"Frode Arntsen: 'Our focus is always forward... we must continue and strengthen the work SalMar has done since 1991.'" - Frode Arntsen
SalMar ASA (SALM.OL) Q4 2024 Financial Results: Navigating Challenges with Resilience and Strategic Growth
Executive Summary
In Q4 2024, SalMar ASA reported revenues of NOK 7.88 billion, reflecting a year-over-year decline of 1.78% amidst challenging biological conditions. Notably, gross profit rose to NOK 3.55 billion, achieving a 73.74% increase from the same period the previous year, driven by operational EBIT of NOK 1.49 billion, representing a strong recovery due to improved biological performance as the year progressed. CEO Frode Arntsen emphasized the commitment to continuously enhance operational efficiency amid ongoing biological challenges presented by jellyfish and sea lice, ensuring a robust response through strategic investment in fish welfare technologies. This steadfast approach anchors SalMar’s financial integrity, allowing for the proposed dividend of NOK 22 per share, underscoring confidence in maintaining value for shareholders as we enter fiscal 2025.
Key Performance Indicators
Revenue
7.88B
QoQ: 28.65% | YoY:-1.78%
Gross Profit
3.55B
45.11% margin
QoQ: 8.42% | YoY:73.74%
Operating Income
1.32B
QoQ: 12.22% | YoY:-24.02%
Net Income
1.00B
QoQ: 252.28% | YoY:-23.81%
EPS
7.60
QoQ: 245.45% | YoY:-24.00%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: NOK 7.88 billion (YoY: -1.78%, QoQ: +28.65%)
**Gross Profit**: NOK 3.55 billion (YoY: +73.74%, QoQ: +8.42%)
**Operating Income**: NOK 1.32 billion (YoY: -24.02%, QoQ: +12.22%)
**Net Income**: NOK 1.00 billion (YoY: -23.81%, QoQ: +252.28%)
**Gross Profit Margin**: 45.1%
Financial Highlights
Financial Performance:
- Revenue: NOK 7.88 billion (YoY: -1.78%, QoQ: +28.65%)
- Gross Profit: NOK 3.55 billion (YoY: +73.74%, QoQ: +8.42%)
- Operating Income: NOK 1.32 billion (YoY: -24.02%, QoQ: +12.22%)
- Net Income: NOK 1.00 billion (YoY: -23.81%, QoQ: +252.28%)
Balance Sheet Metrics:
- Total Assets: NOK 54.43 billion
- Total Liabilities: NOK 34.19 billion
- Total Equity: NOK 17.93 billion
- Debt to Equity Ratio: 1.06
SalMar’s capital structure is supported by healthy total equity, which increased as operational efficiencies improve despite fluctuations in biological performance impacting production costs and prices.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
7.88B
-1.78%
28.65%
Gross Profit
3.55B
73.74%
8.42%
Operating Income
1.32B
-24.02%
12.22%
Net Income
1.00B
-23.81%
252.28%
EPS
7.60
-24.00%
245.45%
Key Financial Ratios
currentRatio
1.73
grossProfitMargin
45.1%
operatingProfitMargin
16.8%
netProfitMargin
12.7%
returnOnAssets
1.84%
returnOnEquity
5.6%
debtEquityRatio
1.06
operatingCashFlowPerShare
$12.01
freeCashFlowPerShare
$8.27
priceToBookRatio
3.98
priceEarningsRatio
17.78
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Challenges and Strategic Initiatives:
- According to CEO Frode Arntsen, '2024 has been a challenging year... but it's encouraging to see improvements in biological performance.' The focus on locating large harvesting and processing capacities positions SalMar strategically to manage operational fluctuations.
Operational Metrics:
- In terms of harvest, SalMar reported 73,800 tonnes of salmon in total with operational EBIT margin of NOK 20.2 per kilo, reflecting sound operational execution despite external pressures. The operational EBIT for Norwegian operations alone was NOK 1.48 billion, an impressive margin compared to its peers.
Frode Arntsen: 'Our focus is always forward... we must continue and strengthen the work SalMar has done since 1991.'
— Frode Arntsen
Ulrik Steinvik: 'The financial position, however, remains robust and enables the realization of the group's operational and growth strategies.'
— Ulrik Steinvik
Forward Guidance
Management has indicated future growth potential driven by significant investments in improving fish welfare and operational innovations. The guidance for 2025 remains stable with unchanged volume targets across regions despite expecting lower volumes in Q1 due to optimized utilization of farming licenses. The market outlook also appears robust, with demand projected to remain high amidst low global supply growth, leading to favorable pricing conditions ahead. The management’s commitment to further increasing the share of contract volumes is a strategic maneuver to safeguard against market pricing fluctuations.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SALM.OL Focus
45.11%
16.80%
5.60%
17.78%
MOWI.OL
61.60%
27.90%
5.62%
9.83%
LSG.OL
54.90%
14.70%
8.05%
4.54%
BAKKA.OL
1.03%
42.30%
4.31%
12.35%
GSF.OL
61.50%
12.60%
-41.30%
-1.09%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given SalMar’s robust recovery trajectory in Q4, marked by increased operational efficiencies and strong market demand, the outlook for investors remains positive. The consistent dividend proposal underscores financial stability despite operational challenges. With strategic investments slated for 2025 aimed at improving harvesting efficiency and adaptability, SalMar presents a compelling case for both growth and resilience in the consumer defensive sector.
Key Investment Factors
Growth Potential
SalMar’s strategic focus on biological performance improvements through investments in technology like submerged laser treatments presents substantial growth potential for 2025 and beyond, aligning operational growth with sustainability.
Profitability Risk
Key threats include biological challenges such as jellyfish and sea lice, which have historically impacted production outputs and operational costs. Market volatility and regulatory changes in marine farming practices also pose ongoing risks for the company.
Financial Position
Despite the historical challenges during 2024, SalMar maintains a solid financial position with a robust equity base and reduced net interest-bearing debt, crucial for financing future growth initiatives.
SWOT Analysis
Strengths
Market leader in salmon farming with a stable operational structure
Strong commitment to biological performance and sustainability
Robust financial health and capital structure with significant liquidity
Weaknesses
Dependency on external environmental conditions and biological health of salmon
Price volatility associated with commodity seafood markets
Opportunities
Increasing global demand for sustainable seafood options
Expansion potential in high-performing markets like Scotland and Iceland
Threats
Increasing competition within the aquaculture sector
Environmental challenges and regulatory pressures related to marine farming practices