EPS of $2.16 decreased by 54.3% from previous year
Gross margin of 53.5%
Net income of 285.00M
""We have been through a challenging period, particularly related to ripple effects of jellyfish, high sea temperatures and high lice levels."" - Frode Arntsen
SalMar ASA's Q3 2024 results reflect a resilient response to significant biological challenges, notably jellyfish blooms, high seawater temperatures, and sea lice pressures. The company reported a revenue of NOK 6.1 billion, despite a year-over-year decline of 18.5%. Profitability faced substantial pressure, with net income plummeting to NOK 285 million, a staggering decrease of 71.4% compared to the previous year. Management highlighted the necessity for operational adaptability ensuring fish welfare while navigating a complex external environment. Forward-looking statements indicate a cautious optimism, with a focus on volume recovery and strategic acquisitions to bolster future growth.
Key Performance Indicators
Revenue
6.12B
QoQ: 4.86% | YoY:-18.50%
Gross Profit
3.28B
53.53% margin
QoQ: 135.25% | YoY:-31.05%
Operating Income
1.18B
QoQ: -28.86% | YoY:-55.56%
Net Income
285.00M
QoQ: -66.78% | YoY:-71.36%
EPS
2.20
QoQ: -66.15% | YoY:-54.26%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: NOK 6.1 billion (YoY: -18.5%, QoQ: +4.9%)
**Gross Profit**: NOK 3.3 billion (YoY: -31.1%, QoQ: +135.3%)
**Operating Income**: NOK 1.1 billion (YoY: -55.6%, QoQ: -28.9%)
**Net Income**: NOK 285 million (YoY: -71.4%, QoQ: -66.8%)
**EBITDA**: NOK 1.5 billion
Financial Highlights
### Key Financial Metrics
- Revenue: NOK 6.1 billion (YoY: -18.5%, QoQ: +4.9%)
- Gross Profit: NOK 3.3 billion (YoY: -31.1%, QoQ: +135.3%)
- Operating Income: NOK 1.1 billion (YoY: -55.6%, QoQ: -28.9%)
- Net Income: NOK 285 million (YoY: -71.4%, QoQ: -66.8%)
- EBITDA: NOK 1.5 billion
- EPS: NOK 2.20 (YoY: -54.3%, QoQ: -66.2%)
- Current Ratio: 1.634
- Total Assets: NOK 54.9 billion
- Total Liabilities: NOK 35.5 billion
- Net Debt: NOK 19.7 billion
### Analysis of Changes
SalMar's year-over-year decline in revenue is primarily attributed to biological challenges impacting growth and increased operational costs. The significant operational EBIT drop was mitigated by a favorable contract price achievement amidst lower spot prices, thus preserving profitability margins despite operational challenges. The favorable operational EBIT margin of NOK 17.3 per kilo illustrates price resilience despite volume declines.
Management is focused on strategic investments and acquisitions that underpin operational efficiency and long-term growth potential. Adjustments to volume guidance for 2024 indicate a need for operational caution while fostering biological stability and market competitiveness.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.12B
-18.50%
4.86%
Gross Profit
3.28B
-31.05%
135.25%
Operating Income
1.18B
-55.56%
-28.86%
Net Income
285.00M
-71.36%
-66.78%
EPS
2.20
-54.26%
-66.15%
Key Financial Ratios
currentRatio
1.63
grossProfitMargin
53.5%
operatingProfitMargin
19.2%
netProfitMargin
4.66%
returnOnAssets
0.52%
returnOnEquity
1.67%
debtEquityRatio
1.18
operatingCashFlowPerShare
$8.38
freeCashFlowPerShare
$0.53
dividendPayoutRatio
13%
priceToBookRatio
4.19
priceEarningsRatio
62.9
Net Income vs. Revenue
Expense Breakdown
Management Commentary
1. Operational Adjustments: CEO Frode Arntsen mentioned, "This is the core and guiding principle at SalMar, and it has allowed us to take good care of the salmon throughout a challenging quarter."
2. Future Prospects: CFO Ulrik Steinvik stated, "The financial position is still robust... Overall, the balance sheet indicates we can seize the growth opportunities that arise."
3. Volume Guidance: SalMar anticipates lowering volume guidance for 2024 to 135,000 tonnes, signaling adjustments to operational capacities in light of biological challenges.
4. Strengthening the Value Chain: Management highlighted acquisitions, including a controlling stake in Knutshaugfisk, to enhance integration and operational efficiency.
"We have been through a challenging period, particularly related to ripple effects of jellyfish, high sea temperatures and high lice levels."
â Frode Arntsen
"Despite the challenges, the biological status of the fish in the sea is for the moment satisfactory."
â Frode Arntsen
Forward Guidance
Management remains optimistic about future growth despite a tough operating environment. The anticipated volume for 2025 is set to recovery levels, targeting 254,000 tonnes, reflecting a 14% increase across regions. Strategic initiatives underpinning this outlook include a focus on biological stability and addressing production challenges through improved technology and breeding practices. Key risks that need monitoring include ongoing biological pressures, market pricing trends, and global supply chain dynamics.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SALM.OL Focus
53.53%
19.20%
1.67%
62.90%
MOWI.OL
36.30%
4.82%
1.35%
42.70%
LSG.OL
33.70%
-2.87%
-0.30%
-129.74%
BAKKA.OL
47.10%
-5.85%
-1.07%
-49.82%
GSF.OL
75.00%
N/A
-0.57%
-48.63%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investors should assess SalMar ASA as a robust long-term play in the aquaculture sector, positioned for growth despite current setbacks. The combination of a solid financial base, strategic acquisitions, and a rebound in market demand suggests that SalMar may recover volume and profitability, positioned notably within the Consumer Defensive sector. Investors should keep track of biological trends and upcoming regulatory changes that could impact operational capabilities.
Key Investment Factors
Growth Potential
SalMar has untapped growth potential, particularly in offshore farming with semi-offshore units showing promising biological performance. Management has indicated optimism about increased production to 294,000 tonnes by 2025 as operational challenges stabilize.
Profitability Risk
Key risks include ongoing impacts of sea lice pressures, jellyfish blooms, and market pricing volatility. The ability to adapt operations and mitigate these biological risks will be paramount.
Financial Position
The balance sheet remains strong, with total assets of NOK 54.9 billion and significant liquidity of NOK 6.2 billion available to support growth initiatives.
SWOT Analysis
Strengths
Strong liquidity position with NOK 6.2 billion available.
Resilient management with strategic acquisitions enhancing operational efficiency.
Established reputation in the salmon aquaculture sector.
Weaknesses
Significant year-over-year decline in net income and profitability.
Increased operational costs due to biological challenges.
Lowered production guidance indicating operational challenges.
Opportunities
Growing global demand for salmon products, supported by favorable pricing expected in 2025.
Potential growth from semi-offshore farming operations showing promising results.
Acquisition of controlling stake in Knutshaugfisk to bolster operational capacity.
Threats
Biological challenges resulting from environmental conditions affecting salmon health.
Market competition with pressure on prices and margins from peers.
Geopolitical risks impacting trade and operations in key markets.