Kaldvik AS (KLDVK) Earnings Call Transcript & Summary

Good morning, everyone. Vidar Aspehaug here, CEO of Kaldvík, and it's a pleasure to welcome all of you to the presentation of our fourth quarter results for 2025. With me today is Hjalti Hvítklett, our new CFO, who'll be introducing himself in just a moment. The two of us will take you through the key highlights and developments from the past quarter. Once the presentation wraps up, we'll open the floor for questions, and as in the past, feel free to send them in by email to <<email_hidden>>. This, let's move on. Here you see the updated management team, with Hjalti Hvítklett stepping in as CFO. I'll hand things over to him so he can introduce himself.

Thank you, Vidar. I'm Hjalti Hvítklett. I joined Kaldvík at the start of February. My home is in the Faroe Islands, and I'll be commuting to Iceland. I earned my finance degree from the University of Aarhus in Denmark, and for most of my career I've worked in fish and aquaculture — most recently with Nordic Aqua Partners, which operates in China. It's a real pleasure to come aboard Kaldvík at such an exciting moment for the company. I've always found a strong team here with clear ambition, and I look forward to contributing as we go forward. Back to you, Vidar — I'll return later with the financials.

Thanks, Hjalti. We'll start today by going over some of the key highlights from the quarter just ended, including operational updates, financial results, and strategic updates. After that, we'll take a brief look ahead with an outlook and summary, and then finish up with the Q&A session. As I mentioned, if you have questions, please send them to <<email_hidden>>. All through the presentation, we've placed the corresponding 2024 figures in brackets after the '25 figures so you have a reference point. Turning to the Q4 highlights: during the fourth quarter, we harvested 7,943 tonnes, with a group operational EBIT of -€10.6 million. The negative results stem mainly from an early harvest of the '24 generation caused by winter wounds, which led to lower average weights and a low superior share, along with a challenging market situation. I'll say more about this later. For the full year '25, we harvested 17,105 tonnes in total, versus almost 15,000 tonnes in '24. Looking ahead to '26, we'll harvest 6,500 tonnes in Q1 this year, mainly from the '24 generation, and we are keeping our full-year harvest guidance at 17,000 tonnes. As we announced to the market, the company finds itself in a challenging financial situation and has requested a waiver from its banking partners.

Right now, we are having productive talks with the banks, and we anticipate wrapping that matter up by the close of Q1. On the strategic side, the legislative program the government has published shows that the new aquaculture bill should be brought forward soon. We will have more to say about that later. The license we have been waiting on for approval in Seyðisfjörður remains outstanding, and the strategic review of how we produce, which is meant to lower risk and bring greater stability to our operations and to back our long-term target of 30,000 tonnes, is still underway and is expected to wrap up no later than May this year. Turning to the 2024 generation in our farming operations, and as I already noted, we chose to start harvesting the '24 generation early because of an unacceptable winter wounds situation. We had been quite optimistic about the '24 generation, since it was the first to get the tailor-made vaccine against winter ulcers. It is now evident, though, that this has not proved sufficient to resolve our wound problems. As we communicated before, part of the '24 generation had a difficult release in the late fall because of delays and a sharp, early decline in sea temperature. Beyond that, the winter of '24/'25 was extreme, with winter temperatures arriving unusually early and readings significantly below normal across all of Q4 '24 and Q1 '25.

That number on the right shows what happened — it gives the temperatures for these quarters in '24/'25 against the average temperatures going back to 2010, which appear in blue. What surprised us was that wounds began to appear during the growth season as temperatures climbed in Q3, and then the problem grew much worse in Q4 '25. Because of that, we made the call to harvest the '24 generation, beginning with the cages that were hit hardest, with the goal of taking the entire generation out as fast as we could. At the close of Q4 in '25, 62% of this generation had been harvested, and by the end of Q1 this year we expect to have wrapped up the harvest of nearly all of the '24 generation. What this means is that the '24 generation will produce roughly 5,200 tonnes less harvest volume than we had anticipated, largely because of lower average weight. On top of that, the superior share came in at 41%, which hurt the price achievement. These poor results from the '24 generation weighed heavily on Kaldvík's financial situation, and that is more or less the primary cause of the financial difficulties we find ourselves in right now. Turning to the '25 generation, the picture is brighter. At this point we are running ahead of plan, and the fish are in good health.

For Kaldvík, the '25 generation represented a milestone in output — we hit 8.25 million smolt — and the transfer went well, with mortality at an acceptable level. Although the '25 generation receives the same vaccine as the '24 generation, temperatures this winter have been far more favorable, closer to what's normal for the Eastfjords of Iceland. You can see this in the red line in the figure on the right: temperatures last year in Q3 were above average, and throughout the period they ran significantly higher than in '24. Right now, performance looks good, with solid growth and an overall healthy status. At year-end, cumulative mortality for the '25 generation stood at 9.3%. In '26, 61% of total harvest volume will come from the '25 generation. To shed a bit more light on how much the temperatures we're seeing in '25 matter compared with the abnormal temperatures of '24, I've included an illustration showing the growth difference, starting from 500 grams and six months of growth under the respective temperature profiles for those two years. Specific growth rate depends heavily on temperature, and as the figure on the right shows, the specific growth rate in '25 has been above the '24 level throughout the last two quarters.

