Analysts have pointed out that SalMar’s cost guidance for the third quarter is higher than expected, raising concerns about the company’s near-term financial performance.
Sandler Lie, an analyst at Pareto Securities, has indicated that Pareto now expects to reduce its 2024 operating profit estimates for SalMar by 4-5% following the latest quarterly report. This adjustment reflects the impact of increased costs on the company’s profitability.
The company’s operational EBIT for the second quarter of 2024 fell to NOK 1.39 billion ($131 million/€118 million), down from NOK 1.75 billion ($165 million/€149 million) in the same period last year, and below the NOK 1.66 billion ($156 million/€142 million) forecast by analysts.
‘No time to rest’: SalMar resilient despite challenging winter conditions
Lie further suggested that SalMar’s stock is likely to underperform compared to other seafood shares on the Oslo Børs in the wake of the report, according to Norwegian business newspaper E24.
Fearnley Securities reports that SalMar’s operating profit was 7% lower than consensus expectations, primarily due to lower price achievement in Northern Norway and biological issues in Iceland. While management maintained this year’s harvest guidance for most regions, it reduced the target for Iceland by 2,000 tonnes.
The third quarter is expected to see slightly higher cost levels, particularly in Northern Norway, but a 35% contract share should offer some support given current spot prices. Fearnley considers the report weak and expects negative EBIT revisions of 3-5%, likely leading to underperformance of SalMar’s stock.
Despite showing improved biological performance in its Norwegian farming segments, SalMar’s results were still negatively impacted by harsh winter conditions and extreme weather earlier in the year. The company maintained its harvest targets for 2024, with a slight reduction in Iceland, but the higher-than-expected cost guidance has cast a shadow over its near-term outlook.
