Challenges in the First Quarter for Icelandic Salmon
Icelandic Salmon stands as the parent company of Arnarlax, leading the charge in salmon farming and processing in Iceland. This conglomerate, known as the "Group," encountered unexpected biological hurdles during the initial quarter of the year, significantly impacting operations.
To uphold animal welfare, early harvesting was undertaken, resulting in lower-than-average weights for the fish processed. This proactive approach aimed to mitigate mortality-related costs, which unfortunately escalated due to market pressures stemming from increased global supply and diminished prices.
The operating income for this quarter totaled EUR 10.4 million, plummeting from EUR 27.5 million in the same period of the previous year. Regrettably, operational EBIT fell to negative EUR 3.0 million, reflecting a stark decline compared to the negative EUR 0.5 million recorded last year. The EBIT per kilogram concluded at negative EUR 2.68, diverging from the negative EUR 0.20 observed in the first quarter of the previous year. When adjusted to exclude mortality-related one-offs, the EBIT per kilogram turned out to be negative EUR 1.22.
CEO Björn Hembre addressed the situation, stating, "We faced biological setbacks this quarter at some sites. Our team responded early to safeguard animal welfare, which meant harvesting fish at lower weights. Low harvest volumes and tougher global markets impacted our first quarter results. We will continue to build biomass as planned and remain on track for a stronger second half of 2025." This resilience signals their commitment to navigating through the idiosyncratic challenges.
Operational Insights
In the first quarter of 2025, Icelandic Salmon managed to harvest 1,100 tonnes of salmon, a sharp decline from the 2,800 tonnes harvested in the same quarter last year. This decrease correlates with the early harvesting strategy alongside the Group’s strategic imperative to enhance biomass levels. Mortality-related costs surged to EUR 1.6 million, emphasizing the delicate balance the company must maintain in its operations.
Despite these hurdles, smolt operations thrived, ensuring the Group remains on track to move a record number of smolt to sea this year. The harvest plant's capacity was carefully aligned with the planned production, demonstrating a strategic response to adjust operations in line with their goal of increasing biomass.
Strategic Development Initiatives
The Group is working diligently with local authorities to restore a license for 10,000 tonnes Maximum Allowable Biomass (MAB) of sterile salmon in Ísafjarðardjúp. Revoked in 2024, this license is crucial for improving operations. Their expansion strategy includes larger sites that promise better MAB utilization, along with a 4,500-tonne application for another site under review.
Investment during this quarter clocked in at EUR 4.4 million, primarily earmarked for preparing for the anticipated biomass buildup at sea. This proactive investment demonstrates the Group's commitment to long-term growth despite short-term challenges.
Market Outlook and Future Prospects
Icelandic Salmon is experiencing sustained demand for its products, despite the quarter being clouded by heightened global supply and reduced prices, particularly for smaller fish. The price achievements were adversely affected, influenced by size mix and general market conditions.
While North America remains a significant market, the lower average weight of salmon has led to reduced sales volumes in this region, while sales to Europe have risen. It is noteworthy that the company has not seen a significant impact from U.S. tariffs, although uncertainties linger regarding long-term effects.
Looking to the future, the Group has maintained its 2025 harvest volume guidance at 15,000 tonnes. Although the initial half of the year may continue to wrestle with low volumes and stretched costs, a turnaround is anticipated in the latter half of 2025, reigniting optimism for both the company and its stakeholders.
Conclusion
The presentation reflecting the first quarter of 2025's results is available and underscores the commitment of CEO Björn Hembre and CFO Jónas Heiðar Birgisson to ensuring transparency with their investors and stakeholders.
For further inquiries or arrangements for meetings, potential investors and interested stakeholders can engage via prescribed contact details for Icelandic Salmon, including reaching out to their executive team members for more personalized communication.
Frequently Asked Questions
What challenges did Icelandic Salmon face in the first quarter?
Icelandic Salmon encountered biological challenges that led to early harvesting, resulting in lower average weights and increased mortality-related costs.
How much was the company's operational income?
The operational income for the first quarter was EUR 10.4 million, down from EUR 27.5 million the previous year.
What is the company's plan for biomass?
The Group aims to build up biomass as planned, anticipating a stronger second half for 2025 despite current challenges.
What is Icelandic Salmon's market condition?
The company maintains solid demand for its products, although it has faced reduced prices due to increased global competition.
What are the future prospects for Icelandic Salmon?
Looking ahead, the company maintains its harvest volume guidance of 15,000 tonnes for 2025, with expectations of improvement in market conditions later in the year.
