Salmon tax: SalMar mulls “legal steps”, Lerøy braces for NOK 1.7bn hit
During this week's Q2 results presented by Norway's salmon farming giants, one issue loomed large: Norway's new resource rent tax regime, the so-called "salmon tax".
Announcing SalMar's results for the second quarter, CEO Frode Arntsen reiterated that the company "strongly opposes" the tax regime, and "will continue to argue for a review of the tax system and tax level."
Arntsen echoed Mowi CEO Ivan Vindheim's comments earlier in the week in threatening legal action, saying the "SalMar is open to legal steps in due course".
Uncertainty remains over longer term, but implementing tax will cost 2.3 billion NOK, says SalMar
Presenting the financial results, SalMar CFO Ulrik Steinvik noted there remains "significant uncertainty over how it shall be calculated", thus the company had not included an estimate on the ongoing resource rent tax costs in its report.
However, he said, SalMar was clear on the costs of implementing the new regime – a whopping 2.3 billion NOK.
This, he said, "highlights how incorrect the proposed model is. By stating that we won't receive deductions for the costs incurred on the fish earlier than 2023, they essentially imply that the resource rent tax has a retroactive effect well beyond the declared date of 1 January 2023. We have estimated this effect to be 2.3 billion NOK for the first half of the year."
"SalMar has consistently been clear about our strong opposition to the resource rent tax, both the proposed model and the level of taxation. Therefore, moving forward, it will be important for us to maintain an open and fact-based dialogue with authorities and other stakeholders to highlight the implications of this tax," Steinvik continued.
"Our goal is to establish a model that is better suited for the industry and the local communities along the entire coast. SalMar is willing to pursue legal steps in due course."
Lerøy says "implementation effect" will cost 1.7 billion NOK
Similar sentiments were expressed by Lerøy Seafood CEO Henning Beltestad and CFO Sjur Malm during Wednesday's quarterly announcement.
"This has been a special year for us. It's now about one year since the Norwegian government launched the proposal to implement the resource tax in our industry, and that proposal was voted for in the Norwegian Storting on the 31 of May," said Malm.
"That means that this is the quarter that we have to implement the impact from the resource tax," he said, highlighting two financial impacts, the running tax rate itself, which is still uncertain, and the "implementation effect", the one-off costs to the company in bringing the new regime into operation.
Malm said they calculated implementation alone would cost Leroy 1.7 billion NOK, "which is a very high number," he added.
"On the implementation effect, there has been a big debate in Norway. We in the industry believe that there is a massive lack of symmetry between cost and revenue. The government is saying that the cost of our biomass going into 2023 and what we can withdraw from the tax is zero. We don't think that is fair, but that is what we have implemented in our result."
"There significant working capital build in this industry," Malm went on to say. "In the proposal for the resource tax in Norway, it was said that this industry is not capital intensive. From our point of view, this balance sheet shows there is no substantiality in such claims. This is a very capital-intensive industry."
Success for Norway's salmon giants in the second quarter, despite tax impacts
Previously this week, Mowi CEO Ivan Vindheim said that Mowi are planning to sue the Norwegian state over the new tax, arguing that it was in breach of EEA rules.
But despite this, all three of the companies – Mowi, SalMar and Lerøy Seafood – have reported extraordinarily good results for the second quarter of 2023.
Mowi celebrated an "all-time high" revenue of 1,365 million euros in Q2, while SalMar recorded "the best result in history for the Norwegian part of our business," according to its CEO Frode Arntsen. Lerøy Seafood also enjoyed a surge in revenue for the second quarter of 2023, with a 17% year-on-year increase compared with Q2 last year.