SalMar sees profits plunge in Q3, reduces 2024 harvest guidance due to "challenges at sea"

SalMar ASA has had another difficult quarter with profits dropping by more than half compared with the same period last year.

However, the company described its financial performance as "acceptable" in the face of significant biological challenges that impacted operations in Norway during Q3 2024.

“Despite challenges at sea, our structure has proven solid, enabling acceptable financial results. We remain focused on improving performance and maximizing value chain potential,” said CEO Frode Arntsen.

During Q3, SalMar achieved an operational EBIT of NOK 1082 million (EUR 92m / USD 98m) in Norway - a drop of more than half compared with last year's 2,300 million. Harvest volume in Norway also dropped significantly, reaching 56,400 tonnes compared with 74,000 tonnes - a decline of almost 24%.

Across the entire SalMar group, operational EBIT totalled NOK 1,041 million (EUR 89m / USD 94m), marking a whopping 54.7% decrease year-on-year.

Operational EBIT per kg saw steep declines, with a 41.4% drop group-wide and a 37.5% drop in Norway, highlighting increased costs and biological challenges impacting margins.

Despite lower harvest volumes, the company said its sales and industry segments delivered "historically strong" results, supported by an efficient operational setup and robust contract shares.

SalMar's Norwegian farming operations faced "biological challenges" during the quarter, the company reports, prompting SalMar to lower its 2024 volume expectations to 217,000 tonnes in Norway.

During the quarter, the company's offshore aquaculture joint venture, SalMar Aker Ocean completed its 2024 harvest with 6,900 tonnes, setting the stage for production cycles in Ocean Farm 1 and Arctic Offshore Farming, with harvesting planned for 2025.

Meanwhile, Icelandic Salmon's harvest forecast remains steady at 13,000 tonnes, and Scottish Sea Farms, SalMar's joint venture with Leroy Seafood Group, has increased its guidance by 3,000 tonnes, now expecting 40,000 tonnes, following increased harvest volumes, larger harvest weights, and stable biological conditions in Q3.

Overall, the group forecasts a total of 257,000 tonnes for 2024.

Looking ahead to 2025, SalMar anticipates a total harvest of 294,000 tonnes - a projected 14% increase from 2024. This includes 254,000 tonnes from Norway, 9,000 tonnes from SalMar Aker Ocean, 15,000 tonnes from Iceland, and 32,000 tonnes from Scottish Sea Farms.

Arntsen also announced SalMar has acquired a controlling interest in AS Knutshaugfisk, a small family-run salmon farming company in Central Norway. The deal includes 3,464 tonnes of MAB licenses and four farming sites. The transaction, subject to regulatory approval, is expected to conclude in January 2025.

The company’s long-term potential, factoring in new acquisitions and production expansions, is projected at 370,000 tonnes, Arntsen said.

“We are confident in our ability to overcome challenges and capitalize on our value chain potential. The measures we are implementing position us well for sustainable growth,” Arntsen added.

Following its 2023 acquisitions of NRS, NTS, and SalmoNor, SalMar said it has identified NOK 1.2 billion in potential cost savings across its value chain. These efficiencies, which it says are set to be realized by 2029, are to be driven by operational improvements and increased efficiency.

“The work ahead to further improve operations and increase efficiency in all parts of the company will make us even stronger going forward. We see strong demand for our products, and our job is to produce them as efficiently and sustainably as possible”, Arntsen said.