Reykjavik-headquartered Iceland Seafood International (ISI) has announced it will exit the U.K. value-added market and close its Grimsby, U.K. operations.
Delivering its second-quarter 2022 results in August, ISI’s board confirmed it was reviewing the group’s strategy in the United Kingdom. At that time, it advised that the Iceland Seafood UK operation was loss-making in the period, with external challenges continuing to impact the business. Despite a strengthening of the local management team and the appointment of a new managing director at end of February, ISI said that it was clear that stabilizing the U.K. operations would take longer and cost more than previously estimated.
On 17 November, 2022, the group said it has now decided that it plans to exit the country’s value-added market entirely.
“Although it has been concluded that the U.K. operation is not a strategic fit for Iceland Seafood anymore, the excellent facilities and strong management team in Grimsby can be a great addition to other companies in the sector,” it said.
ISI’s Iceland Seafood U.K. branch invested in operating facilities in Grimsby and merged its operations from Bradford and Grimsby into this location, streamlining operations, it said.
“The investment and decision of the merger was completed in March 2020, just before COVID-19 started, and the renovation and installation of the factory was very much affected by COVID and later Brexit along with difficulties in overall operations,” it said.
The group’s overall Q3 results, also published on 17 November, showed its profitability rebounded in the period after a difficult first half of the year. The group generated a normalized profit before tax (PBT) of EUR 2.3 million (USD 2.4 million) in the quarter and EUR 500,000 (USD 519,000) in the first nine months of 2022, versus EUR 3.4 million (USD 3.5 million) and EUR 8.2 million (USD 8.5 million) in the corresponding periods of 2021.
Excluding results from Iceland Seafood U.K., ISI has revised its outlook range for 2022 normalized PBT to EUR 3 million (USD 3.1 million) to to EUR 5 million (USD 5.2 million).
ISICEO Bjarni Ármannsson said 2022 had turned into “a very challenging year,” characterized by a war in Europe, disruptions in value chains, high volatility in commodities, food prices, and capital costs.
“We are experiencing headwinds, which require difficult decisions to be made and sails to be adjusted to the change in winds. We believe in the future and that we are well-positioned in our key markets with well-run value-added operations in Europe. But we must adjust to a different reality and are therefore exiting the U.K. market from a value-added perspective,” Ármannsson said. “This is a difficult decision, but I believe it is the right one. We are committed to our main stakeholders and maintain our commitment to run a profitable business within the European value-added seafood industry. We see opportunities but realize that we must be rational – and careful in the very near future.”
ISI said salmon prices eased and stabilized in the period, aiding its performance in Ireland and at Ahumados Dominguez in Spain. ISI acquired a controlling stake in Ahumados Dominguez in 2021. ISI's Q3 report also showed whitefish prices remain at a very high level, but potentially peaking.
Due to the high prices, ISI's Value-Added Southern Europe division performed well during the first nine months of 2922 with sales up 19 percent year-on-year to EUR 163.1 million (USD 169.2 million).
In its Value-Added Northern Europe division, results in Ireland were back to a balanced level in Q3, but the U.K. operation continued to be loss-making. Consequently, its normalized loss before tax was EUR 9.2 million (USD 9.5 million) for the first nine months of 2022, compared with a loss of EUR 1.3 million (USD 1.3 million) for same period in 2021.
According to the report, ISI's Sales and Distribution division saw strong demand during Q3 and had an excellent first nine months of 2022. Its sales increased 14 percent during the period to EUR 132.1 million (USD 137 million), primarily driven by price increases. It sold 9 percent more groundfish but 21 percent less pelagic volume year-over-year.
“The situation in Ukraine is having an impact on pelagic sales," the company said. "Customers are not holding any stock inside Ukraine, which is causing significant logistic issues elsewhere."
However, ISI's sales of fresh fish have been good, both into Europe and the U.S. market, it said.
Photo courtesy of Iceland Seafood International
