SalMar posts all time high operating profit

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Salmon farmer achieves this through strong underlying operations, high volumes and good prices.

In a financial report on the Oslo Stock Exchange, SalMar reported a Q1 operational EBIT of EUR 97.2 million. “This is the highest ever achieved in the company’s history,” it wrote. In the same period of 2019, operational EBIT came to EUR 73.5 million.

Earnings
“For the SalMar Group, the first quarter was very good. We posted the highest ever operational EBIT in the company’s history, achieved through strong underlying operations, high volumes and good prices. Central Norway in particular distinguished itself through solid performance in the quarter,” said SalMar’s CEO Gustav Witzøe.

Operating revenues came to just over EUR 328,6 million for the quarter, up 22 per cent on the same quarter of 2019. SalMar harvested 40,000 tonnes in the first quarter, up from 35,500 tonnes in the corresponding period last year.

Operational EBIT per kg came to EUR 2.4 for the first quarter, up from EUR 2 per kg for the first quarter of 2019. The increase is attributable to higher prices and a larger harvested volume.

Mortality
The first quarter of 2020 was challenging for Iceland’s Arnarlax. The segment experienced a high rate of mortality as a result of winter wounds, which resulted in a large volume of fish being harvested in a period of poor weather conditions and low sea temperatures. This led to high costs. In the second quarter this year, harvesting from same generation will continue and SalMar therefore expects significantly lower volume and weak margins for the second quarter.

Through the first quarter the Sales and Processing segment achieved good capacity utilisation and effective operations, which have provided good margins for SalMar’s harvesting and secondary processing operations. The segment also secured favourable placement of volumes at spot prices in a quarter characterised by high prices. Nevertheless, the segment reported an Operational EBIT of EUR -1,5 million, after a negative contribution from fixed-price contracts. Some 24 per cent of the volume was sold under fixed-price contracts in the first quarter of 2020. The contract rate for the second quarter is 25 per cent, while it stands at 20 per cent for the year as a whole. Contract prices are slightly higher than the level in 2019.

“The corona pandemic (covid-19) has created significant uncertainty for world trade, and changes in consumer behaviour and transport patterns are affecting several markets. SalMar is closely monitoring developments in the various markets and is constantly assessing measures to adjust its production. SalMar has a solid financial position and good flexibility in its supply chain, which ensures that the company is well equipped to handle changes in the market,” wrote SalMar.

Investment
Despite the uncertainty, SalMar strongly believe in further growth of the aquaculture industry. The company is therefore continuing its investment projects as planned, including the construction of the InnovaNor harvesting and processing plant in Northern Norway and the smolt production facility on Senja.

Looking ahead, SalMar maintains its expectations to harvest 152,000 tonnes in Norway: 103,000 tonnes in Central Norway and 49,000 tonnes in Northern Norway and 12,000 tonnes in Iceland in 2020.

As a result of the covid-19 situation and the prevailing uncertainty with regard to its consequences going forward, SalMar’s board of directors decided in March to cancel the proposed dividend distribution to shareholders.