"Results are somewhat hampered by low price achievement due to downgrading," said Måsøval CEO Helge Kvalvik on commenting Q1 2024 report.
Photo: Måsøval AS / Sondre Marøy.
The Norwegian salmon producer Måsøval presented its Q1 2024 results. A good operational quarter with strong marine production and cost improvement has been, however, overshadowed by losses in the sales and processing department due to what the company has called "non-recurring events," which led to a "somewhat hampered price achievement."
After a Q4 2023 in which its profits rocketed, the figures make it clear that in the first quarter of this year, the problem was not quantity. Måsøval posted revenues of NOK 402 million (EUR 34.8 million / USD 37.7 million) harvesting 3,606 GWT, compared to NOK 237 million (EUR 20.5 million / USD 22.2 million) and 1,994 GWT in the same period of 2023. This represents a 69% increase in revenue and up to 80% increase in harvest.
If we talk about operational earnings before interest and tax (EBIT), Q1 2024 result more than tripled last year's. In the first quarter, Måsøval's operating EBIT was NOK 120 million (EUR 10.4 million / USD 11.2 million) compared to NOK 36 million (EUR 3.1 million / USD 3.3 million) in Q1 2023. In percentage terms, this is an increase of 233%.
With these results, the Board of Måsøval proposed to pay a dividend of NOK 0.5 (EUR 0.043 / USD 0.046) per share. As said, the Norwegian salmon producer's problem in the first quarter of 2024 has not been the amount of fish harvested, but, as CEO Helge Kvalvik explained, how much of it has been downgraded to production grade.
"The sea production was strong in the quarter. Despite colder sea temperatures, jelly fish and winter storms, the team performed well. During the quarter the Group not only harvested more salmon than guided, but also exiting the quarter with a high biomass with harvest ready fish. Cost position improved significantly in the quarter, positioning us for a strong Q2," he said.
"Results are however somewhat hampered by low price achievement due to downgrading," he continued. And concluded, "The quality is substandard our responsibility as a farmer and food producer. We have intensified our work on fish health to improve the quality within the entire value chain."
Måsøval is not the only salmon producer affected by Norway's production fish drama. In fact, despite losses in sales and processing, it has been less affected than some of the big players such as Mowi, SalMar, Lerøy Seafood, or Grieg Seafood, which recorded drastic drops in profits in Q1 2024 due to the same problem.
It should be recalled that while the European Union sees Norway's production fish export ban as a trade barrier, the Norwegian government has toughened its stance on the illegal trading of the so-called "prodfisk."
That being the case, Måsøval is already looking ahead. In the second quarter of 2024 the Group expects to further increase the harvest, targeting a volume of 7500-8000 GWT. For the full year, it expects to harvest 27,000-28,000 GWT.
Likewise, spot prices are expected to be higher in the second quarter, with fish pool futures for Q2 last traded at NOK 122 (EUR 10.56 / USD 11.43) compared to NOK 110 (NOK 110 - EUR 9.52 / USD 10.30) for Q1.
To conclude his results presentation, Måsøval also recalled it has taken "important strategic measures" in Q1 2024 to vertically integrate and increase key capabilities. Furthermore, although completed at the beginning of Q2, the Q1 results presentation also highlighted two important strategic acquisitions to enhance its processing and wellboat capacity.
In mid-May, the company reported that the acquisition of Mowi's harvesting facility announced in January had been completed. Located in the municipality of Ulvan Hitra, in announcing the new addition to Måsøval Group, CEO Helge Kvalvik said this facility will provide the company with greater flexibility in production and, more importantly, it will be able to meet better market demands.
Just a few days later, the Norwegian salmon producer announced it had signed a time charter agreement to acquire the wellboat 'MS Njord Kya'. The boat is already under construction and is expected to be operational by the end of this year. In addition to a vacuum system, it will provide Måsøval with additional capacity and new technical features, such as combined freshwater and Thermolicer treatments continuously and without bottlenecks.
Located in Central Norway in the region west of Trondheim, Måsøval AS is an integrated producer of Atlantic salmon with more than 50 years of operational experience. The company has significant farming operations at sea and in-house smolt production, and, through its majority ownership in the processing and distribution company Pure Norwegian Seafood AS, it also processes and exports high-quality Atlantic salmon to a global marketplace.