Jon Hindar, Cermaq CEO. (Photo: Cermaq)

Reducing costs becomes a challenge for Chilean salmon farmers

CHILE
Thursday, April 24, 2014, 03:10 (GMT + 9)

When many market analysts and industry executives forecast a turnaround in the salmon industry this year, the CEO of a major Norwegian company states that although there is growth potential, it is necessary to reduce costs.

According to the director of the National Fisheries and Aquaculture Service (SERNAPESCA), José Luis Ansoleaga, it is expected that this year harvested salmon volumes will remain at about 800,000 tonnes, as it was registered in 2012 and 2013.

And from the industry there are signs of optimism due to the maintenance of high prices and signals of progress towards reducing production costs.

In this context, Cermaq’s CEO, Jon Hindar, thinks a sign of the loss of competitiveness of the Chilean salmon industry is the fact that in the past 12 months, the salmon firm’s shares listed listed in the Stock exchange fell by 42 per cent while those of the Norwegian firms rose in the same proportion.

During the latest presentation to investors at the National Seafood Conference 2014, held in Ireland, the executive of the third largest salmon producer in the world made a thorough analysis of the situation of the Chilean salmon companies compared to the Norwegian ones.

According to Hindar, the main challenges faced by the Chilean companies are losing competitiveness and sanitary factors – such as the sea lice and the infectious salmon anemia (ISA) virus -- which have had a strong impact on national salmon farming. Cermaq operates in Norway, Chile and Canada. In Chile, it holds 89 concessions between Los Lagos Region and that of Magallanes, and in Norway it has not had new licenses since 2009.

"Chile has a significant growth potential if control is regained on the sanitary aspects and costs," stressed Hindar, according to Pulso.

Furthermore, he stressed that showing that aquaculture is sustainable is a prerequisite for further growth.

In early 2014, Cermaq unveiled a strategic plan with the goal of becoming profitable in Chile. At this time, its operating cost is USD 4.4 per kilogram of produced salmon while in 2012 it was USD 4.2 per kg and in 2011, it was USD 3.5.

Cermaq has set a goal that by 2017 each kilogram costs USD 3.5.

According to the data provided by the company, in the fourth quarter of 2013 it obtained profits for USD 14 million, reversing a loss of USD 21.5 million that it had experienced in the same three months of 2012. Similarly, sales volumes increased from 24,600 tonnes to 25,900 tonnes in that period.

A recent report from the Swedish investment bank Carnegie also emphasizes the loss of competitiveness of the Chilean salmon industry due to its high production costs.

And it forecasts "further consolidation of the local industry is expected in the next 6 to 12 months, which could obviously involve Norwegian players such as Marine Harvest," Diario Financiero reported.

The report notes that while the average margin in Chile has improved by about USD 1 per kilogram from the second quarter of 2013, this improvement was mainly due to higher prices so that "production costs remain high."

Related articles:

- Salmon firms expect a good year
- AquaChile and Cermaq lead salmon exports

By Analia Murias
[email protected]
www.seafood.media

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