Norwegian aquaculture businesses see revenue grow but profit margins are tighter
The Norwegian aquaculture industry is seeing revenues continuing to rise, but profit margins are becoming squeezed. That is one of the key findings from financial consultant EY’s annual analysis of the sector.
The tenth edition of The Norwegian Aquaculture Analysis looks both forward and back. Its figures are based on reports for 2024.
The Production segment saw revenues continue to rise, but the EBITDA margin declined in 2024 to 21% compared with 29% in 2023. Broodstock and smolt production enjoyed a slightly better margin, at 32%.
The Technical Solution segment saw revenue growth of 5.9% in 2024 (2023: 2.4%)thanks to rising optimism and investment following the initial impact of the resource rent or “salmon” tax, with EBITDA margin at the highest level since 2016, 9.3%. The big winners in this sector were service vessel operators, EY notes.
The Biotechnology segment, including Feed, saw a big revenue growth spurt in 2023, of 18.8%,but slowed to 3.7% growth in 2024.Nonetheless, the sector racked up an all-time revenue high of almost NOK 65bn (around £5bn).
Overall, since 2015 the Norwegian aquaculture industry saw revenues increase by around 175% to NOK 434bn. This was not all due to increased production – measured by volume, the output from salmon farming increased by 20% to 1,649 tonnes in the same period.
The report concludes: “The past decade has shown strong growth in the Norwegian aquaculture industry, but the drivers behind this expansion are varied. While overall revenues have increased significantly, the picture is more nuanced; moderate volume growth, price volatility and rising production costs have shaped the performance of the farming operations.
Subsegments such as transportation on sea, fish health and consulting and services have successfully navigated this challenging landscape, benefiting from structural changes and high demand, while others, like cleaner fish providers, have faced steep declines. Margin pressure remains a challenge for sea farmers, reinforcing the need for cost efficiency and innovation.
Looking ahead, continued investment in technology, fish health solutions and operational improvements will be key to sustaining profitability and addressing ongoing biological and regulatory challenges.”
Looking to the future
The analysis predicts six key trends set to shape the coming decade:
1. An increasing mix of production technology, with “hybrid sites” incorporating land-based smolt facilities, closed containment at sea and open cages, all in close proximity to minimise handling, transportation and biological risk.
2. Consolidation will continue – among suppliers as well as producers.
3. Automation and AI will see further progress, moving on from systems simply reporting data towards fully automated, model-based operations.
4. “Circularity” will play an increasing part in aquaculture – especially in feed which will need to find more sustainable sources.
5. Transparency and trust will be key, with the ability to provide reliable data on factors like fish welfare and carbon emissions being seen as part of a producer’s licence to operate.
6. The increasing importance of long-term capital investment will mean that the view of financial risk will need to change, and companies with a strong balance sheet and good access to capital will enjoy a major advantage.
Launching the report, Eirik Moe, Leader, Nordic Private Assurance, commented: “The sea farming segment has long been the industry’s profit engine, but its margins and relative share in the value chain has dropped in recent years. Cost increase impacted by biological issues and fish mortality and a somewhat diverse landscape on salmon prices - partly due to high volumes- has put pressure on margins.
“However, land-based aquaculture and closed & semi-closed installations in the sea are experiencing promising results - biological and financial. Discussions are now on a new regulatory framework for aquaculture. This may accelerate these trends even further and hence performance across Norwegian aquaculture”
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