Royal Greenland aims for turnaround after "an unsatisfactory year" in 2023

The Greenlandic state-owned seafood giant mounts a "turnaround project" to slash costs after its pre-tax loss of DKK 255 million last year.
The year of 2023 was "one of the most challenging in our long history," says Royal Greenland Chair, Maliina Abelsen.

The year of 2023 was "one of the most challenging in our long history," says Royal Greenland Chair, Maliina Abelsen.

Photo: Royal Greenland.

2023 was a highly disappointing year for Royal Greenland, after a cocktail of factors led to a dramatic reversal of fortunes for the state-owned seafood giant.

In its annual report for 2023, the company reported a loss before tax of DKK 255 million (USD 36.8 million / EUR 34.2 million), compared with its anticipated DKK 250 million profit. Net revenue remained at DKK 5.8 billion (USD 837 million / EUR 777 million).

The company is now mounting a "turnaround project" in 2024 to get back on track, and promises to slash costs by a "three-digit DKK-million amount".

Calling the year "undoubtedly... one of the most challenging in our long history," Royal Greenland Chair Maliina Abelsen continued: "Our journey through 2023 has been characterised by global upheavals that have tested our resilience and adaptability."

"The ongoing geopolitical turmoil, escalated by conflict and war, has sent tremors through the world economy, which for us has meant navigating the waters of inflation and rising production costs. These challenges have affected every facet of our business, from capture to end customer, and have required extraordinary efforts from our entire team," Abelsen added.

A cocktail of factors, including lower market demand and Russia's invasion of Ukraine

Key challenges included economic stagnation in Europe affecting consumer behavior and reducing demand for luxury items like cooked and peeled prawns, and market pressure from Russian cod imports to Europe, leading to falling prices.

The company also said loss of access to the Russian market for shell-on prawns -- previously the world's second largest market -- as well as a collapse in U.S. market demand for king crab and seabass, had made a significant impact on its earnings.

The company suffered a further setback in Chile, making "a considerable loss" after it lost approval from China to export its crab there.

All of this was combined with rising direct costs over the past two years, largely due to inflation, high interest rates and energy expenses.

Record pelagic fishing result and improved U.S. snow crab market, bright spots in an otherwise difficult year

However, it was not all bad news for Royal Greenland in 2023, as the company had a few positive developments to report. These included an "normalised" U.S. snow crab market in 2023, after its collapse in 2022.

Meanwhile, the company's pelagic fishing activities achieved "record performance", and delivered the best result in Royal Greenland's history.

The company also gained an ocean-going cod quota in East Greenland, however it was unable to use its entire quota since this was allocated late in the fishing season.

From 2024, the company intends to fully utilise the quota, and says it is constructing a processing plant in Tasiilaq to increase the coastal activity in East Greenland.

Royal Greenland aims to save millions in cost-cutting "turnaround project"

The company now plans to adjust its strategy and business model through a "turnaround project" during 2024, with a new business plan aimed at significantly reducing costs and increasing efficiency.

"A turnaround project has been launched, with the objective of reducing the cost base by a three-digit DKK-million amount," the company noted in its annual report.

"Since the main task in 2024 is to re-establish earnings, with focus on reducing the cost level, 2024 is viewed as a transition year, to bring earnings back up to previous levels."

Royal Greenland anticipates a 3% revenue increase to DKK 6.0 billion in 2024, with profits ranging from DKK 75 to 150 million. The improvement will mainly be driven by core Greenlandic species, with losses experienced in Chile during 2023 not expected to recur, the company said.

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