Salmones Camanchaca Q3 results driven by higher prices and sales volumes
The average price of Atlantic salmon sold by Salmones Camanchaca during Q3 2022 was USD 7.87/kg WFE, which was 20% or USD 1.31/kg higher than in Q3 2021. This increase was explained by higher global demand and lower supply during 2022.
Prices made records during the period, but growth moderated somewhat throughout the quarter due to seasonal higher production. The higher sales volume from Salmones Camanchaca also helped capture these high prices on the spot market.
The greater price stability achieved by Salmones Camanchaca is explained by the Company's value-added strategy associated with medium-term commercial agreements that attenuate sharp drops and escalations.
Feed costs and inflation
Ex-cage costs for the quarter were similar to costs a year ago at USD 4.17/kg live weight. This year they were pressured by an increase in feed costs and inflation affecting services and other supplies. Whereas in 2021 they were affected by algae blooms.
Meanwhile, processing costs including harvesting costs were USD 1.03/kg WFE. Slightly above the long-term target of USD 1/kg WFE, and 1 cent below Q3 2021. Processing costs were pressured by more sites harvested from the XI region and using third-party processing plants for frozen products.
The company experienced extraordinary mortalities during the period, mainly caused by sea lion attacks and algae blooms. However, the financial impact was limited to USD 1.0 million. Significantly lower than the USD 3.7 million impact in Q3 2021.
Expenses on fallow sites with no biomass, or only the minimum required to avoid the concession lapsing, were USD 2.9M. EBIT before fair value adjustments for Q3 2022 increased by USD 21.5 million compared to Q3 2021 and totaled USD 21M. Thus, EBIT/kg WFE for Atlantic salmon ended at USD 1.78/kg WFE. A substantial improvement over the negative figure for Q3 2021.
Sales of Coho salmon during the quarter resulted in an EBIT/kg WFE of USD 1.16. The biological performance continues to improve with the biological conversion ratio reaching 1.12 for the last 12 months. Its the lowest ever. Salmones Camanchaca had no farming sites classified as sea lice High Propagation Sites.
The strength of demand
Commenting on the performance of Salmones Camanchaca, vice chairman Ricardo García, said: "After two complex years, with a pandemic and a period of great drought and sunnier summer in Patagonia, today we once again register results consistent with the capabilities of Salmones Camanchaca, not very different from those achieved in 2018-2019. Perhaps what is extraordinary about this 2022 is that the limitations of world supply and the strength of demand have allowed salmon prices to cover the significant cost pressures that we have experienced due to inflation on supplies and services."
"Salmones Camanchaca continues to deploy its strategy of adjusting production and commercial plans to better adapt to the effects of possible climate change. Incorporating all risk mitigation practices and technologies, and developing main markets to come up with better solutions for our customers. These initiatives will mature in 2023, which will allow us to take a step forward in the use of our capabilities in 2024-2025," he added.