For the longer term, the company sees significant growth potential of up to 26,000 tonnes on its current licenses and is confident in its ability to reach this ambition.
Photo: Arnarlax.
Icelandic Salmon presented its results for Q3 2024 in which harvest volume remained low, affecting quarterly results. However, in this third quarter, the company was able to stabilize conditions after the biological challenges of last winter and spring and assures that its focus on biomass growth has established a solid foundation for recovery and future growth.
Dedicated to salmon farming and processing in Iceland, Icelandic Salmon is the parent company of Arnarlax and its subsidiaries. In Q3 2024, the Group reported revenues of EUR 14.3 million (USD 15.1 million), compared to EUR 41.9 million (USD 44.3 million) in Q3 2023, a decrease of 65.8%. EBIT for the quarter was negative EUR 3 million (USD 3.1 million), compared with positive EUR 3 million in the prior-year period.
The Icelandic salmon farmer said that the year-on-year decline was due to lower volumes and continued biological challenges since the beginning of the year, resulting in a one-off cost of EUR 0.4 million (USD 0.42 million). The EBIT/kg for the quarter was EUR -1.71 (USD -1.80), and adjusted for the one-off cost, EBIT/kg was EUR -1.46 (USD -1.54).
As mentioned, in pursuit of recovery, Icelandic Salmon has focused on biomass growth. With new sea lice control measures, an increase in smolt release, recent investments in smolt facilities, and active stakeholder engagement, Arnarlax's owner group claimed to have taken important steps forward.
Despite the negative results, Icelandic Salmon reiterated its long-term growth ambitions, which, it said, are well aligned with the authorities, lenders, and other key partners.
Regarding harvest volumes, the company remarked that although they have increased from the also low levels observed in Q2, the Group prioritized the strengthening of biological assets, so they remained still low.
In Q3 2024, Icelandic Salmon harvested 1,750 tons. Compared to 4,040 tons in the same period last year, this is a decrease of 56.8%, 2,290 tons less.
"Consistent efforts by our entire team have driven operational improvements across our value chain, from sea to land. We have focused on growing our biological assets. Strong smolt performance, a reduction in underlying costs in the beginning of Q4, and solid price achievement underscores that we are on the right way," Björn Hembre, CEO of Icelandic Salmon, explained.
However, the Group's growth plans hit an unexpected obstacle when in October this year, Arnarlax's license for a 10,000-tonne salmon site in Ísafjarðardjúp was revoked.
According to Iceland's Environmental and Natural Resources Board of Appeal ruling, the Icelandic Food and Veterinary Authority (MAST) did not provide a sufficiently comprehensive, weighted assessment of the potential risk of the spread of fish diseases and parasites before issuing the license. Icelandic Salmon said it is working closely with the authorities to resolve the situation.
In terms of the market for its products, in the release on its Q3 2024 results, Icelandic Salmon said that it continues to see strong demand for its salmon and that it achieved high prices for its products in key markets during the period.
In addition, it also reported that the Group's proportion of premium salmon in the quarter was 95%.
The company also highlighted that its results were especially strong in North America, a destination that accounts for 25% of its sales, and where it obtained prices that significantly exceeded those of the market.
"Icelandic Salmon has a competitive advantage in the North American market, as it can transport its fish by sea. This means lower transport costs and a lower CO2 footprint, which is highly appreciated by key customers," the company explains in its release.
Finally, the Icelandic group discussed its outlook for both the remainder of this year and next year. For the full year 2024, Icelandic Salmon maintains its volume guidance of 13,000 tons. However, it expects the biological challenges faced in 2024 to impact the next quarters and 2025 harvest volumes.
Thus, the Group expects that in the next fiscal year, the majority of the expected volume will be concentrated in the second half of the year. The company has set the volume guidance for the full year 2025 at 15,000 tons.
"For the longer term, we see significant growth potential of up to 26,000 tonnes on our current licenses and are confident in our ability to reach this ambition. This ambition aligns with our stakeholders' vision, and we have a close dialogue with the authorities, lenders and other partners to drive this growth going forward," concluded CEO Björn Hembre.
It should be recalled that Icelandic Salmon - whose flagship is, as said above, Arnarlax, the leading salmon farming company in Iceland - is, in turn, owned by Norway's SalMar, which, according to its Q3 results presentation yesterday, has had another difficult quarter seeing profits plunge and reducing 2024 harvest guidance due to "challenges at sea."