Salmon processing company from Kolding, Denmark Vega Salmon has posted its first profit in four years.

The company recorded revenues of DKK 2.2 billion (USD 321 million, EUR 294.8 million) and gross profit of DKK 67.7 million (USD 9.9 million, EUR 9.1 million) for the 18 months from July 2022 to the end of 2023. EBITDA in the period was DKK 19.5 million (USD 2.8 million, EUR 2.6 million).

Vega Salmon operates a salmon processing plant in Handewitt, Germany, its headquarters in Denmark and satellite sales offices in several other countries. In December 2022 it was acquired by Måløy, a coastal fish restaurant based in Norway of the Danish private equity fund Maj Invest Equity for an unknown amount.

“The new ownership supports the company’s continued growth while at the same time bringing even greater focus on sustainability, optimization and automation of the value chain, synergies and strengthening Vega as an attractive partner,” the company said in its statement on the financial results.

The company’s Handewitt branch has a Annual production of 25,000 tons of processed salmon products, including fresh and frozen salmon, cold smoked salmon, hot smoked salmon, marinated salmon, value added products and salmon scraps.

Vega Salmon said a change in the financial reporting calendar, which now sees the fiscal year closing from June to December, makes comparison with previous years challenging, particularly due to the seasonal nature of the business.

However, despite the improved results Vega has achieved through better margins and an improved product mix, with increased sales of smoked salmon, Vega’s management still believes that Vega’s performance is below par.

“The general increase in interest rates had a large impact on the result compared to last year, and after adjusting for the different periods considered, the impact for the period is close to DKK 20 million (USD 2.9 million, EUR 2.7 million),” the report said. “Despite the positive result … management does not consider the result to be satisfactory as it is below expectations for the period and in aggregate does not honour the change in the level of interest rates.”

Subsidiary Vega Sea, which includes the majority of Vega Salmon’s operations, recorded revenues of DKK 2.2 billion (USD 321 million, EUR 294.8 million) and gross profit of DKK 280.1 million (USD 40.9 million, EUR 37.5 million) for the 18 months from July 2022 to the end of 2023. EBITDA amounted to DKK 57.4 million (USD 8.4 million, EUR 7.7 million).

Vega hit a rough patch in the spring of 2023 when the price of headless salmon rose significantly due to increasing degradation of fish, leading to a shortage of superior quality salmon.

“This has made it difficult to have a stable production flow during the year,” the company said. “Due to volatile salmon prices, the market development in turnover in terms of value is not seen as a fair picture of the activity in the group, but rather as a focus on volume.”

To hedge against price volatility, Vega Salmon has increased the number of fixed price contracts. It has also shifted more of its production to the second half of 2024 and is seeking to strengthen its position in selected export destinations to benefit from the group’s advantages in quality and product range during the current limited availability of superior quality salmon on the market.

“We are continuously updating our purchasing strategy and cost picture, focusing on efficiency and offering alternative products to the market,” the company said.

Vega Sea increased its receivables to DKK 100.5 million (USD 14.7 million, EUR 13.5 million) and its inventory value to DKK 59 million (USD 8.6 million, EUR 7.9 million). The improvement in the company’s balance sheet was mainly due to the shifting of the financial year to December, the end of the high season, from June, the end of the low season.

Vega Sea expects …