In Central Norway and Scotland, SalMar saw significant improvements in their aquaculture businesses, marking a turnaround from previous struggles. However, Northern Norway and Iceland faced challenges with biological issues affecting their current volumes and upcoming harvest expectations. These difficulties may impact profits, especially in segments with lower contract shares, such as in Norway.

Despite some expected growth in operating profits, year-over-year net profit performance is unlikely to see substantial improvements due to new tax regulations and heightened tax levels for salmon companies. More significant net profit enhancements may only materialize in the following year. The company remains fairly valued, with price-to-earnings ratios likely exceeding 20x according to analysts.

In the latest Q1 earnings report, biological issues led to early harvests, increasing costs per kilo and impacting tonnage and margins. While salmon prices on the spot market were favorable, they were not enough to offset these challenges fully. Central Norway and Scotland performed well, with Scotland overcoming environmental challenges to boost volumes significantly. This positive contribution has been crucial for the company.

Northern Norway struggled due to jellyfish attacks, resulting in earlier-than-desired harvests and elevated costs per kilo. Despite volume guidance remaining intact, the segment may fall short of profit expectations by year-end. Likewise, Iceland faced lice-related environmental issues, affecting profitability and necessitating corrective measures such as disposals and inefficient harvests.

Looking ahead, SalMar aims to maintain harvest volumes despite cost pressures and declining salmon prices. The offshore salmon project shows promise, with incremental profit improvements expected. Cost reductions are anticipated in the second half of the year, although growth in volume may be limited. The company is also challenged by the high contract share and decreasing pricing benefits.

The article concludes by highlighting potential profit decreases this year, compounded by a higher tax burden, leading to a 25x price-to-earnings ratio. While this valuation may seem high, SalMar’s strong return on invested capital justifies the multiple. The aquaculture industry’s unique business models and geographical differences make direct peer comparisons challenging, further emphasizing SalMar’s fair valuation.