Chilean salmon companies shaken after price drop

by
Owen Evans & Aslak Berge

The share price of Santiago listed salmon farmers has fallen by up to 60 per-cent in just a year.

Chilean salmon exports, severely impacted by the pandemic with its main customers (USA, China, Russia, Brazil), are experiencing extreme uncertainty surrounding COVID-19.

COVID-19
Back in May, Mowi CEO Ivan Vindheim said: “Chile mainly produces fillets for the US market sold through traditional fish dishes, which have been shut down in addition to the Horeca segment (hotels, restaurants and catering). In other words, Chile has lost their most important customer, does not have processing capacity and as a result has had to put the fish on frozen stock”.

Mowi’s Q3 earnings have also been impacted by “falling prices as a result of lower net demand”.

Latin America
In the past year, the price of Chilean salmon has been shaken-up as demand weakens due to the profound market impact of the COVID-19 outbreak. Especially with pandemic restrictions affecting the foodservice segment in North America.

According to Mowi, the Miami fillet price is currently EUR 6.3 per-kg (USD 3.4 per pound). With a fillet yield at 60 per-cent (minus airfreight costs of around USD 1 per-kg), this implies a whole fish price delivered to Santiago at EUR 3.7.

The fish farmer’s production cost per kilo (whole fish) is around EUR 4. This means that Chilean salmon farmers are currently operating at a loss.

SOURCE: Mowi

SalmonBusiness reported last Friday that there was no sign of rising pre-Christmas prices. “Around 40 kroner (EUR 3.6), the equal price for everything now really.”

Sharper fall
Two Chilean salmon farmers are listed on the Santiago Stock Exchange, as opposed to five just three years ago.

SOURCE: Bloomberg

In a year, Blumar’s and Multiexport Foods’ share price has dropped nearly 60 per-cent. Oslo Stock Exchange-listed Salmones Camanchacha share price has dropped 24 per-cent.

SOURCE: Bloomberg

Previously listed
Some formerly listed salmon farmers are not on the Santiago Stock Exchange anymore. Invermar delisted in March last year. And When Agrosuper acquired Aquachile, it was brought into the privately-owned company.

SOURCE: Bloomberg

In the past week, Chilean salmon farmers have seen huge cash injections. Chinese Legend Holdings subsidiary Joyvio Group injected USD 62.2 million into Agri-Joyvio, the owner of Australis Seafoods. AquaChile announced that it is restructuring, with a USD 248 million in capital increase to transfer salmon farmer Pesquera Los Fiordos into the company. And lastly, Blumar renegotiated its debt with at least five banks and has been granted USD 300 million in new financing.

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