Norwegian cod-farming company Norcod reported an improvement in production costs in Q1 2024, as it also managed to secure an additional NOK 75 million (USD 7 million, EUR 6.5 million) in credit to fund future expansions.
The company reported its production costs reached NOK 39.75 (USD 3.73, EUR 3.46) per kilogram, down from NOK 42.42 (USD 3.98, EUR 3.70) per kilogram in Q1 2023. Its overall production costs totaled NOK 109.9 million (USD 10.3 million, EUR 9.6 million) in Q1 2024, down from NOK 142.6 million (USD 13.4 million, EUR 12.4 million) in Q1 2023, and its operating expenses reached NOK 166 million (USD 15.6 million, EUR 14.5 million), down from NOK 213 million (USD 19.9 million EUR 18.6 million).
“The decrease is mainly explained by lower harvest volume compared to the corresponding quarter last year, partly offset by additional cost base from structural changes in the group from the consolidation of Kråkøy slakteri from the second half of 2023,” the company said.
However, lower harvests reduced the company’s revenue to NOK 118.4 million (USD 11.1 million, EUR 10.3 million), down 5 percent from the NOK 125.1 million (USD 11.7 million, EUR 10.9 million) it posted in Q1 2023, the company said.
Even with the lower revenue, the lower costs reduced the company’s operating losses to NOK 48 million (USD 4.5 million, EUR 4.2 million), down from NOK 88 million (USD 8.3 million, EUR 7.7 million) in Q1 2023, but net losses increased from NOK 43 million (USD 4 million, EUR 3.7 million) in Q1 2023 to NOK 55 million (USD 5.2 million, EUR 4.8 million).
The company has a much larger biomass at sea than it did a year ago. As of Q1 2024, the company had 6,599 metric tons (MT) of farmed cod in the water, compared to 3,784 MT in Q1 2023. During the quarter, the company saw 1,586 MT of growth “amid heavy investments in biomass and a satisfactory feed conversion rate and stable and predictable mortality.”
The Q1 2024 report came soon after the company reported an additional NOK 75 million (USD 7 million, EUR 6.5 million) in credit from its main bank: DNB and Export Finance Norway.
“This additional credit of [NOK] 75 million truly shows that our main bank has strong belief in Norcod and our strategy on fine-tuning our biology, developing the market, and positioning our product in a premium niche category,” Norcod CEO Christian Riber said in a release. “DNB and Export Finance Norway are important partners to us, and I am excited and grateful for their commitment.”
Norcod CFO Arne Kristian Hoset added that Norcod worked throughout Q1 2024 to improve its financial capacity. In late February, the company had a successful NOK 169 million (USD 15.9 million, EUR 14.7 million) private placement, which saw investment from Canada-based seafood company High Liner Foods.
This additional credit of NOK 75 million comes on top of "investments in biomass, the cost-reducing value chain integration, and other financial measures that we have executed during the last 12 months,” Hoset said.
Norcod said the company has reached a point where it can provide stable deliveries of high-quality cod year-round – with weekly deliveries.
"Norcod’s vision, strategy, and long-term goals stand firm,” the company said. “Farmed cod is a proven part of the solution to providing the world’s growing population with a reliable, sustainable, and healthy protein source.”
The company has also begun to enter the Chinese market with its cod, which it said offers more attractive market opportunities for the company.
“The company’s key tasks at hand going forward are two-fold: Firstly, a continued vigilant focus on cod biology and fine tuning of the feeding regime, the production processes, and the utilization of production capacity,” Norcod said. “Secondly, stepping up efforts to develop the market and positioning our product in a premium niche category, with corresponding sales prices and contracts.”
