Promising outlook for land-based Salmon Evolution as farming segment breaks even

Salmon Evolution is celebrating a landmark quarter, having achieved EBITDA breakeven in its farming segment for the first time.

The Norwegian land-based salmon farming company, which utilises a hybrid flow-through farming system at its Indre Harøy facility, presented its Q4 2023 results this morning.

CEO Trond Håkon Schaug-Pettersen said the quarter marked "a significant milestone for Salmon Evolution, having harvested over 1,100 tonnes HOG with good results and reaching break-even EBITDA in the farming segment for the first time."

Notably, the superior quality share of the harvest reached 90%, indicating the high caliber of salmon produced, with an average weight of approximately 3.5 kg per fish.

The company also celebrated an all-time high in biomass production, with a net growth of 1,439 tonnes, highlighting its continued strong biological performance, characterized by good appetite and low mortality rates among its fish stocks. By the end of December 2023, the standing biomass exceeded 2,200 tonnes live weight.

Commenting on this achievement during this morning's Q4 presentation, Schaug-Pettersen said Salmon Evolution's commitment to fish welfare was one of the areas the company was "most proud of", adding, "When we say we put biology first, this is not just something we say - you can actually also now see it in our performance."

Achieving a high percentage of "superior grade" fish means Salmon Evolution can realise higher prices - at a time when market prices are high, and when many competitors are undergoing significant seasonal biological problems resulting in a higher percentage of so-called "production fish", or "prod-fish", downgraded quality salmon due to wounds or injuries.

During Tuesday morning's presentation, CFO Trond Vadset Veibust pointed out that current record levels of downgraded quality fish gives Salmon Evolution a significant advantage, noting that "Currently in Norway, there is too much prod-fish and too little superior, and this has an impact on the price realisation."

"Looking into 2024 we remain optimistic, and we are very satisfied with our harvest results year to date, showing increasing harvest weights, exceptionally high superior share, and strong price realization," Schaug-Pettersen said.

During the first quarter of 2024, Salmon Evolution has already harvested 457 tonnes HOG from half of its farming groups, with an increased average weight of approximately 3.9 kg and a superior share above 95%.

These results reflect the company's ongoing commitment to quality and efficiency, Schaug-Pettersen said.

Financially, the company is also on solid ground, with available liquidity of NOK 645 million as of 31 December 2023. This includes committed, available, and undrawn credit facilities, positioning Salmon Evolution well for future growth and operational scalability.

Schaug-Pettersen also gave an update on Salmon Evolution's projects in North American and South Korea, saying the company was in "advanced negotiations" over a site in North America, and "engaging with relevant authorities in South Korea" over financing and regulations for its Asian project.