SalMar – Continuing the solid trend with strong operational and financial performance
Continued solid operational performance have led to strong results in the third quarter. Total Group operational EBIT was NOK 1,313 million and total harvest was 53,600 tonnes. This resulted in an operational EBIT of NOK 24.51 per kg.
Total operational EBIT for Norway for the third quarter was NOK 1,309 million (NOK 26.29 per kg).
Fish Farming Central Norway and Northern Norway continued to deliver solid results despite general cost inflation.
Sales and Industry had high levels of activity at its harvesting and processing plants and increased its results significantly from the previous quarter.
The underlying operational performance of the Icelandic operation was stable, but lower spot prices reduced the margins.
Upgrade of Ocean Farm 1 is progressing according to plan.
31st of October 2022 clearance was received from the European Commission for the acquisition of a majority of the shares in NTS ASA, and consequently also the merger between SalMar and Norway Royal Salmon ASA (NRS). As part of the transactions Arctic Fish to be sold for 115 NOK/share, NOK 1.9 billion.
Following completion of the transactions SalMar increases volume guiding in Norway with 5,000 tonnes to 180,000 tonnes for 2022. Volume guidance Iceland is kept unchanged and for Scottish Sea Farms the volume guidance is reduced with 8,000 tonnes.
In 2023 SalMar expects significant volume growth from 215,000 tonnes up to over 280 000 tonnes including its relative share in Scottish Sea Farms.
The Norwegian government proposed to introduce a resource tax on aquaculture of 40% with effect from the tax year 2023 for volumes above 4-5,000 tonnes MAB. A hearing is underway with feedback due in January 2023. If this proposal is adopted this will have major impact on the capacity for innovation and investments in the Norwegian aquaculture industry
Continued solid performance
“Our committed and highly skilled employees have continued to deliver solid operational performance in key areas, resulting in yet another quarter with strong results. The whole aquaculture industry is experiencing inflationary pressure, but we remain committed to our strategy, operating on the terms of the salmon and delivering products of excellent quality,” said SalMar’s CEO Frode Arntsen.
“Despite cost inflation on feed, Fish Farming Central Norway and Fish Farming Northern Norway continue to deliver solid results, driven by a consistently good operational performance. The operational performance is particularly impressive in Northern Norway, which posts yet another very good result”, Arntsen added.
Sales and Industry maintained a high level of activity through the quarter, reversing the negative effects of high contract share seen in the previous quarter.
- Through the third quarter, we have had a record high volume through our harvesting and processing facilities. And I am particularly pleased to see that the development in our new facility at Senja in northern Norway, InnovaNor, improves with each passing week. This strengthens our belief in our growth ambitions going forward, says SalMar's CEO Frode Arntsen.
Icelandic Salmon delivered solid performance, but results were affected by the lower spot prices compared with the previous quarter.
Robust platform for further sustainable growth, despite uncertainty caused by new resource tax proposal
For over 30 years, sustainable food production has been SalMar's hallmark, and the company has led the way for the development of a forward-looking Norwegian aquaculture sector. Despite an uncertain situation caused by the new tax system proposed by the Government, the strategic and operational for the transaction of NRS and NTS remains. The combination will strengthen the activities in the regions where we operate which are core regions in an industry where Norway is world leader.
The position has been created through creativity, effort and passion over decades, from employees, management and shareholders. We believe, in spite of a tax proposal creating uncertainty in this industry, that striving for continued sustainability, operational excellence, and efficient use of resources remains the best path to protect jobs and value creation in Norways most important export industry after petroleum. This is crucial for the further development of the industry and the supplier industry along the coast in Norway. This means that the Norwegian Government need to establish competitive framework conditions in an industry which has a large potential all over the world. Norway today accounts for around 50% of the global production of salmon and trout.
“In the light of the uncertainty surrounding the Norwegian government’s tax proposal, SalMar has decided to put future investments on hold. And has already cancelled investments. SalMar works actively with relevant actors to ensure that predictable framework conditions are put in place that do not inhibit the innovative power and value creation in the local communities of the aquaculture industry,” says SalMar’s CEO Frode Arntsen.
“The proposal that has been submitted for consultation involves an increase on the tax on seafood production, from 22 to 62 per cent. No other country has introduced a tax of this kind and at this level on its food production. Both level and structure will divert investments from aquaculture in Norway to other countries and other industries. This will strongly affect innovation power and investments on the Norwegian coast. The tax will mean a sharp confiscation of investment capital for innovation and industrial construction in both aquaculture as well as adjacent and other industries,” adds Arntsen.
Completion of merger with NRS and voluntary offer for shares in NTS
In October, the European Commission cleared SalMar’s acquisition of a majority of the shares in NTS ASA, and consequently also the merger between SalMar and Norway Royal Salmon ASA (NRS).
“The strategic and operational rationale linked to the transaction is still good, and even if the industry has to scale back and reduce other planned investments, the need for increased efficiency and economies of scale has now become even greater. We are therefore very happy to have completed this important transaction,” says SalMar's CEO Frode Arntsen.
In accordance to estimates from Kontali Analyse one expects low supply growth for Atlantic salmon in 2023.
Following completion of the transactions SalMar increases volume guiding in Norway with 5,000 tonnes to 180,000 tonnes for 2022. Volume guidance on Iceland is kept unchanged and for Scottish Sea Farms the volume guidance is reduced with 8,000 tonnes.
In the fourth quarter, costs are expected to be higher than in the third quarter. SalMar expects a contract rate of around 35 per cent in the fourth quarter 2022.
In 2023 SalMar expects significant volume growth following completion of the transactions with NRS, SalmoNor and NTS. SalMar expects to harvest 243,000 tonnes in Norway, 16,000 tonnes in Iceland and 43,000 tonnes in joint venture in UK.
The complete report and presentation for the third quarter is attached.
SalMar's CEO Frode Arntsen and CFO Ulrik Steinvik will present the company's results in Hotel Continental, Stortingsgata 24-26, Oslo, Norway today at 8am CET. The presentation will also be available on webcast on www.salmar.no.
For further information, please contact:
Frode Arntsen, CEO
Tel: +47 482 06 665
Ulrik Steinvik, CFO
Tel: +47 900 84 538
Håkon Husby, Head of Investor Relations
Tlf: +47 936 30 449
SalMar is one of the world's largest and most efficient producers of salmon. The
Group has farming operations in Central Norway, Northern Norway and Iceland, as well as substantial harvesting and secondary processing operations in Norway, at InnovaMar in Frøya, InnovaNor in Senja and Vikenco in Aukra. In addition, the company is operating within offshore aquaculture through the company SalMar Aker Ocean. SalMar also owns 50% of the shares in Scottish Sea Farms Ltd.
See www.salmar.no for more information about the company.
This information is subject to the disclosure requirements stipulated in section 5-12 of the Norwegian Securities Trading Act.