Smolt trouble dampens NRS earnings

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Norway Royal Salmon (NRS) has reported an operational EBIT for the third quarter of NOK 89 million (€9 million) and an EBIT per. kg of NOK 12.13 (€1.23). The corresponding figures from the same quarter last year are NOK 35 million (€3.5 million) and NOK 4.21 (€0.42)

The result is somewhat weaker than the expectations of the analysts who follow the company. The consensus estimate for operational EBIT was NOK 95 million (€9.5 million), according to TDN Direkt.

“It is gratifying that in this quarter we have lower production costs and higher prices than the corresponding quarter last year. At the same time, operational EBIT is affected by high non-recurring costs associated with NTS ‘mandatory bid for the company, as well as incidents with external smolt suppliers which have led to NRS having to destroy smolt. The destruction of smolts has reduced this year’s release and will have a negative impact on harvest volume in 2022,” said Acting CEO Klaus Hatlebrekke in a stock exchange announcement.

Builds biomass
“We are pleased that the production in our new smolt plant in Dåfjord has been good, which will ensure NRS smolt from next spring,” he added.

Klaus Hatlebrekke. PHOTO: NRS

Payments to the company’s growth investments in Arctic Offshore Farming and a new hatchery, as well as the build-up of biomass in the sea, explain that net interest-bearing debt increased in the third quarter by NOK 190 million (€19 million) to NOK 2,185 million (€218 million).

Farming Norway harvested a volume of 8,340 tonnes gutted weight in the quarter, which is 17 per cent lower than in the corresponding quarter last year. The volume sold from the sales business in the quarter is 20,167 tonnes of salmon, which is 26 per cent lower than in the corresponding quarter last year.

Farming Iceland achieved an operational EBIT in the third quarter of 2021 of NOK 30.9 million (€3 million) against NOK 0.8 million (€80,000) in the corresponding quarter the year before. Operational EBIT per. kg gutted weight was NOK 10.55 (€1.55) against NOK 0.30 (€0.03) in the corresponding quarter last year. Farming Iceland harvested a volume of 2,925 tonnes gutted weight in the quarter, which is five percent higher than the corresponding quarter last year.

Increases next year
For 2021, the group’s total harvest volume is expected to be 48,000 tonnes, of which 36,500 tonnes in Norway and 11,500 tonnes in Iceland. This is an increase of 20 per cent in Norway and 55 per cent in Iceland compared with 2020. For 2022, the group’s total harvest volume is expected to be 51,500 tonnes, of which 38,500 tonnes in Norway and 13,000 tonnes in Iceland. Estimated smolt release for 2021 is 11.2 million smolts, of which 8.4 million in Norway and 2.8 million in Iceland. For 2022, the smolt release is estimated to be 15.6 million, of which 12.1 in Norway and 3.5 million in Iceland.

“NRS believes that sustainable production of salmon is very important for our long-term economic value creation. NRS works to achieve the strictest environmental certificate in our industry, the Aquaculture Stewardship Council (ASC) standard. ASC-certified fish is produced in a responsible and sustainable way within very strict requirements. NRS has now achieved that all our active locations are ASC-certified, both in Norway and Iceland. We have been working towards this goal for several years and NRS is one of the few companies in the world that has achieved 100 percent ASC certification.”

“NRS has started electrification of the feed rafts at our fish farms in Norway. The solutions for the feed rafts are either batteries charged using fossil fuels (hybrid) or batteries charged from the shore power grid. 89 per cent of the feed fleets in Norway have now installed batteries and operate on a hybrid solution. We expect a significant reduction in carbon emissions and at the same time a more cost-effective power supply as a result,” said Klaus Hatlebrekke.