Employees working at one of Salmones Camanchaca's sites. The Chilean producer ended 2023 with a drop in profits despite increased harvests and improved biological indicators.
Photo: Salmones Camanchaca.
What was pointed out in Salmones Camanchaca's Q3 2024 results has been maintained in Q4. The Chilean salmon farmer closed the fourth quarter and the year with a drop in profits despite increased harvests and improved biological indicators. A 27% reduction in the use of antibiotics or a 9% reduction in the use of antiparasitics are some of these good data, which are added to a 14% increase in the salmon harvest. However, revenues for the whole year fell by 5%.
"There is no doubt we faced important challenges in 2023 that made the results weak, among which the low demand for seafood in the world, and the costs of mitigations we have had to implement for environmental and biological challenges," said Salmones Camanchaca's Vice President, Ricardo García Holtz, commenting on the results.
Salmones Camanchaca closed 2023 with annual harvests of 55,494 MT WFE compared to 48,568 MT WFE in 2022, an increase of 14%. This meant the year ended with higher inventories, especially for Coho salmon due to the increased harvest in the last quarter of the year, which was 165% higher than in 2022. In Q4 there were harvests of 8,900 tons in Coho, while sales were only 1,100 tons. Final inventory at the end of 2023 totaled 9,000 tons.
In addition to the positive production results, there was also an improvement in biological indicators. Compared to 2022, in sites that concluded their cycle, Salmones Camanchaca recorded a 27% reduction in the use of antibiotics, a 9% reduction in the use of antiparasitics, an improvement in the biological feed conversion factor of 2% - from 1.09 to 1.07 for the year just ended -, and an increase from 9 to 10 months in the resting time of the operating concessions in use.
Looking back, Salmones Camanchaca started 2023 with a bright outlook in Q1 and focused on continuous improvement in Q2. This good start to the year probably contributed to the fact that the drop in revenues at the end of the year was only 5%, even though profits had dropped almost 90% in Q3, and EBITDA was almost zero in Q4.
This declining progression resulted in revenues of USD 354 million (EUR 327 million) at the end of the year. However, if we talk about Q4, the Chilean salmon company's EBITDA was USD 33.5 million (EUR 30.9 million), an amount much lower than the USD 77.7 million (EUR 71.8 million) in 2022. These results contain provisions on the inventory of USD 8.7 million (EUR 8 million) in 2023 due to the observed price declines, of which Coho represents 70%.
The fall in prices is one of the arguments offered in the report to justify the drop in income. Prices fell by 4% for Atlantic salmon, but by as much as 14% for Coho. According to Salmones Camanchacha, seafood demand conditions, particularly for salmon, "were abnormally weak from Q2 2023, which explains the price falls."
Moreover, Atlantic salmon farming costs were 12% higher than in 2022, affected by feed costs and the various mitigation measures to address environmental and biological risks - low oxygen, algae, SRS, and endogenous parasites - which affected about half of the harvested biomass and made the product more expensive.
"We faced important challenges in 2023 that made the results weak," said Ricardo García Holtz, Vice President of Salmones Camanchaca, who was optimistic about the recovery of demand although also concerned about the uncertainty of the regulatory order in Chile.
We recently learned that 2023 was the best value year ever for Norwegian seafood exports boosted by a weak Norwegian krone and high prices. The currency effect that nearly all Norwegian producers are referring to as a plus point in their Q4 2023 results, is in the case of Chile a minus point due to the strong devaluation of the yen, the currency of its main destination market, Japan. The EBIT/Kg WFE of Atlantic salmon sold in 2023 was USD 0.62 (EUR 0.57) for both Atlantic and Coho salmon, but while that of Atlantic was USD 0.57 (EUR 0.52) lower than in 2022, in the case of Coho it was USD 2 (EUR 1.84).
Finally, the net result for the year was negative USD 6 million (EUR 5.54 million) compared to USD 44.7 million (EUR 41.34 million) in 2022. The report explains this decrease by a lower net fair value effect and by the loss in the shared trout business, which was also impacted by higher costs, but, above all, by lower prices in Japan, again its main market.
For 2024, with seeding already carried out and under normal performance, Salmones Camanchaca estimates a harvest in the range of 46 to 48 thousand MT WFE in Atlantic salmon, while Coho will be an estimated 4 to 5 thousand MT WFE. Vice-president Ricardo García Holtz said the company will cut the seeding of the latter species to a third, "as a result of the drop in the price of Coho due to yen devaluation."
In his assessment of the results and looking at the new year, García Holtz was optimistic about production but not so much about the regulatory changes that are taking place in Chile. "We are optimistic about the recovery of demand and our capacity to face the challenges of the business and the implementation of improvements and mitigations to salmon farming, but our greatest concern is the uncertainty of the institutional or regulatory order, where we are frequently impacted with surprises," he said. As an example, Salmones Camanchaca’s VP spoke of "the surprise of finding an article in the proposed Fisheries Law that again limits the use of concessions in protected areas in the SBAP [Biodiversity and Protected Areas Service in its Spanish acronym], contravening what was agreed in Parliament in May 2023, this time, covertly in a law of another sector".
With more than 30 years of experience, Salmones Camanchaca is a leading producer of salmonids from Chile, specializing in breeding, egg production, and hatchery upgrading of Atlantic salmon, Coho salmon, and trout. The company also excels in primary and secondary processing and marketing, and sales of premium salmon. It has a strategic position in more than 50 international markets.