Brim buys 10.83% of Iceland Seafood International

Golli. A Brim ship in Akranes, West Iceland

Icelandic seafood company Brim has bought a 10.83% share in Iceland Seafood International (ISI), RÚV reports. The purchase entails the entire share of Bjarni Ármannsson’s company Sjávarsýn in ISI. Bjarni is also the CEO of Iceland Seafood but is resigning from the position.

Even prior to the sale, Brim was one of Iceland’s largest and most profitable seafood companies. With this purchase, the company intends to strengthen its sales network in Europe. The sale was announced to the stock exchange last night, as both Brim and Iceland Seafood are listed on Nasdaq Iceland’s main market. Brim paid over ISK 1.6 billion [$11.7 million, €11 million] for the shares.

Sold for one thousand pounds after losses

Iceland Seafood has faced difficulties in operations recently. The company sustained considerable losses in the operations of its subsidiary Iceland Seafood UK, which was eventually sold to the Danish company Espersen for the small sum of one thousand pounds. Iceland Seafood’s loss in the first half of the year amounted to ISK 2.2 billion [$16 million, €15.1 million].

The share price in Iceland Seafood last weekend stood at ISK 5.3 [$0.04, €0.04] per share and had never been lower since the company went public four years ago. The price rose by 4.72% at the opening of the market this morning in a transaction worth ISK 22 million [$160,000, €151,000].

Brim to strengthen sales network

Iceland Seafood is one of the main exporters of seafood in Iceland and operates offices in seven countries in Europe, North America, and South America. According to Brim’s CEO Guðmundur Kristjánsson, this is exactly what Brim is looking for with the purchase. The goal is to strengthen Brim’s sales network, especially with regard to markets in Europe.

Bjarni Ármannsson will step down as Iceland Seafood’s CEO and will be replaced by Ægir Páll Friðbertsson, managing director of Brim.

43% of Iceland’s exported goods

The Icelandic seafood industry is one of the country’s key industries, employing around 7,500 people or approximately 3.9% of the workforce. The seafood industry contributes around 8% directly to Iceland’s GDP, but its indirect contributions are much greater. Marine products account for 43% of the value of Iceland’s exported goods.

Consolidated wealth

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. In 2021, Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million].

In a column published in Morgunblaðið last year, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust and that it felt that this collective resource was not distributed fairly.

Opposition MP and former Social-Democratic Alliance Chairman Logi Einarsson pointed out that the wealth in the fishing industry was leading to accumulated assets in unrelated sectors, such as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

Fishing Industry Profits Spark Wealth Distribution Debate

fishing in Iceland

Iceland’s largest seafood companies made huge profits last year, if the first published financial statements are any indication, Fréttablaðið reports. Opposition MPs are arguing that the industry should be taxed more so its earnings are more evenly distributed throughout Icelandic society. According to Minister of Fisheries Svandís Svavarsdóttir, the nation sees the industry as unjust, largely because consolidation of fishing quota has funnelled large profits into the hands of very few individuals.

Billions in profits

At the end of 2020, the seafood industry’s equity was evaluated at ISK 325 billion [$2.6 billion; €2.4 billion]. In the same year, the industry paid just under ISK 4.8 billion [$37.7 million; €35.2 million] in quota fees, while the state treasury faced record financial challenges due to the coronavirus pandemic.

The fishing industry has continued to grow despite the pandemic recession. Between 2020 and 2021, the total value of catch in Iceland increased around 9%, from ISK 148.3 billion [$1.2 billion; €1.1 billion] to ISK 162.2 billion [$1.3 billion; €1.2 billion], according to figures from Statistics Iceland. Prospects continue to be good, especially since the price of fish has risen dramatically in the wake of the Russian invasion of Ukraine.

Four companies hold 60% of quota

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million] last year, and Síldarvinnslan’s profits are similar. In the first three months of this year, Síldarvinnslan has made profits of nearly ISK 4 billion [$31.4 million; €29.3 million]. Samherji, Kaupfélag Skagfirðinga (KS), and other fishing industry giants have not yet submitted financial statements from last year, but similarly high profits are expected.

In a column published in Morgunblaðið yesterday, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust, and that it felt that this collective resource was not distributed fairly.

Fishing money in other sectors

Opposition MP and Social-Democratic Alliance Chairman Logi Einarsson echoed these words. “We have watched a huge accumulation of wealth in very few hands, which has also led to a small number of individuals not only holding the majority of fishing quota, but due to this same wealth, accumulated assets in many parts of society, in unrelated sectors.” Logi named these sectors as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

“This creates a very unhealthy situation,” Logi continued. “And now that the entire public expects worsening livelihoods and various healthcare and welfare services are underfunded, quota holders should certainly pay more toward public expenditure, they are well capable of it, to say the least.”

