Kaldvik AS (KLDVK) Earnings Call Transcript & Summary

Good morning, everyone. My name is Vidar Aspehaug, and I'm glad to welcome you to the presentation of our results for the third quarter of 2025. Our CFO, Róbert Róbertsson, is with me today, and the two of us will take you through the main highlights and developments of the quarter just ended. Once the presentation is done, we'll open things up for questions. As usual, you're welcome to send them in by email, and the address is shown on screen. All this disclaimer, then we'll move on to the agenda. We'll start with some key highlights from the last quarter, covering operational performance, financial results, and strategic updates. After that, we'll look ahead with a brief outlook and summary before we finish with a Q&A session. Should you have any questions, please send them to <<email_hidden>>. Beginning with some highlights. Throughout the presentation, we've placed the respective '24 figures in brackets after the '25 figures to give you a point of reference. During the third quarter, we harvested 1,545 tonnes, with a group operational EBIT of negative €5 million. The primary causes are elevated costs stemming from low utilization of company capacity, a low superior share, and a difficult market situation. To close out Q3, we have harvested 9,163 tonnes in total so far this year, against 8,298 tonnes last year.

As we look toward 2025, our full-year harvest guidance is being reduced from 18,000 tonnes down to 17,000 tonnes. For 2026, harvest guidance stands at 17,000 tonnes, and further detail on that will come later in the presentation. One important milestone: we finished transferring 8.2 million smolt in 2025, which supports our long-term ambition of reaching 30,000 tonnes. On the strategic side, we've implemented some operational changes at Kaldvik that I'll speak to. Test production of sterile fish has begun, and the license we've been waiting on approval for in Seyðisfjörður remains pending. We've also kicked off a strategic review of our production model, with the aim of lowering risk and boosting stability across our operations, and I'll say more about that later in the presentation. Beginning with farming operations: as noted in the Q2 report, this summer we had an incident involving reduced growth and early harvest caused by algae in the '23 generation. That same incident led to a loss of 900 tonnes in July. On a brighter note, and as the figure below shows, sea temperatures in 2025 have returned to normal, which supports improved growth relative to 2024, when we saw unusually low temperatures.

Closing Q3, our biomass in the sea stood at 19,300 tonnes. That's a decrease of 3,200 tonnes versus the identical period a year ago. Next, a few details about smolt output and transfers during this year. As noted, we completed putting 8.2 million smolt into the sea, ultimately hitting our 7.5 million smolt goal. Of that total, 7.7 million came from our own north and south facilities, while 500,000 were supplied externally. Smolt averaged 288 grams, somewhat lower than a year earlier, largely because of earlier output plus smaller-sized external smolt. Even so, overall smolt biomass transferred to sea came in 13.7% above last year. Mortality at transfer has posed a big problem in prior years, and although it isn't impressive versus other regions, 93% survival after 60 days at sea is markedly improved from last year's 79% survival rate. The main losses trace to a handful of trips with elevated mortality, while most trips' survival ran well above the average. So we think the money invested in our land sites over previous years is delivering returns, and that we'll continue to see solid output of sturdier smolt than in prior years moving forward.

Moving on to sales and harvesting. During Q3 we harvested 1,545 tonnes, and that's 2,250 tonnes — 2,250 tonnes below what we did in the same quarter a year ago. As everyone knows, the market for salmon prices has been challenging and remains so. Even with a superior share as low as 65%, fixed price contracts accounted for 43% of our sales, which supported the overall price achievement, landing at €6.3 per kilo. Given the limited volumes we harvested this year, it's natural that harvest cost came in high at €2.59 per kilo for the last quarter, though year to date it stands at €1.31 per kilo. That wraps up the operational update, and I'll now hand over to Róbert, who will take you through the financial performance.

