SalMar has culled approximately 1.2 million salmon at its Ørnfjordbotn, Senja, Norway-based salmon farm after an inflex of jellyfish caused harm to fish housed at the site.
The company said it had a “threatening” influx of Apolemia uvaria, a type of string jellyfish that grows in colonies that can stretch up to three meters long. The jellyfish are venomous, with a sting that can be painful to humans and cause damage to salmon.
SalMar said at first there was an influx of the jellyfish that harmed and even killed some fish. As the numbers of jellyfish continued to increase, the company said it decided to cull all approximately 1.2 million salmon on the site for fish welfare reasons.
“Our staff worked together with people from an external emergency boat intensively on a 24-hour basis to deal with the acute and deplorable situation that arose due to this unusual and violent invasion,” SalMar said.
SalMar said the last jellyfish attack of this type and magnitude is rare, and that the last one of this scale happened 20 years ago.
“SalMar's contingency plans take account of such incidents, so that they are handled in a reassuring manner and with fish welfare as an important governing principle if they occur,” the company said.
It added that the incident will not have any impacts on SalMar financially, beyond the value of the destroyed fish, and it will also not have an impact on its current guided slaughter volume.
In addition to the jellyfish mortalities, SalMar reported it had a separate mortality incident at its salmon hatchery in Jøvika, Senja, Norway. The company said that the incorrect installation of barriers in a fish tank led fish to end up inside the equipment of the recirculating aquaculture system – including the biofilter and fish trap designed to catch any fish that enter the system.
SalMar said that roughly 200,000 salmon fry with an average weight of 7 grams made it through the barrier. The fish trap caught most of those that escaped, but approximately 200 fry that were not adapted to the sea ended up escaping.
The two mortality incidents come soon after the company released its Q3 2023 results, which showcased a strong operational performance, high earnings per kilogram, and much higher harvests.
The company said its harvests in Q3 2023 increased to 78,100 metric tons (MT), up from 53,600 MT in 2022. Those higher harvests came with higher operating income, reaching NOK 7.5 billion (USD 688 million, EUR 636 million), up from NOK 4.9 billion (USD 449 million, EUR 415 million) in Q3 2022.
The higher harvests and income also came with higher earnings. The company posted operational earnings before interest and taxes (EBIT) of NOK 2.3 billion (USD 211 million, EUR 195 million), a 75 percent increase over the NOK 1.3 billion (USD 120 million, EUR 111 million) it posted in Q3 2022. The increase in overall earnings also came with a higher EBIT per kilogram – the company saw an EBIT per kilogram of NOK 29.5 (USD 2.70, EUR 2.50) in Q3 2023 compared to NOK 24.5 (USD 2.24, EUR 2.07) in Q3 2022.
The company’s Farming Central Norway division posted a record-high harvest volume in the quarter, reaching 48,400 MT with an EBIT-per-kilogram of NOK 25.2 (USD 2.30, EUR 2.13). The division’s operating income reached NOK 3.8 billion (USD 348 million, EUR 322 million), up from NOK 2.5 billion (USD 229 million, EUR 212 million) in Q3 2022, and posted an operational EBIT of NOK 1.2 billion (USD 109 million, EUR 101 million), up from NOK 978 million (USD 89 million, EUR 83 million). The company said its harvest guidance for FY 2023 has been reduced to 144,000 MT, and that it is currently seeing good biological status at its farms.
SalMar's Farming Northern Norway division also had a strong operational performance, with a harvest of 25,700 MT in Q3 2023 with an EBIT-per-kilogram of NOK 33.8 (USD 3.09, EUR 2.86). The division’s operating income reached NOK 2 billion (USD 183 million, EUR 169 million), up from NOK 946 million (USD 86 million, EUR 80 million) in Q3 2022, and posted an operational EBIT of NOK 868 million (USD 79 million, EUR 73 million), up from NOK 428 million (USD 39 million, EUR 36 million). The company said its harvest forecast remains unchanged at 95,000 MT, even with the transfer of 4,000 MT of harvest stemming from merger of its Arctic Offshore Farming holding with SalMar Aker Ocean.
SalMar's Icelandic salmon farming division reported a relatively flat harvest volume of 4,000 MT in Q3 2023 – compared to 3,800 MT in Q3 2022. The slightly higher harvest came with a slightly worse EBIT-per-kilogram of NOK 8.7 (USD 0.79, EUR 0.73), down from NOK 10.20 (USD 0.93, EUR 0.86). Overall, the Icelandic division posted an operating income of NOK 476 million (USD 43 million, EUR 40 million), up from NOK 340 million (USD 31 million, EUR 29 million), and an operational EBIT of NOK 35 million (USD 3.2 million, EUR 2.9 million) – down year-over-year from NOK 39 million (USD 3.5 million, EUR 3.3 million).
SalMar Aker Ocean continued to see no income but posted a smaller loss in earnings. The company said its operational EBIT was a loss of NOK 8 million (USD 732,000, EUR 678,000), compared to its Q3 2022 loss of NOK 34 million (USD 3.1 million, EUR 2.8 million). The company currently has two semi-offshore projects in operation.
The company’s Scottish Sea Farms division, meanwhile, continues to struggle in 2023. It posted an operating income of NOK 867 million (USD 79 million, EUR 73 million) in Q3 2023, down from NOK 972 million (USD 89 million, EUR 82 million) in Q3 2022. The lower income was coupled with a worse operating EBIT, with the company posting a loss of NOK 121 million (USD 11 million, EUR 10 million).
SalMar said biological challenges have affected Scottish Sea Farms’ harvest size, costs, and price achievements, which is partially to blame for the losses, as its EBIT-per-kilogram was a loss of NOK 13.7 (USD 1.25, EUR 1.16) for each kilogram of fish. Incident-based mortality at its Scottish Sea Farms division, the company said, reached GBP 13.1 million (USD 16.5 million, EUR 15.3 million). Salmon production in Scotland as a whole has faced a bevy of challenges in 2023, including microscopic jellyfish invasions and record temperatures thanks to the El Niño weather-warming phenomenon.
The company also completed its sale of Frøy, which a subsidiary of Goldman Sachs purchased for NOK 6.6 billion (USD 604 million, EUR 559 million). SalMar said that with the sale, it saw a gain of NOK 363 million (USD 33 million, EUR 30 million).
The company said that the resource rent tax in Norway, which was initially set at a 40 percent tax rate but was later reduced to 25 percent through political agreements, is expected to have a NOK 1.12 billion (USD 102 million, EUR 95 million) impact on the company in the quarter, based on its best current estimates.
“SalMar remains strongly opposed to this the resource rent tax and has consistently cautioned against it,” the company said. “The tax relies on the incorrect assumption that aquaculture food production is a location-bound resource rent industry that consistently generates extraordinary returns disproportionate to the risk involved. The high tax level and the unfavorable design of the new tax are poised to withdraw a substantial portion of investment capital from the industry.”
For the year, SalMar is estimating the resource rent tax, including production tax, has cost it NOK 3.5 billion (USD 320 million, EUR 297 million).
Photo courtesy of SalMar
