Kolding, Denmark-based salmon-processing firm Vega Salmon has posted its first profit in four years.
The company posted DKK 2.2 billion (USD 321 million, EUR 294.8 million) in revenue and DKK 67.7 million (USD 9.9 million, EUR 9.1 million) in gross profit between the 18 months stretching from July 2022 to the end of 2023. Its EBITDA during the period was DKK 19.5 million (USD 2.8 million, EUR 2.6 million).
Vega Salmon operates a salmon-processing plant in Handewitt, Germany, its head office in Denmark, and satellite sales offices in several other countries. In December 2022, it was acquired by Måløy, Norway-based Coast Seafood from Danish private equity fund Maj Invest Equity for an undisclosed sum.
“The new ownership supports the continuous growth of the company and, at the same time, brings even more focus on sustainability, value-chain optimization and automation, synergies, and strengthening Vega in being an attractive partner,” the company said in its financial results statement.
The firm’s Handewitt facility has a 25,000-metric-ton (MT) output of processed salmon products annually, including fresh and frozen salmon, cold-smoked salmon, hot-smoked salmon, marinated salmon, value-added products, and salmon off-cuts.
With a change in its financial reporting calendar that now entails closing its financial year to December from June, Vega Salmon said comparison to previous years is challenging, especially with the seasonality of its business.
Nevertheless, despite Vega’s improved result – achieved through better margins and improved product mix, with an increase in smoked salmon sales – its management still considers Vega’s performance lacking.
“The general increase in interest rates had a major impact on the result compared to last year, and adjusting for the different period under review, the impact for the period is close to DKK 20 million [USD 2.9 million, EUR 2.7 million],” it said. “Despite the positive result … the management does not consider the result satisfactory as it is beneath the expectations for the period and, in total, not honoring the change in the level of interest rates.”
Subsidiary Vega Sea, which encompasses most of Vega Salmon’s operations, posted DKK 2.2 billion (USD 321 million, EUR 294.8 million) in revenue and DKK 280.1 million (USD 40.9 million, EUR 37.5 million) in gross profit between the 18 months stretching from July 2022 to the end of 2023. Its EBITDA was DKK 57.4 million (USD 8.4 million, EUR 7.7 million).
Vega struggled in the spring of 2023 when the price for head-on gutted salmon increased significantly due to increased downgrading of fish, leading to a shortage of superior-grade salmon.
“This has challenged having a steady production flow throughout the year,” the company said. “Due to the volatile prices in salmon, market development in revenue in terms of value is not considered a fair view of the activity in the group, but more the focus on volume.”
To hedge against price volatility, Vega Salmon has increased its number of fixed-price contracts. It also pushed more of its production to the second half of 2024 and is seeking to strengthen its position in selected export destinations to capitalize on the group’s advantages in its quality and product range during the current limited availability of superior-grade salmon in the marketplace.
“We are continuously updating our sourcing strategy and cost picture, focusing on efficiency and offering alternative products to the market,” it said.
Vega Sea increased its receivables to DKK 100.5 million (USD 14.7 million, EUR 13.5 million) and its inventory value to DKK 59 million (USD 8.6 million, EUR 7.9 million). The improvement in the company’s balance sheet was primarily due to the move of its financial year to December, the end of its high season, from June, which is at the end of its low season.
Vega Sea expects to achieve ...
