SALMAR POSTS SATISFACTORY RESULTS IN THE FOURTH QUARTER 2020
SalMar posts satisfactory results in the fourth quarter 2020 and recommends a dividend of NOK 20 per share.
Highlights in the fourth quarter:
- Operational EBIT of NOK 413.8 million, EBIT per kg of NOK 9.50.
- Fish Farming Central Norway and Fish Farming Northern Norway post satisfactory results based on a good biological and operational performance.
- Low salmon prices and a challenging market affected the results for Sales & Processing.
- Positive cost development for Icelandic Salmon, with a significantly lower production costs for the fish harvested. However, a challenging market with low salmon prices resulted in an operating loss.
- Guiding for 2021 maintained at 163,000 tonnes in Norway and 14,000 tonnes in Iceland.
- The board of directors recommends a dividend of NOK 20 per share for the 2020 financial year.
- Strengthens strategic focus on offshore fish farming for sustainable growth on the salmon’s terms.
Satisfactory result despite a challenging market
SalMar is celebrating its 30th anniversary, and can look back on three decades of fantastic results. The company has grown to be one of the world’s largest aquaculture companies and has unwavering faith in its capacity for further growth. Despite a challenging market, with global uncertainty and low salmon prices, the company has completed yet another strong year.
In the fourth quarter 2020, SalMar ASA made an Operational EBIT of NOK 413.8 million. Operational EBIT for the year as a whole totalled NOK 3 billion. The company’s Norwegian operations posted an Operational EBIT of NOK 433.5 million in the fourth quarter and NOK 3,058 million in 2020 as a whole. This corresponds to an increase of 3 per cent on 2019.
– 2020 has been a challenging year, characterised by significant uncertainty for the aquaculture industry. This uncertainty was also evident in the fourth quarter. At the start of the year, few people would have dared to hope that we would post a 2020 operational result that was as good as the year before. Nevertheless, through a strategic and operational focus, as well as employees who have demonstrated a formidable ability to adapt to new working practices, we have done just that,” says SalMar’s CEO Gustav Witzøe.
SalMar harvested a total of 43,600 tonnes in the fourth quarter 2020, compared with 40,300 tonnes in the same period the year before. Operational EBIT per kg came to NOK 9.50 in the fourth quarter, down from NOK 16.31 per kg in the fourth quarter 2019. The decrease in Operational EBIT per kg is attributable largely to a 25 per cent lower average salmon price in the fourth quarter 2020 compared with the same period the year before. EBIT per kg for 2020 as a whole came to NOK 18.62, down just NOK 1.42 per kg from 2019.
Biological and operational performance remains good
Fish Farming Central Norway once again posted a solid result, and reaped the rewards of sound operations and a good biological performance. The autumn-2019 generation accounted for the entire volume harvested during the period. In the first quarter 2021, the segment will finish harvesting the autumn-2019 generation and start harvesting the spring-2020 generation. The biological performance of both generations has recently proved to be good. In the year’s first quarter, costs are expected to remain at similar levels, while the volume harvested will be slightly lower than in the quarter before. SalMar expects Fish Farming Central Norway to harvest 107,000 tonnes of salmon in 2021.
Fish Farming Northern Norway continues its positive trend and posted satisfactory results in the fourth quarter 2020. 80 per cent of the volume harvested derived from fish transferred to sea farms in the spring of 2019, a generation that has had strong biological performance and contributed to lower costs at harvest. SalMar started harvesting the autumn-2019 generation in the fourth quarter 2020, and will continue doing so in the first quarter 2021. This generation has also demonstrated a good biological performance. In the first quarter 2021, the segment expects slightly higher costs and a substantially lower harvested volume compared with the quarter before.
For the Sales and Processing segment, the fourth quarter was characterised by a high degree of uncertainty in the market as a result of the Covid-19 pandemic. Nevertheless, the segment posted a satisfactory Operational EBIT of NOK 73 million in the period. For 2020 as a whole, the segment posted a strong performance with an Operational EBIT of NOK 282 million, up from NOK 124 million the year before.
2020 proved to be a difficult year for Icelandic Salmon, which experienced substantial challenges at the start of the year. The company started harvesting the 2019-generation in the fourth quarter 2020. These fish have a substantially lower cost at harvest. Nevertheless, low price achievement led to an operating loss in the period. The company is drawing on the lessons learned in the year now past, and is optimistic with respect to 2021, a year in which the biological status of the fish held at its sea farms is significantly better.
The coronavirus and the associated public health measures that have been implemented worldwide to limit its transmission have prompted greater uncertainty in the market. However, SalMar is well equipped to handle such crises, since it has a high degree of financial flexibility and the capacity to process products locally before shipping them worldwide. A small number of employees tested positive for the virus towards the end of 2020, but good contingency plans and a robust response helped ensure that the infection did not spread.
SalMar’s board of directors considers that the company has a solid foundation for continued positive development, both within its offshore and coastal operations. The company is continuing to pursue its ongoing investment programmes to secure development of an already robust platform for further growth.
SalMar still expects to harvest a total of 163,000 tonnes in Norway and 14,000 tonnes in Iceland in 2021.
Strengthened focus on offshore fish farming
SalMar’s focus on offshore fish farming is well known and continues the company’s tradition of developing and utilising new technologies and new solutions. In January 2021, an application for permission to operate the world’s first fish farm in the open ocean, Smart Fish Farm, was submitted to the Norwegian Directorate of Fisheries. The establishment of salmon farming in the open ocean is an important element in SalMar’s strategy for sustainable growth. This endeavour is described in more detail in a separate stock market notice/press release published today.
Secured new sustainability linked financing
To strengthen financial flexibility and further strengthen the company’s focus on sustainability, SalMar has in the beginning of 2021 refinanced its existing credit facilities. The company has increased its overdraft facility and at the same time entered into an agreement on a new sustainability linked credit facility, an agreement that has four ESG KPI’s linked to it.
– Through the new facilities, we strengthen our financial flexibility and at the same time strengthen our focus on sustainability. The agreement focuses on four of our most important KPIs where all of them pulls us in an even more sustainable direction, says CFO & COO Trine Sæther Romuld.
In the past few quarters, SalMar has demonstrated its ability to adapt to changing market conditions by posting strong results and maintaining a solid financial position. On this basis, the board of directors is recommending that a dividend of NOK 20 per share be paid for the 2020 financial year.
The complete report and presentation for the fourth quarter 2020 is attached.
SalMar’s CEO Gustav Witzøe and CFO & COO Trine S. Romuld will begin presenting the company’s results at 8am CET via a webcast on www.salmar.no