NRS misses high spot prices and posts lower Q2 results

The Norwegian headquarters of Trondheim, Norway Royal Salmon reported lower revenues despite higher revenues as fixed price contracts prevented the company from taking advantage of high spot prices for salmon.

Norway Royal Salmon reported operating profit before interest and taxes (EBIT) of NOK 31.7 million (USD 3.2 million, EUR 3.2 million) for the second quarter of 2022, down from NOK 94 million ( USD 9.5 million, EUR 9.5 million) it earned in the corresponding period of 2021. However, the producer’s revenue increased from approximately NOK 1.4 billion (USD 141 million, EUR 141.3 million) to NOK 1 .7 billion (USD 171.2 million, EUR 171.5 million).

NRS’ Q2 2022 interim report showed a decline in Q2 operating EBIT due to low harvest volumes and a loss on open fixed-price contracts compared to the Fish Pool’s price level of 131 million NOK (USD 13.2 million, EUR 13.2 million). Only 12 percent of the fish harvested by NRS Farming was sold on the spot market in the second quarter.

At the same time, overheads nearly tripled to NOK 56.8 million (USD 5.7 million, EUR 5.7 million) in the second quarter, largely as a result of culling fish in two cages for fish welfare reasons.

“The second quarter of 2022 was a quarter with record salmon prices. NRS harvested a low volume and as announced in the previous quarterly presentation we therefore have an unusually high share of Norwegian volume on fixed price contracts,” said Charles Høstlund, CEO of NRS: “The price realization compared to the spot price has therefore been low and this has a major impact on the result in this quarter.”

NRS’ Farming business harvested 4,471 metric tons (MT) of gutted salmon in the quarter, a 54 percent year-over-year decline, while total volume sold in the quarter was 16,434 MT, down from 20,559 MT in the second quarter. quarter of 2021 .

NRS’ Farming Norway division saw its operating EBIT decrease from NOK 96.3 million (USD 9.7 million, EUR 9.7 million) to NOK 34.8 million (USD 3.5 million, EUR 3.5 million), and operating EBIT per stripped kilogram increased to NOK 48.16 (USD 4.65, EUR 4.66), compared to NOK 12.49 (USD 1.26, EUR 1.26) in the corresponding quarter of 2021.

In the quarter, the segment acquired new production capacity through the Norwegian traffic light system, which provided additional salmon farming capacity in 2022 – and increased the maximum allowable biomass from 36,085 tons to 36,455 tons.

Operating EBIT of NRS’ Farming Iceland division more than doubled to NOK 37.9 million (USD 3.8 million, EUR 3.8 million), and operating EBIT per kilogram of stripped weight quadrupled to NOK 36.84 (USD 3 .71, EUR 3.72).

For 2022, the group’s total harvest volume is expected to be 40,600 tons, a decrease of 18 percent compared to 2021.

In the second quarter, NRS’ sales segment sold 18 percent less than in the second quarter of 2021 at 15,405 tons. The segment had an operating EBIT before open contracts with a fixed price of NOK 20.7 million (USD 2.1 million, EUR 2.1 million), an increase of NOK 3.7 million (USD 372,521, EUR 373,318) in the second quarter of 2021. This corresponded to NOK 1.35 (USD 0.14 , EUR 0.14) per kilogram sold in the period.

NRS sales volumes to Eastern Europe declined 23 percent in the quarter, to Asia by 38 percent and to Western Europe by 4 percent. Volumes sold in Norway were down 53 percent in the quarter.

In the first quarter of 2022, Western Europe accounted for 83 percent of NRS’s export volumes, Asia for 11 percent and Eastern Europe for 6 percent. The domestic volume in Norway amounted to 11 percent of the total volume sold.

In the second quarter of 2022, Norway’s Royal Salmon confirmed that it will proceed with the acquisition of SalmoNor AS and merge with SalMar ASA. Høstlund said the merger plan between NRS and SalMar was approved at both general meetings.

“These are companies with clearly complementary activities in Norway, Iceland and via offshore aquaculture. There is therefore a solid industrial rationale for the merger and significant synergy potential,” he said. “By smolting from our own smolt plant and phasing out sterile fish, NRS expects to gradually deliver more competitive production costs and fewer biological challenges in the future. So the foundation is there and the merger provides an even stronger basis for value creation and employment in the areas where NRS is active.”

For the first half of 2022, the group posted an operating income of more than NOK 3.3 billion (USD 332.2 million, EUR 333 million), compared to almost NOK 2.8 billion (USD 281.9 million, USD 282.5 million). EUR) in H1 2021. Operating EBIT for the period increased from NOK 153.9 million (USD 15.5 million, EUR 15.5 million) to NOK 165 million (USD 16.6 million, EUR 16.6 million). The agricultural segment harvested 18,829 tons, down from 25,119 tons, and posted a higher EBIT per kilogram of NOK 19.61 (USD 1.97, EUR 1.98).

NRS owns 36,455 MT MAB for salmon farming in Troms and Finnmark, and 21,800 MT maximum allowable biomass for salmon farming and 5,300 MT maximum allowable biomass for trout farming in Iceland through Arctic Fish company. In addition, the group has a minority interest in two associated Norwegian fish farming companies that together hold nine fish farming licenses.

Photo Courtesy of Norway Royal Salmon

Leave a Comment

%d bloggers like this: