Hofseth Q2 profits up thanks to strong processing results
Norwegian salmon farmer Hofseth International has announced a 12% reduction in second quarter revenues due to lower sales in processing. Strong profitability in processing, however, also helped the company to record a higher operating profit.
Sales for Hofseth totalled NOK 1.456bn (£108m) against NOK 1.656bn (£124m) a year earlier.
The EBITDA (or operating profit) rose from NOK 149.4m (£11m) to NOK 168.6m (£12.5m), a year on year increase of 13% mainly due to a stronger performance in processing which more than offset a weaker performance in farming.
During the period, Hofseth successfully completed the acquisition of the remaining 50% of shares in Hauge Aqua Innovation Holding AS, now renamed Hofseth
Development AS, which holds six development licenses for the Egg closed pen technology.
The investment to double the harvest plant capacity was completed in May, and additional external harvest contracts s were secured for the second half of this year.
The company said that while farming revenues were relatively stable year on year, processing however saw lower sales compared to the previous year when elevated inventory destocking took place.
Raw material prices also acted as a brake on production during April before declining throughout the second quarter.
Farming generated total revenue of NOK 310.3m (£23m) where increasing harvest volumes offset a softening in sales prices.
Processing generated revenues came out slightly lower at NOK 1.345m (£100m) which was in line with the previous quarter but behind the same period last year.
It believes the pressure on salmon prices is expected to persist until the end of this year, adding that the processing division can benefit from this market dynamic and provide an attractive hedge against the Farming division’s weaker expected results.
The report adds: “Although labour constraints continue to be a key challenge for increasing the processing division’s volumes, Hofseth is actively working on recruitment and moving to double shifts.”
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