With a typical growth rate averaging 0.58% in '24 and 0.82% in '25, that gives us 330 grams of additional growth in '25 versus 2024. Under a scenario of 5 million fish, the total production difference would come to 1,655 tonnes. Beyond that, the fish itself is in improved condition. Next, a few details on harvesting and sales. During Q4, we harvested just under 8,000 tonnes, a record figure both for Kaldvík and for our harvesting facilities. On our best single day, harvest volumes reached as much as 245 tonnes — the highest we've ever recorded. This boost in harvesting capacity came about partly from adding stun-and-bleed capacity and partly from operational optimization carried out at the harvest site. As everyone knows, the market for salmon prices has been volatile and remains so. Even with a low superior share of 42% and an early harvest of the '24 generation, overall price achievement for the quarter came in at €6.01 per kilo. That wraps up the operational update. I'll now hand things over to Hjalti, who will take you through the financial updates.

Thank you, Vidar. To start, here are the quarter's highlights, which were characterized by a comparatively strong harvest volume alongside weak prices and a reduced superior share. As Vidar noted earlier, operational EBIT for the group came in at negative €10.6 million, while EBIT per kilo was -€1.33 in the fourth quarter. Several factors lie behind this, chiefly softer market prices, elevated costs stemming from early harvesting, and a low superior rate. Revenue came to roughly €48 million. Even with the superior share at a low 41% and the early harvest of the '24 generation, price achievement for the quarter overall landed at €6 per kilo. Total assets fell by €22 million over the quarter. That was mainly the result of a larger harvest and, consequently, smaller biological assets. Total liabilities went down by €10 million in the quarter. The main driver there was a substantial reduction in trade and other payables. The equity ratio stands at 55%, unchanged from what we reported in Q3. Net interest-bearing debt rose by €6 million during the quarter. EBITDA was negative €7.2 million. Working capital changed by €11 million, largely because biomass was lower at quarter-end. CapEx investment for the quarter totaled €2.1 million, and financial items came to €4.4 million.

As we've said, the company has asked its banking partners for a waiver. As of today, discussions with the banks are constructive, and we expect these issues to be wrapped up by the end of Q1. Company updates will come quarterly, while financial reports will be published semi-annually, with half-year and full-year reports. The next company update, covering the first quarter, is set for May 21st, and the next financial report, for full financial year '25, will be issued on April 30th. For more detail on the financials for the fourth quarter and year-to-date figures, please see the appendix section. In October '25, Sunnlendinga District Court turned down the minority shareholders' request for a special investigation concerning the acquisition of certain strategic assets completed in March '25. No appeal was filed against that decision, and the matter is now concluded. Thank you, and I'll now hand it back to you, Vidar.

Thanks, Hjalti. Now a brief update on strategy. On the current process around the new aquaculture bill in Iceland, the legislative agenda the government has published shows the bill should be introduced soon. Consultation drafts have been going around, but the final text hasn't been formally put forward yet. We're watching developments closely, and as soon as the final framework is out publicly, we'll look carefully at what it means and say more once that assessment is done. The new license at Seyðisfjörður is still pending, and on the ongoing strategic review of our production model, we expect to wrap up no later than May this year. That review will give us a clearer basis for long-term decisions and support a more robust and predictable production model going forward, lowering risk and lowering cost. Then a bit on what to expect going forward. As already mentioned and as you know, the market for salmon is volatile and hard to predict. Even so, forward prices point to a promising market in Q2 and Q3 of '26 compared with '25. For Q1 in '26, we expect to harvest 6,500 tonnes, and most of the harvest this quarter will come from the '24 generation. We expect to finish the rest of the '23 generation and most of the '24 generation this quarter.

Looking at Q2, we'll begin the first harvest from the '25 generation, and that generation is doing well, with good health. For '26, total harvest volume is expected to reach 17,000 tonnes, and starting in Q2, the bulk of our harvesting will come from the '25 generation. So to wrap up, I'll finish with the outlook and the key points as we move forward. We've faced winter wound issues in our '24 generation, and we started an early harvest that we expect to have behind us by the close of this quarter. The '25 generation appears far more promising and is ahead of plan when it comes to growth, and harvest from Q2 onwards will come mainly from this generation. Last year we harvested and sold 17,105 tonnes in total and finished with a record-high harvest volume of almost 8,000 tonnes in Q4. Because of the difficult biology in the '24 generation, the company has asked its banking partners for a waiver, and constructive discussions are underway, with conclusion expected within Q1. On the strategic front, we are still waiting for approval of the licenses in Seyðisfjörður, and the strategic review of our production strategy continues and is expected to wrap up in May this year.

Market volatility hasn’t gone away, yet when we look at forward prices for Q2 and Q3, they look encouraging next to ’25. Our guidance for ’26 stays at 17,000 tonnes, and for Q1 we’re keeping a harvest volume of 6,500 tonnes. That brings our presentation to a close, and we’re ready to take questions now; as we said at the start, kindly direct your questions to <<email_hidden>>.

A question came in here from Vidar: "What steps are you taking to make the winter wound situation better? In your view, what's the root cause?"