Icelandic Seafood Market Report

Íslandsbanki has issued seafood industry reports on a regular basis since 2003. The Bank constantly seeks to improve the report, and to that end, two new sections have been added to it: first, a discussion of the global seafood industry, featuring a comparison of seafood and aquaculture – by continent, within Europe, and in the Nordic region – and second, a discussion of seafood over the first nine months of 2016 and a forecast for the years ahead. We are of the opinion that these new sections enrich the report and give a more comprehensive view of the scope of the Icelandic seafood industry. The Bank benefited from the assistance of Deloitte in preparing the discussion of fishery operations, as it did in 2015. We extend our sincere thanks to Deloitte staff for their effort.

Key Highlights

  • A total of 95 million tonnes of fish were caught worldwide in 2015, an increase of 12% since 1990. Pelagic species were fished the most, and fishing in marine waters accounted for 26 m tonnes, or about 29% of all catches.
  • Asia fishes the most worldwide, with 54 m tonnes, or 57% of the global total. China is the largest fishing country in the world, with 17 m tonnes in 2015, or 18% of the global total.
  • Iceland ranked 20th worldwide in 2014, with a 1.4% share of total fishing. Iceland has moved down on the list in recent years, as other countries have stepped up their fishing more than Iceland has.
  • Russia is the largest fishing country in Europe. The Russians caught about 4 m tonnes in 2015, or about 31% of the European total. Iceland catches more fish per capita (just over 3 tonnes per person) than any other country in Europe except the Faeroe Islands.
  • Iceland’s total catch over the first nine months of 2016 was 851,000 tonnes, about 250,000 tonnes (23%) less than over the same period in 2015. The year-on-year contraction is due principally to a poor capelin season; however, the total catch value in the first three quarters of 2016 contracted by only 14%. Increased fishing of higher-value species has therefore mitigated the negative impact of the capelin season on Iceland’s total catch value.
  • We expect marine product exports to rally in the second half of the year, not least because of an increased cod quota. We project a 1% contraction in exports in 2016 as a whole, followed by increases of 4% in 2017 and just over 3% in 2018.
  • Based on forecasts from the OECD and the FAO, we expect global marine product prices to rise by 7.5% in 2016 and then fall in 2017 and 2018, by 2% and just under 1%, respectively.
  • The total catch in 2015 was 1,319,000 tonnes, an increase of 22.5% (243,000 tonnes) over and above 2014. The mostcaught species in 2015 was capelin, at 337,000 tonnes, a year-on-year increase of 218% (229,000 tonnes). The 2015 catch value was ISK 151 bn, an increase of 9.2% YoY at constant prices.
  • In terms of catch value, cod is still by far the biggest species, with a value in 2015 of nearly ISK 61 bn, or 40.3% of Iceland’s total catch value. The increase in the value of cod is 13%, some 10 percentage points more than the increase in volume; therefore, the value per tonne has increased between years.
  • Closer examination of the species distribution of catches and catch values in 2015 reveals that large volumes do not necessarily generate commensurate value. Each tonne of groundfish generated almost six times more value than each tonne of pelagic fish caught in 2015.
  • Nearly 632,000 tonnes of marine products were exported in 2015, some 3% less than in 2014 and about 83,000 tonnes below the long-term average. The year-on-year contraction is due largely to the Russian trade embargo. In spite of this, 2015 export values totalled about ISK 265 bn, nearly ISK 17 bn (7%) more than in 2014, at 2015 prices.
  • Cod was the most valuable export species in 2015, with a value of ISK 105 bn, about 38% of total marine product export values.
  • Frozen products accounted for the largest share of exported marine products, at 286,000 tonnes, or 45% of the total value of marine exports. In 2015, fresh products generated the greatest value per tonne, at ISK 799,000.