Greenland Authorities Warn Arctic Prime Fisheries Against Fishing License Violations

Greenlandic authorities have warned the Greenlandic fishing company Arctic Prime Fisheries of possible repercussions if Arctic Prime violates the terms of its fishing license, Sermitsiaq reports. The violation in question is landing its catch in Iceland before having landed half of its permissible catch in Greenland. 29.53% of Arctic Prime Fisheries is owned by interconnected Icelandic seafood companies Brim and Útgerðarfélag Reykjavíkur.

December 17, Greenland’s government warned the company in January that they needed to land at least half of their permissible catch in Greenland before they landing their catch in other countries. According to Sermitsiaq, Arctic Prime protested the mandate but Greenland’s government upheld their decision, as late as January 28. Since then, Greenland’s Ministry of Fisheries has had wind of Arctic Prime’s ship on its way or even already landing fish in Iceland. As of last Friday, they hadn’t yet notified the police but did notify the company of the consequences it might bring to violate the terms of their Greenlandic fishing license, Jørgen Isak Olsen told Sermitsiaq.

Icelandic seafood companies Brim and Útgerðarfélag Reykjavíkur own 29.53% of Arctic Prime Fisheries, after extensive investments last summer. Arctic Prime is one of South Greenland’s largest private workplaces and was hard hit by the effects of the pandemic. The company has catch quotas of cod, mackerel, herring, as well as redfish and halibut. The company mostly fishes south of Greenland and in the Greenland Strait.

Top Icelandic Fishing Companies’ Profits Rose 50%

The profits of Iceland’s ten largest seafood companies grew by 50% in 2019 as compared to 2018, amounting to ISK 29 billion ($214 million/€180 million) last year. Viðskiptablaðið reports that at the same time fewer of the companies paid out dividends, and the total amount paid out decreased by 40%. Just two companies, Samherji and Brim, were responsible for around half of the total turnover and half of the profits of Iceland’s ten largest fishing companies in 2019.

Biggest Companies All Profited

The total turnover of the ten largest fishing companies in the country amounted to ISK 178 billion ($1.3 billion/€1.1 billion) in 2019 and increased by almost ISK 22 billion between years, or 14%. The companies’ total profit increased by more than 52% between years, from ISK 19 billion to ISK 29 billion. The performance of all ten companies improved between 2018 and 2019 and all companies turned a profit.

The total dividend payment of the ten fishing companies decreased by 40% between years, amounting to around ISK 3.7 billion ($27.3 million/€22.9 million) last year, down from around ISK 6.2 billion ($45.7 million/€38.4 million) in 2018. The number of companies that did not pay out dividends also tripled between years: from one in 2018 to three in 2019.

Two Companies Account for Half of Profits

Fishing companies Samherji and Brim (previously HB Grandi), are by far the largest of the ten. Samherji’s turnover amounted to ISK 50.5 billion ($373 million/€313 million) in 2019, which is almost 30% of the total turnover of the ten companies. Brims and Samherji’s turnover amounted to almost ISK 88 billion in 2019, which is half of the total turnover. The profit of the two companies was 47% of the total profit, or almost ISK 14 billion, and dividends paid were 68% of total dividends or about ISK 2.5 billion. Samherji is currently under investigation in Iceland, Norway, and Namibia due to tax evasion and alleged use of bribery to obtain fishing quota in Africa.

The ten largest companies were those who were allocated the most cod-equivalent tonnes for the 2020-2021 fishing year. Special allocations, such as shrimp and shellfish, were not included in the figures. Several of Iceland’s fishing companies have reported that the COVID-19 pandemic has had a negative impact on their business.

Brim’s Grandi Fish-Processing Plant to Close Temporarily Next Year

fish fishing haddock

Next year, the seafood company Brim will be closing its fish-processing plant in Norðurgarður – in Reykjavík’s Grandi neighbourhood – for a few months, RÚV reports. In order to install new processing belts to increase automation, the plant’s operations will be temporarily moved to Hafnarfjörður.

According to Guðmundur Kristjánsson, CEO of Brim, technological sophistication is, perhaps, the only way for Icelanders to remain globally competitive and to prevent fish-processing plants from moving overseas: “fish-processing plants abroad offer a premium for Icelandic fish, which is processed within the EU, in a more auspicious operational environment.” Kristjánsson adds that although the Grandi plant will employ fewer workers after opening again, their jobs will be more secure.

Brim has been involved in significant business dealings of late. It purchased the fish-processing company Kambur and the fishing company Grábrók, both of which are operated in Hafnarfjörður. The majority shareholder of Kambur and Grábók is a company owned by Hjálmar Þór Kristjánsson, Guðmundur Kristjánsson’s (Brim) brother. The acquisition means that Brim controls a quota that exceeds the fishing capacity ceiling. It has six months to rectify this surfeit.