21 October 2022

Increased headwinds in Q4, a key trading period for Iceland Seafood

Consumers purchasing power is diminishing, sales volumes in key markets are below expectations negatively impacted by high prices

Outlook range for 2022 normalised PBT revised to €4.0-7.0m

Draft results for Q3 indicate a normalized PBT of €2.3m in the quarter, and €0.5m for first nine months of the year.  With salmon prices stabilizing the results of both Oceanpath in Ireland and Ahumados Dominguez in Spain were back at normal level in Q3.  Sales and margins of cod products in Spain stayed strong in Q3 and performance of the S&D division was good as well.  The outcome of the National Waters fishing season for Argentinian shrimp was worse than expected, total volume was 43% down compared to same time last year, impacted by bad weathers and disruptions in sourcing of raw material. 

Headwinds have increased in the start of Q4, which is a key trading period for Iceland Seafood.  There are signs that recession in Europe is impacting demand in key markets negatively.  Price of seafood has increased significantly, whilst at the same time the consumer’s purchasing power is diminishing due to increased energy prices and an overall high inflation.  Sales of IS Iberica have not been as strong during the first weeks of October as same time last year.  The important Rawson fishing season in Argentina starts in November. It is expected that the season will not be as strong as last year, both in terms of volume and value.  These factors have negative impact on the outlook for the S-Europe division for Q4.    

At the same time, sales of smoked salmon from Ahumados Dominguez are expected to increase driven by new accounts with both current and new customers, where the marketing campaign at end of 2021 is paying off.  The outlook for the important Christmas season in smoked salmon remains good for both Spain and Ireland, although it is uncertain to what extent the worsening economic situation will impact  demand and it also depends on stability in raw material prices. 

As previously announced, the IS UK operation is still loss making and is expected to be so for the remainder of the year, until reaching a breakeven level around mid-year 2023.  Important steps in the turnaround will be taken during Q4, with implementing of new processing machinery which will improve efficiency and support volume growth.  At the same time the management team in UK is focusing on growing sales with both current and new customers.  The results from key tenders with customers should become clearer in the coming weeks.

Based on a revised business forecast for Q4, the Outlook range for Normalised PBT is now revised to €4.0m – 7.0m, from previous range of €9.0-14.0m

Iceland Seafood will publish its 9M and Q3 2022 results after closing of markets on November 17th.  At the same day, at 4.15pm the company will host a meeting for investors and market participants, where management will present and discuss the results as well as giving further clarity on Outlook for Q4.  The meeting will be held at the company’s premises at Köllunarklettsvegur 2, 104 Reykjavík. The meeting will also be webcasted live in Icelandic, a link to the webcast and investors presentation will be provided before the meeting commence.

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