EPS of $6.22 decreased by 52.8% from previous year
Gross margin of 21.7%
Net income of 821.00M
""We care about the fish, the people, the customers, the environment and the local community that we are a part of."" - Frode Arntsen
SalMar ASA (SALM.OL) Q1 2024 Results: Navigating Challenges in a Dynamic Market
Executive Summary
SalMar ASA faced a challenging first quarter of 2024 characterized by adverse weather conditions, jellyfish infestations, and high biological costs that impacted yield and pricing. The company's revenue for the quarter was reported at NOK 6.555 billion, marking a year-over-year decrease of 3.49%. Despite these obstacles, operational EBIT was NOK 1.512 billion due to robust pricing, although it represented a significant decrease of 646 million from the previous quarter. Management emphasized their ongoing commitment to improve operational performance and fish welfare amidst these challenges. SalMar maintains a solid financial position with guidance unchanged for production volumes throughout 2024, affirming its ability to navigate through turbulent conditions successfully.
**Net Income**: NOK 821 million
- **YoY Change**: -52.65%
- **QoQ Change**: -37.70%
**EBITDA**: NOK 1.919 billion
**EPS**: NOK 6.23
**Gross Profit**: NOK 1.422 billion
Financial Highlights
### Financial Performance
- Revenue: NOK 6.555 billion
- YoY Change: -3.49%
- QoQ Change: -18.26%
- Net Income: NOK 821 million
- YoY Change: -52.65%
- QoQ Change: -37.70%
- EBITDA: NOK 1.919 billion
- EPS: NOK 6.23
- Gross Profit: NOK 1.422 billion
- Operating Income: NOK 1.615 billion
### Key Ratios
- Net Profit Margin: 12.5%
- Current Ratio: 2.04
- Debt-to-Equity Ratio: 0.736
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.56B
-3.49%
-18.26%
Gross Profit
1.42B
-60.40%
-30.46%
Operating Income
1.62B
2.54%
-7.18%
Net Income
821.00M
-52.65%
-37.70%
EPS
6.23
-52.77%
-37.70%
Key Financial Ratios
currentRatio
2.04
grossProfitMargin
21.7%
operatingProfitMargin
24.6%
netProfitMargin
12.5%
returnOnAssets
1.58%
returnOnEquity
4%
debtEquityRatio
0.74
operatingCashFlowPerShare
$8.52
freeCashFlowPerShare
$5.65
priceToBookRatio
4.38
priceEarningsRatio
27.38
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Operational Challenges: "It has been a demanding winter period... cold winter temperatures, extreme weather and several attacks from string jellyfish have left their mark on the result." - Frode Arntsen, CEO.
- Commitment to Improvement: "We have good control over the underlying operations... our desire to improve becomes even stronger."
- Production Guidance: "We continue to have a solid and robust financial position and we maintain our volume guidance for 2024 unchanged in all regions." - Frode Arntsen, CEO.
- Financial Efficiency Focus: "Despite the impact on financial results, SalMar’s strong focus on cost and continuous improvement efforts has contributed to a reduction in the underlying costs in the quarter." - Ulrik Steinvik, CFO.
"We care about the fish, the people, the customers, the environment and the local community that we are a part of."
— Frode Arntsen
"We will keep the volume guidance unchanged... it’s crucial for us to adapt to the challenges we have faced."
— Frode Arntsen
Forward Guidance
Management highlighted their focus on improving operational efficiency and mitigating biological risks while maintaining production volume guidance for 2024. SalMar’s emphasis on fish welfare, new vaccine introduction, and improvements in the value chain illustrate the company’s proactive approach to navigate future challenges. Investors should closely monitor the company's response to biological challenges, particularly regarding jellyfish impacts and production stability in Iceland and Northern Norway.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SALM.OL Focus
21.69%
24.60%
4.00%
27.38%
MOWI.OL
49.70%
18.70%
4.54%
13.06%
LSG.OL
11.50%
11.50%
2.46%
14.79%
BAKKA.OL
64.20%
23.90%
3.55%
15.93%
GSF.OL
12.00%
12.00%
-5.18%
-5.76%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
SalMar ASA presents a cautiously optimistic investment outlook despite recent challenges. While revenue and net income face pressure due to biological and market risks, the company's commitment to operational improvements and maintaining production guidance reflect sound management practices. Given the strong demand for sustainable salmon globally, investors should consider SalMar as a stable investment in the consumer defensive sector. The strong equity position and focus on innovation, such as the new vaccine and salmon living lab initiative, also indicate potential for long-term growth.
Key Investment Factors
Growth Potential
SalMar's existing licenses provide significant untapped potential, allowing for organic growth even in the face of limited global supply and increasing demand for sustainably sourced salmon.
Profitability Risk
Biological risks due to environmental factors, such as jellyfish attacks and extreme weather, could continue to impact yields and operational profitability.
Financial Position
SalMar maintains a strong financial position with current assets of NOK 16.077 billion and a robust equity ratio of 46%, indicating that it can withstand operational volatility and invest strategically.
SWOT Analysis
Strengths
Strong market position in the salmon farming industry.
Established brand reputation for quality products.
Solid financial foundation with a high equity ratio.
Weaknesses
Vulnerability to environmental and biological risks affecting production.
Recent decline in net income and profitability compared to previous periods.
Opportunities
Increasing global demand for sustainably sourced seafood products.
Potential for organic growth without significant capital investment than improving existing operations.
Threats
Potential increase in regulatory scrutiny around aquaculture practices.
Rising competition in the aquaculture industry, particularly from other salmon producers.