SalMar increases second-quarter earnings amid high salmon prices

Record high salmon prices and a solid operational performance helped Frøya, Norway-headquartered SalMar to total second-quarter 2022 operational earnings before interest and taxes (EBIT) of NOK 1.048 billion (USD 108.9 million, EUR 108.2 million), up from 661 million (USD 68.7 million, EUR 68.2 million) in Q2 2021.

SalMar’s Norwegian operations achieved an operational EBIT of NOK 952 million (USD 99 million, EUR 98.3 million) for the period, compared with NOK 633 million (USD 65.8 million, EUR 65.3 million) a year previously.

The company's EBIT was partially impacted by the settlement of a lawsuit in North America, which cost the company NOK 164 million (USD 16.77 million, EUR 16.73 million). The settlement was related to a class-action lawsuit alleging collusion between Norwegian salmon-farming firms. 

SalMar's Q2 2022’s operating revenues exceeded almost NOK 4.17 billion (USD 433.6 million, EUR 430.5 million), up over NOK 1 billion (USD 103.9 million, EUR 103.2 million) year-on-year, while the harvest totaled 32,400 metric tons (MT), compared with 36,600 MT a year previously. The operational EBIT-per-kilogram increased to NOK 32.35 (USD 3.36, EUR 3.34).

“Our consistent and relentless efforts to operate on the terms of the salmon, and with sustainability mindset in everything we do, have again proved to be a successful recipe," SalMar CEO Linda L. Aase said.

Regionally, Fish Farming Central Norway, the group’s largest business segment, harvested a total of 20,700 MT of salmon in the last quarter – some 300 MT less than in Q2 2021 – and generated operating income of almost NOK 2.1 billion (USD 218.2 million, EUR 216.8 million), compared with NOK 1.3 billion (USD 135.1 million, EUR 134.2 million) previously.

SalMar's Fish Farming Northern Norway division harvested 8,700 MT of salmon in the last quarter, which was 4,600 MT less than in Q2 2021, with its operating income rising NOK 81 million (USD 8.4 million, EUR 8.4 million) to NOK 917 million (USD 95.2 million, EUR 94.6 million). the Fish Farming Central Norway and Fish Farming Northern Norway divisions are expected to harvest 117,000 MT and 58,000 MT, respectively, in 2022.

SalMar's Icelandic Salmon harvested 3,000 MT of salmon in Q2 2022, compared with 2,300 MT a year previously. Its operating income totaled NOK 349 million (USD 36.2 million, EUR 36 million), up from NOK 182 million (USD 18.9 million, EUR 18.8 million). It achieved an operational EBIT of NOK 135 million (USD 14 million, EUR 13.9 million), which was more than four times that of Q2 2021. Icelandic Salmon is expected to harvest 16,000 MT in 2022.

SalMar’s joint venture, Norskott Havbruk (Scottish Sea Farms), harvested 9,500 MT of salmon in the quarter, compared with 11,400 MT in Q2 2021.

"Our financial results were of course also supported by high salmon prices in the market, although this fortunate market situation weakens the financial results in Sales and Industry due to profitability on contracts,” Aase said.

SalMar’s Sales and Industry segment, which sells all the fish that the group harvests in Norway, generated higher revenues of NOK 3.9 billion (USD 404.8 million, EUR 402.2 million) in the last quarter. The unit’s operational EBIT represented a loss of NOK 781 million (USD 81.1 million, EUR 80.6 million), compared with a loss of NOK 136 million (USD 14.1 million, EUR 14 million) in Q2 2021. The losses largely stemmed from high salmon spot prices reducing profitability on contracts.

The group’s newest segment, SalMar Aker Ocean, posted a loss on its operational EBIT of NOK 39 million (USD 4 million, EUR 3.9 million) in the quarter, though it reported an upgrade of its Ocean Farm 1 design is progressing according to plan. The unit is currently at Aker Verdal for maintenance upgrades and its next production cycle is planned to commence in spring 2023.

Overall, for the first six months of 2022, SalMar generated a gross operating income of almost NOK 8.9 billion (USD 924.2 million, EUR 918.4 million), up from NOK 6.4 billion (USD 664.8 million, EUR 660.4 million) in the first half of 2021. Excluding Norskott Havbruk, the group harvested 77,400 MT in the first six months of this year. In the same period last year, it harvested 73,500 MT.

The price of salmon for H1 2022 averaged NOK 92.92 (USD 9.65, EUR 9.59) per kilogram, compared with NOK 58.07 (USD 6.03, EUR 5.99) per kilogram in H1 2021.

SalMar’s operational EBIT for the first six months of this year climbed to NOK 2.1 billion (USD 218.2 million, EUR 216.7 million) from NOK 1.3 billion (USD 135.1 million, EUR 134.2 million) in the first-half of 2021. This gave an operational EBIT-per-kilogram of NOK 27.71 (USD 2.88, EUR 2.86), compared with NOK 17.54 (USD 1.82, EUR 1.81) in H1 2021.  

Photo courtesy of SalMar