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The board of Iceland Seafood has decided to exit the loss making UK market from a value-added perspective after a strategic review
The board of Iceland Seafood have decided to exit the UK market from a value-added perspective.
The exit from the market could means job losses in Grimsby from one of the largest fish processing factories in the area.
Iceland Seafood UK invested in operating facilities in Grimsby and merged its operations from Bradford and Grimsby into this location. The investment and decision of the merger was completed in March 2020, just before Covid-19 started, and the renovation and installation of the factory was very much affected by Covid and later Brexit along with difficulties in overall operations.
Iceland Seafood has now decided that it plans to exit this market from a value-added perspective and has mandated MAR advisors to support the process.
Iceland Seafood says that, “Although it has been concluded that the UK operation is not a strategic fit for Iceland Seafood anymore, the excellent facilities and strong management team in Grimsby can be a great addition to other companies in the sector.”
In their 3rd Quarter Announcement, they wrote:
“The board of Iceland Seafood has decided to exit the UK market from value added perspective. The UK’s performance has eroded the group profitability to the extent that the board no longer feels it’s justifiable to continue. This has also meant that management resources have to a large degree, been devoted to this situation instead of capturing growth opportunities elsewhere. Iceland Seafood has retained MAR Advisors to support the exit process and will evaluate different options in the coming weeks.
“The S&D division saw strong demand during Q3 and had an excellent first nine months of the year. Sales of €132.1m during 9M 2022 were 14% up on the same period last year. This growth was primarily driven by price increases; although the volume sold of groundfish grew by 9%, pelagic volumes decreased by 21% from last year. The situation in Ukraine is having an impact on pelagic sales, customers are not holding any stock inside Ukraine, which is causing significant logistic issues elsewhere. Sales of fresh fish have been good, both into Europe but especially into the US market. Overall, the Normalised profit before tax of the division was €2.5m in the 9M 2022, up 48% from the same period in 2021.
“As mentioned in an announcement from October 21st, headwinds have increased at the start of Q4, where the European recession is negatively impacting demand in key markets in. The price of seafood is historically very high, while at the same time, the consumer’s purchasing power is diminishing due to increased energy prices and high inflation. It is also expected that the Rawson fishing season in Argentina, which is just starting, will not be as strong as last year, both in terms of volume and value. However, the outlook for the important Christmas season in smoked salmon remains good for Spain and Ireland, although it is uncertain to what extent the worsening economic situation will impact demand. The outlook range for 2022 Normalised PBT is revised to €3.0 – 5.0m, which excludes results from IS UK for the last two months of the year, as a decision has been taken to exit that operation.”
Bjarni Ármannsson, Group CEO said:
“2022 has turned into a very challenging year. A year where we expected Covid-19 to end and life to go back to “normal” – which turned into a year, characterized by a war in Europe, disruptions in value chains, high volatility in commodities, food prices and cost of capital. We are experiencing headwinds, which require difficult decisions to be made and sails to be adjusted to the change in winds. We believe in the future and that we are well positioned in our key markets with well-run value-added operations in Europe. But we must adjust to a different reality and are therefore exiting the UK market from a value-added perspective. This is a difficult decision, but I believe it is the right one. We are committed to our main stakeholders and maintain our commitment to run a profitable business within the European value-added seafood industry. We see opportunities but realise that we must be rational – and careful in the very near future.”
