Price increases continued to impact European salmon and seafood company Iceland Seafood’s results in Q2.
Whitefish prices of all origins have increased significantly, with cod prices increasing by 25 percent from the beginning of the year, while salmon prices reached a historically high level in May, having increased 90 percent from the start of the year.
In recent years, Iceland Seafood invested significant sums in the salmon market, acquiring an 85 percent stake in Spanish company Ahumados Dominguez. Ahumados Dominguez is known for its production of premium smoked salmon and has strong brand and consumer recognition in Spanish retail.
“Salmon prices have now levelled off, at the same time as price increases have been passed on to customers,” the company stated in its financial results. However, “group operations in Ireland and at Ahumados Domínguez were especially impacted by these increases,” with profitability in those areas expected to take until Q3 to return to normal levels.
“The first half of the year has been a disappointment for Iceland Seafood. During Covid, we emphasized rebalancing the business, with more retail exposure. Now in times of extreme increase in input cost, it’s hard to put the additional cost items forward to our retail customers while at the same time the cost increases. It is like chasing your own tail,” Bjarni Ármannsson, the group’s CEO, said.
Looking ahead to quarters later in the year, Ármannsson said “we are more optimistic for the second half, as we see input prices of raw material stabilise or on a downward trend. We firmly believe that we have a strong position in our markets and that we will be able to make the most of that position for the upcoming months.”
“We live in an unstable world, where stability of any sort is fragile, and businesses are generally diversifying and putting more emphasis on reliability rather than optimising with respect to lowest possible cost,” Ármannsson said. “This in the long run will prove positive for Iceland Seafood with it’s operating units largely in Western Europe, close to the consumer. It means that we must invest further in automation, making sure we are following strict ESG measures and building up consumer brands, which will give us a stronger position in the long run,” he added.