Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Operating revenue increased by almost 50% compared to the second quarter of 2023 due to higher harvest and processing volumes.
- Harvest weights improved from 4.4 kilos in the first quarter to 5 kilos in the second quarter of 2024.
- Atlantic salmon harvest was 81% higher than the second quarter of 2023, showing significant recovery in production.
- The company achieved better relative price performance compared to peers despite overall price declines.
- Positive cash flow of $24 million in the quarter due to reduced inventories and increased sales.
Negative Points
- Significant price declines with Atlantic salmon prices down 10% and Coho prices down 25% compared to the previous year.
- EBIT per kilo for Coho was negative, reflecting the impact of price declines.
- The company faced weaker market conditions, particularly in the US, affecting margins.
- High ex-cage costs remain a concern, although improvements are expected in the second half of the year.
- The company's net financial debt exceeded the sustainability-linked loan threshold, requiring a waiver from the bank.
Q & A Highlights
Q: How do you see US demand currently? And what do you expect going forward?
A: Ricardo Garcia Holtz, CEO, explained that the US market is experiencing weaker conditions, with seafood prices dropping despite lower volumes. This is attributed to the erosion of real income due to inflation. He expects the US market to gradually adjust, with 2025 being a better year for seafood demand and prices.
Q: Do you expect positive EBIT kilo on Coho sales for the second semester of 2024?
A: Ricardo Garcia Holtz, CEO, anticipates improved market conditions for Coho due to the recent appreciation of the yen and reduced Chilean production. He expects better EBIT kilo as prices stabilize and production costs decrease.
Q: Can you provide more details about the ex-cage costs and their evolution?
A: Manuel Arriagada Ossa, Director - Salmon Division, noted that biological conditions are favorable, with low mortality and good growth, leading to expected reductions in ex-cage costs. Feed costs are also expected to decrease due to lower prices of vegetable and animal ingredients.
Q: How will the reduction in feed costs impact the cost of goods sold?
A: Ricardo Garcia Holtz, CEO, mentioned that the reduction in feed costs will likely impact the cost of goods sold in 2025, with minimal effects expected in 2024.
Q: What are the strategic plans for Salmones Camanchaca's growth?
A: Ricardo Garcia Holtz, CEO, outlined plans to increase Atlantic salmon production to 55,000-60,000 metric tons over the next 24 months, with a focus on improving operational results and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
