Cold and algal blooms hit NRS harvests and earnings

Norway Royal Salmon (NRS) today reported lower production and earnings for the second quarter of 2019 compared to Q2 2018, while at the same time increasing biomass by 26% year-on-year.

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Low temperatures and preventative measures against algal blooms were blamed for lower production in North Region, its main operating area. In its North and South regions, NRS harvested 5,830 tonnes, a 34% drop year on year and 700 tonnes fewer than guided in its Q1 2019 report.

Operational EBIT for Q2 2019 was NOK 116 million (£10.5m), a 36% drop compared to the NOK 181m made in Q2 last year. EBIT per kilo was NOK 23.95 (NOK24.39). 

Charles Høstlund: Pleased with the result in the north.
Charles Høstlund: Pleased with the result in the north.

Biomass up 26%

“We are pleased with the result for the quarter in our main region, Region Nord,” said chief executive Charles Høstlund in a stock exchange announcement. 

“Region South has harvested from the same locality as last quarter with announced high production cost. NRS will grow through sustainable growth, and the Group increased its biomass by 26% over the quarter compared to the end of the same quarter last year. 

“NRS had a good price achievement and the sales business had a good result in the quarter.”

Region Nord achieved operating EBIT in Q2 of NOK 136.2m against NOK 157.4m in Q2 2018. Operating EBIT per kilo was NOK 27.46 (NOK 24.73).

Volume adjusted

“Low sea temperatures in the Northern Region so far this year and preventative measures due to algal bloom have resulted in lower production, so that the expected harvest volume for 2019 has been adjusted down [by 3%] to 35,000 tonnes,” the company said.

This hasn’t stopped the company from continuing to increase its activity in Northern Norway. 

“We are now starting construction of our new smolt plant outside Tromsø,” said Høstlund.

“During the quarter, NRS purchased 50% of Northern Norway Smolt. The investment is in line with NRS’s strategy of greater control of this part of the value chain as well as producing larger smolt.”

4,962 tonnes in North

Region South achieved Q2 operating EBIT of NOK 3.4m against NOK 56.5m in the corresponding quarter of the previous year. Operating EBIT per kilo was NOK 3.95 compared to NOK 23.49 in Q2 2018.

NRS harvested a volume of 5,830 tonnes gutted weight in the quarter, 34% less than in Q2 last year. Most of the volume - 4,962 tonnes – came from the Northern Region, with 869 tonnes from the Southern Region.

The sales business sold 17,579 tonnes salmon during the quarter, which is 3% higher than in the corresponding quarter last year.

Payment of dividends and disbursements for growth investments in Arctic Offshore Farming and new fish farms, as well as the build-up of biomass in the sea, mean that net interest-bearing debt increased in the quarter to NOK 657m. Equity at the end of the quarter amounted to NOK 2,300m.