  • Seafood company revenues totalled ISK 275 bn in 2015, an increase of ISK 9 bn, or 3.3%, at constant prices. This growth in revenues is due to an increase in capelin catches and an increase in the cod catch value, owing to price hikes in foreign markets.
  • EBITDA totalled ISK 71 bn in 2015, and EBITDA margins increased by 3 percentage points year-on-year, from 23% in 2014 to 26% in 2015.
  • In 2016 year-to-date, oil prices have been 19% lower, on average, than in 2015. Over the same period, the Icelandic króna has been some 7% stronger against the US dollar; therefore, seafood companies’ costs can be expected to decline because of falling oil prices.
  • In terms of the trade-weighted exchange rate index, the ISK has appreciated by 17% since the beginning of 2016 and 26% since the beginning of 2015. The ISK has strengthened most against the pound sterling, or by 41% since the beginning of 2016. The UK is one of Iceland’s largest trading partners, and about 18% of our total marine product export value is sold to the British market. As a result, the weakening of the pound versus the ISK has a significant impact on Iceland’s external trade.
  • The margins of mixed pelagic and groundfish seafood companies are highest, at 28%. This is because it is generally less costly to catch pelagics than groundfish, and processing costs for pelagic species are lower as well. The margin for groundfish fisheries is 26%, and the margin for groundfish fishing and processing is 24%.
  • Seafood companies’ debt has declined markedly in recent years, to an end-2015 total of ISK 333 bn, the lowest since the onset of the financial crisis in 2008. For the first time since 2007, new lending exceeded loan repayments, by a total of ISK 18 bn, indicating that companies are increasingly paying down short-term loans.
  • Investment declined marginally YoY in 2015, or by ISK 1 bn, to a total of ISK 26 bn. Nevertheless, investment was relatively robust during the year, in comparison with the 2001-2013 average of about ISK 14 bn (at 2015 prices).
  • Dividend payments to fishery owners totalled ISK 12.9 bn in 2015, a YoY reduction of 6%, or ISK 800 m. Dividend payments as a share of EBITDA contracted by 4 percentage points, to 18% in 2015.
  • Public levies paid by fisheries totalled ISK 22.6bn in 2015, after declining between years by ISK 400 m at 2015 prices. The greatest difference was in seafood fees, which fell ISK 700bn, or 9%. Seafood companies’ income tax liabilities in 2015 totalled ISK 9.3 bn, up from ISK 8.9 bn in 2014. Payroll taxes paid in 2015 totalled an estimated ISK 5.8 bn and were broadly unchanged between years.
  • Aquaculture has grown rapidly in recent decades, with a sixfold increase during the period 1990-2015. In 2015, some 76 m tonnes of fish were raised. Salmonids, the largest sea-farmed fish worldwide, account for about 59% of total farmed fish.
  • In 2015, Asia accounted for 89% of the 67 m tonnes of fish farmed worldwide, followed by the Americas (4%), Europe (4%), and Africa (2%). China is by far the world’s biggest aquaculture producer, with a 62% share worldwide.
  • Norway is the largest aquaculture producer in Europe, with a share of 45%. Iceland ranks 25th in aquaculture in Europe, with about 8,000 tonnes, or 0.3% of the European total.
  • Arctic charr was the leading aquaculture species in Iceland, at 3,937 tonnes, an increase of 466 tonnes YoY. About 3,260 tonnes of salmon were farmed, or 705 tonnes less than in the prior year. In addition, 728 tonnes of rainbow trout and 74 tonnes of cod were farmed.
  • The export value of farmed fish was about ISK 7,024 m in 2015, as opposed to ISK 5,530 m in 2014, at constant prices. As before, the US was the largest market for Icelandic aquaculture products, with about 35% of total value in 2015. It was followed by the UK, with about 9.3%, and Germany, with 7.5%.
  • The amount of aquaculture permits is highest in the West Fjords and West Iceland, where permits have been issued for annual production totalling 21,698 tonnes. Authorised production under aquaculture permits has increased by 2,320 tonnes since 2014.

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