Danish Salmon’s losses mount as energy crisis batters Europe

The aquaculture industry has been hit by a series of crises in recent months, including supply chain disruptions and soaring energy costs.

Danish Salmon is among the land-based fish farming company that has been impacted in the fiscal year ending March 2022. Net turnover fell from 45.9 million DKK (€6.2 million) in 2021 to 37.6 million DKK (€5.1 million) in 2022, while pre-tax profits declined from -7.2 million DKK (-€0.97 million) to -10.4 million DKK (-€1.4 million) during the same period. Following the latest decline in turnover and profits, Danish Salmon was left with 35.5 million DKK in total equity.

“Costs for producing salmon on land was gradually increasing and in particular the last part of 2021 and early 2022 has proven to be very challenging in terms of costs, as electricity-costs has surged,” the company’s annual report, presented in June, stated.

“This has had ripple effect onto other supplier goods, such as feed and oxygen. This in combination with fair value adjustments has meant the company has seen cost-increases, which particularly has been a challenge in the later part of the fiscal year,” it added.

“The business must be expected to be negatively impacted by these increases in feed and energy costs (the largest cost-components in the business) as these will not be fully transferable into the selling price and thereby the customers of the product. However, these circumstances seem to be general for the salmon farming industry and production companies in general for the coming year,” the company’s annual report explained.

Danish Salmon, which was established in 2009, has only managed to post a small surplus in one year (2018), with losses reporting in all other financial periods.

The business was acquired by two Japanese conglomerates in April 2020. It was then announced that Marubeni and Nippon Suisan Kaisha had entered into an agreement to acquire 66.7 per-cent of the shares in Danish Salmon.

“We do not have anything to add to the topic at this time,” Danish Salmon CEO Kim Lyhne said when SalmonBusiness requested a comment on the impact of rising energy prices on the company.

Read more: Electricity prices in the EU have increased tenfold in one year, presenting challenges for Columbia Salmon

Elsewhere in Europe, a cocktail consisting of shut down nuclear and coal power plants, as well as a stop in gas supplies from Russia, has increased electricity prices tenfold in Germany and France.

Columbi Salmon, based in Belgium, is among the companies impacted. “We have an idea about gross power consumption, but not something we want to come out with,” Columbi Salmon CFO Kolbjørn Giskeødegård said, accepting there is still much that needs to be done.

“The plan is that we want to use solar cells, but that will only be a small part of the consumption. After all, we also want to use a significant amount of salmon sludge, which we want to convert into combustible biogas, which in turn is converted into electricity,” he explained.

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