Thank you, Vidar, and good morning, everyone. I've put together some slides to take you through the financial update for the third quarter. To start, you'll see the highlights from the quarter, which was characterized by constrained harvest volume, underutilization of our harvesting capacity, and a low superior share. As Vidar noted, operational EBIT for the group came in at negative €5 million, and EBIT per kilo was negative €3.3. Revenues were approximately €10 million. Price achievement held steady compared with a year earlier, finishing at €6.3 per kilo. That's largely because of a higher proportion of fixed price contracts, as Vidar mentioned, toward the US, which offset the low superior share in the quarter. As the previous slide showed, the constrained harvest volumes resulted in only partial use of our harvesting facility and wellboats. As a result, we saw higher operational cost in the quarter. Moving to the financial summary. Total assets rose by €6 million in the quarter. That was mainly driven by investments in biological assets. Liabilities went up by €16 million, primarily driven by financing of working capital. The equity ratio stood at 55% at quarter end. Here you can see the analysis of net interest-bearing debt, which rose by €27 million during the quarter.

EBITDA came in at negative €2 million. Net investments in working capital were €17.4 million, mainly because of biomass that built up during the quarter. For '25, total capex is estimated at €15 million, below the original guidance of €18 million. Capex investments in the quarter totaled €3.7 million, which brings total capex investments year to date to roughly €12.6 million. Financial items were €3.7 million. The last step in the box factory acquisition process was completed during the quarter, with the issuance of around 1.6 million shares in Kaldvik at a price of 27.6 NOK per share. That issuance settled the seller's credit from the acquisition of all shares in Mosi ehf. earlier this year. Mosi owns the property and building that hosts Djúpsteypa, the fish box producer in Djúpivogur. The new shares were issued to the seller, Heimstø AS, in September. Heimstø is a close associate of a primary insider of Kaldvik and the biggest shareholder in the company through its subsidiary, Austur Holding AS. Here you can see the financial calendar for the financial year 2025. Management of Kaldvik has decided to change the reporting mechanism starting from this quarter and going forward.

So now we're going to give you the quarterly company updates, and bear in mind that the financial reports come out on a semi-annual basis — a half-year report and a full-year report. The next company update, for the fourth quarter, is set for February 25, 2026, and the next financial report, covering full year 2025, will be issued on April 30, 2026. If you want more detail on the financials for the third quarter and the year-to-date figures, please turn to the appendix, where you'll find the income statement, balance sheet, cash flow statement, statement of changes in equity, and share capital and shareholder information. In September, a share repair took place with limited participation. That share repair was done so that every shareholder would have the chance to participate in the private placement that was carried out in June 2025. Lastly, an update on the investigation request from a group of minority shareholders concerning the acquisition of the box factory mentioned earlier and the remaining 33% shares in the harvesting station Búlandstindur. That transaction was carried out in March this year. The investigation request was initiated last August. Now, in October, the Trøndelag District Court decided not to approve the request, since the court found that the transaction had been sufficiently documented. The deadline for appeal was yesterday, 20th of November.

Right now, I don’t have any additional details on whether the minority shareholders have filed an appeal against the court’s ruling, but the company will provide the market with an update on this later. Thank you. I’ll now turn it back to our CEO, Vidar Aspehaug.

Thanks, Róbert. Now for an update on where we stand strategically. When I gave the Q2 report not long after taking over as CEO of Kaldvik, my focus in the months since has been on building a thorough picture of how the company runs and pinpointing the places where our processes need to be made stronger. As part of that work, we've launched a number of measures to improve operations. A new, refocused executive management team is now in place, and we've set up a new operational management group under our COO, Kjartan Lindbøl, with a clear production focus intended to boost coordination and cut biological and operational risk. On top of that, we've renegotiated the sales agreement with our sales partner, which gives us a better price indication and clearer commercial terms. Cost reduction initiatives have also been put in motion, among them organizational adjustments, moving sales activities to an external partner, and other steps aimed at lowering the overall cost base. Beyond that, we've kicked off a wider strategic reset. That process will look at the production model with the goal of making it more robust and bringing risk down going forward. These initiatives provide an important foundation for building an operation that is more predictable and efficient, and they'll remain a key area of focus in the quarters ahead.

