Arctic Fish Q1 2024: satisfaction despite lower volumes and revenues

"Overall, we consider this as a strong quarter with strong operational and financial performance," said CEO Stein Ove Tveiten.
In Q1 2024, Arctic Fish's CAPEX investment amounted to EUR 5 million (USD 5.3 million), mainly related to the setup of new seawater sites.

In Q1 2024, Arctic Fish's CAPEX investment amounted to EUR 5 million (USD 5.3 million), mainly related to the setup of new seawater sites.

Photo: Arctic Fish.

With lower volumes harvested - almost half that of last year in the same period - and, consequently, a significant drop in revenues, Q1 2024 could present itself as a poor start to the year for Arctic Fish. However, the picture is much more positive if one puts these figures into perspective and looks at other markers such as operational EBIT -which has reached an all-time high-, new licenses or renewals won, and the company's substantial investments in its value chain.

Operational EBIT per kg reached an all-time high

Even though in Q3 it was affected by an escape issue and had a difficult autumn due to sea lice problems - which, among other things, forced it to an emergency premature harvest -, 2023 marked an all-time high in volumes and revenues for Arctic Fish.

Now, after that record year, in Q1 2024, harvested volumes amounted to 2,531 tons of Head-On-Gutted (HOG) compared to 4,866 tons of HOG in the same period last year, a drop of 48%, this is almost half the harvest in Q1 2023.

With a drop in harvested volume of that magnitude, it is normal for revenues to fall as well, and they did. In the first quarter of 2024, Mowi-owned Arctic Fish had revenues of EUR 24.1 million (USD 25.9), down 38% from the corresponding period of the previous year.

However, against these figures, the Group achieved what it describes as "a positive operational EBIT" of EUR 9.7 million (USD 10.4 million), which is only a slight decline from the EUR 10.4 million (USD 11.2 million) in 1Q 2023, which is mainly the result of substantially higher volumes harvested last year.

"It is important to note that the EBIT this year is a far better operational result when comparing it with two periods, especially when looking at the operational EBIT per kg and EBIT margin as the operational EBIT per kg reached an all-time high of 3.84 EUR per kg in the first quarter of 2024," Arctic Fish CFO Baldur Smári Einarsson, noted during the results presentation.

"Furthermore, the Group recognizes a positive fair value adjustment of 1.3 million EUR on the biomass in the sea, a much better result than last year when the harvested volumes were quite a substantial part of the biomass," he continued.

Optimizing utilization of license capacity, long-term growth objective

The Icelandic farmer was also satisfied with the biological performance of its fish. "I consider it as a satisfactory growth exceeding expectation despite seasonal low temperatures," Arctic Fish CEO, Stein Ove Tveiten said.

The company expects to maintain the volumes established in previous forecasts for the remainder of the year. "We aim and expect to maintain the volumes set forth in this and earlier forecast amounted up to 10,100 tons in total for 2024," Tveiten explained.

"In addition, I will also emphasize that our long-term growth objective is to optimize highest the utilization of the existing license capacity, which is the primary target for the coming years," he continued.

During Q1 2024, the company received a license for 8,000 tons in Ísafjarðardjúp, Iceland, of which 5,200 tons are fertile salmon licenses, while the remaining 2,800 tons are trout. This replaces an existing license covering 5,300 tons of trout. In addition, the company received a renewed license for 7,800 tons for Patreksfjörður and Tálknafjörður.

Following this license update, the company's total production capacity is 29,800 tonnes MAB (Maximum Allowed Biomass), of which 27,000 tonnes are for fertile salmon. Arctic Fish licenses 13 farming areas in 6 different fjords, all located in the Westfjords of Iceland.

Additionally, the Group also holds a license for land-based smolt production on its own land in Norðurbotn, which, the company says, "is required for the Group's ongoing smolt production."

Substantial investments in the value chain

Another highlight in Arctic-Fish's Q1 2024 figures is its CAPEX investment, which amounted to EUR 5 million (USD 5.3 million), mainly related to the setup of new seawater sites.

"In the last quarter, we invested EUR 5 million, mainly in growth initiatives for the seawater-based equipment," explained Arctic Fish CEO, Stein Ove Tveiten. "This constitutes the largest part of our CAPEX for 2024 which is a total of EUR 7 million" (USD 7.5 million).

These "substantial investments," as the company calls them in the presentation, come to reinforce a value chain that consists of a state-of-the-art RAS hatching and smolt production facility, sea sites with high bearing capacity and high-energy equipment, and a newly completed harvesting facility with sufficient capacity to secure the utilization of the licenses and growth objectives for the company.

"Our value chain is modern and robust, including a state-of-the-art RAS hatching and smolt production facility, high energy equipment at sea, and a recently completed harvesting facility," Tveiten said. "In short, Arctic Fish is a key player in the Icelandic salmon farming industry with a strong focus on sustainability, quality, and growth."

Moreover, Arctic Fish sells its salmon under the brand name 'Mowi Arctic', thus utilizing "the substantial synergies that become available through the majority owner." The salmon farming giant also presented its Q1 2024 results this week, one of the toughest, if not the toughest, in Mowi's recent history when its profits plunged after a "perfect storm" of biological problems in Norway.

In the face of these challenges facing its majority owner and having overcome its own last fall, Arctic Fish is looking optimistically to the future and, despite falling volumes and revenues, even to Q1 2024 results. "Overall, we consider this as a strong quarter with strong operational and financial performance," CEO Stein Ove Tveiten summed up.

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