analysis of the tax highlights two key findings. First, the total payable RRT is reported to be NOK 2.6bn-2.7bn, which is lower than the government’s projected RRT revenue of NOK 3.5 billion.
Second, not all producers are effectively paying at the same rate. Companies harvesting 10,000 to 30,000 tonnes report the highest payable RRT per MAB (maximum allowable biomass) unit, at NOK 5-6 per kg MAB, while larger producers harvesting over 30,000 tonnes estimate a tax cost of less than NOK 3 per kg MAB. Although the tax scheme includes a minimum standard deduction intended to provide relief to smaller players, the data suggest that mid-sized companies might be bearing the highest tax burden per MAB unit. This outcome contrasts with the government’s stated objective for the largest companies to contribute the highest share of the tax, both in absolute and relative terms.
Kontali said smolt producers enjoyed a standout year, with earnings before interest and taxes (EBIT) increasing by 210%, with the average EBIT margin rising to 26%, up from 12% in 2022.
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