Below is the revised management team. Since I took on the CEO position, our emphasis has been on making the organization's core stronger. We've simplified the management structure so that production, biological performance, and operational execution each receive strong emphasis. The organization is leaner now, and that helps bring down costs while making roles clearer. As part of this, we assessed our internal functions and chose not to keep an internal sales department at this point. Sales work has been moved to an external partner, which lets us focus entirely on our core business and on operational performance. We're also actively working to find and capture synergies throughout the company. The aim is to use resources more efficiently and to support an operation that is more integrated and better coordinated. This management team reflects that emphasis: clearer accountability, stronger production leadership, and an organization aligned with improving biological results and cutting cost. Also, as a new CEO, I want to reset expectations with full transparency. Our aim is to give guidance the market can rely on, built on realistic biological assumptions, better data quality, and clear communication of risk factors. Over recent years, we have missed several operational targets, and there are several reasons for that, apart from the fact that aquaculture can be an unpredictable and challenging industry to guide.

At Kaldvik, smolt capacity has been difficult — releases came in below plan, and survival rates took a hit from transfer complications as well as smolt quality. On top of that, production and construction at our land sites have been happening at the same time, which brings its own set of challenges. Those factors have fed into weaker performance at sea too, and that is hardly an ideal mix given the tough Icelandic environmental conditions. Having now hit our target production capacity on land, we're optimistic, though also respectful of the fact that we must adapt further to the production environment we're working in. To tackle these challenges, a strategic review is under way, aiming to build a more robust and predictable production setup. That review of our production model is set to be finalized by the end of Q1 '26, and what comes out of it could involve adjustments to our production strategy. Its purpose is to examine the whole Kaldvik value chain and pinpoint how we can best optimize production, make use of license capacity, and put our assets to effective use under the specific conditions we face in Iceland. A key objective is to achieve the lowest possible cost of production at an acceptable level of biological and operational risk.

Within this effort, we are looking at whether we can raise the proportion of fish raised with just a single winter in the sea. We'll be examining the chance to pair smolt supplied from outside with the smolt capacity we have internally, and we're studying ways to make harvest capacity and flexibility stronger. This review is going to provide a clearer foundation for long-term choices and back a production model that's more robust and predictable as we move ahead. Now, a little on what to expect in the time ahead. For Q4 '25, our harvest expectation is 7,800 tonnes, a figure 1,000 tonnes below what would be required to hit the volume we originally guided, totaling 18,000 tonnes for the year. So our updated guidance for '25 stands at 17,000 tonnes. Through boosting harvest in Q3 and Q4, our aim has been to make the best possible use of the growth season in Iceland and also to secure improved prices. Yet we can see at this point that, given difficulties with harvest days lost because of weather, a delayed stun-and-bleed vessel, and constraints on our wellboat capacity, we won't manage to hit the 18,000 tonne target. As was mentioned earlier, we are guiding a total harvest of 17,000 tonnes for 2026. To wrap up, I'll finish with the outlook and the key points as we go forward.

When it comes to the commercial side, we've renegotiated our sales agreement, and a flexible, robust sales partner is now in place. For '25, our harvest outlook stands at 17,000 tonnes, adjusted down from 18,000 tonnes. The '26 harvest outlook is also 17,000 tonnes. The '25 generation smolt cycle produced a strong output of 8.2 million smolt along with a 93% survival rate. That gives us a foundation for our long-term ambition of 30,000 tonnes. The application for a 10,000 tonne license in Seyðisfjörður is still pending approval. We've initiated structural and cost reduction measures, backed by a new organizational setup, and the strategic review continues, with the objective of optimizing the production model and reducing risk. Overall, these initiatives position us to improve operational stability and hopefully support more predictable performance going forward. We'll conclude our presentation here, and we're now open for questions. As mentioned at the start, please send questions to <<email_hidden>>.

Hello there. You folks have sent in some questions for us. The first one we have is this: what superior share do you expect for Q4?

Regarding the superior share for Q4, we’re not able to provide guidance on that, so…