Samherji Sells to Síldarvinnslan

Börkur ship fishing

Seafood company Síldarvinnslan has bought a 50% share in the seafood sales company Ice Fresh Seafood for ISK 4.7 billion from Samherji. Samherji’s CEO Þorsteinn Már Baldvinsson had to step down from the board of Síldarvinnslan when the purchase was decided. RÚV reported first.

Samherji has run the company Ice Fresh Seafood, which sells fish abroad through a sales network covering over 60 countries. As soon as Síldarvinnslan acquires half of the company, a certain reshuffling of the other foreign sales companies of Samherji Group and Síldarvinnslan will be carried out, transferring them partially or completely to Ice Fresh Seafood.

Purchase price considerably above book equity

Síldarvinnslan’s announcement of the purchase states that the purchase price in the transaction is considerably higher than the Ice Fresh Seafood’s equity. Síldarvinnslan is paying ISK 4.7 billion for half of Ice Fresh Seafood and the value of the company in the transaction is 76% higher than the company’s book value of equity at the end of last year. It states, however, that there are decades of knowledge and business relationships behind IFS in the main markets for Icelandic seafood. According to the CEO of Síldarvinnslan, investing in the sales company strengthens sales and marketing, allowing Síldarvinnslan to get further in the value chain.

Samherji owns over 30% of Síldarvinnslan and when its board decided to buy, Þorsteinn Már Baldvinsson, CEO of Samherji, had to step down from the board. It is stated in the announcement that he was not involved in decision-making regarding the purchase.

A pillar of Iceland’s economy

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. Another large purchase in the Icelandic seafood industry was announced yesterday when Brim purchased 10.83% of Iceland Seafood International.

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið.

Largest Catch in Icelandic History – 3,400 Tonnes

Börkur ship fishing

Fishing vessel Börkur NK likely broke an Icelandic record when it landed 3,409 tonnes of capelin in Seyðisfjörður last week. The capelin had been caught over four days, and it took 18 hours to transfer it onto land. There are only two other vessels in the Icelandic fleet that could land a catch of similar size.

Fish processing company Síldarvinnslan hf. posted about the catch last week, saying that only Börkur’s sister ship Vilhelm Þorsteinsson EA, as well as Beitir NK, would have the capacity to land such a large catch (with Beitir having significantly less cargo space than the other two ships).

Eggert Ólafur Einarsson, factory manager of Síldvarvinnslan in Seyðisfjörður, says the capelin is high-grade. “This is quality material and the processing is going very well. There’s good fishing now and the processing is going very well,” Eggert stated, adding that the company was preparing to land from another vessel, Barði.

Capelin catch quotas issued by the Icelandic Marine and Freshwater Research Institute have fluctuated in recent years, with no quota at all being issued in the 2019-2020 season. Last year’s quota was issued late, but later increased several times after research expeditions detected more fish.

Hálfdan Hálfdanarson, who sat in the captain’s chair when Börkur headed out to sea once more, stated that the crew’s spirits were high. “Everyone’s in high spirits here on board, since we’re experiencing a real capelin season.”

Electricity Shortage in Iceland Impacts Local Industry and Data Centres

Low cost of electricity in Iceland compared with the rest of Europe

Iceland’s National Power Company has made a sudden decision to reduce electricity supply to industrial operations, including fishmeal factories, aluminium smelters, and data centres, RÚV reports. The decision was made due to an energy shortage caused by a series of issues, including a problem at a power station, low hydro reservoir levels, and limited transmission capacity. The affected companies have either had to reduce operations or switch to other power sources such as oil.

Data centres reduce operations

The National Power Company initially stated that cuts would be made in January, but decided yesterday that the supply would be reduced immediately. Sigríður Mogensen of The Federation of Icelandic Industries (SI) says the cuts have had an immediate effect on data centres. “We know of cases where Icelandic data centres have unfortunately had to close down customer service [yesterday]; early in the morning after this information became available. That means an immediate loss of revenue and we can keep in mind that the data processing industry generates at least ISK 20 billion in foreign exchange earnings for the national economy annually.”

Iceland’s abundance of low-cost, renewable energy and low average temperatures that minimise the need for cooling systems have made it an attractive destination for data centres and cryptocurrency mining operations in recent years. Sigríður added that the current cuts could have a long-term impact on the industry by leading potential customers to question energy security in Iceland. “This main this is that this is a definite loss for the economy and we need to learn the lesson from this to plan further ahead.”

Fishmeal factories switch to oil

CEO of Síldarvinnslan fishmeal factories, located in East Iceland, says the cuts will not impact production levels but will affect cost for the company, which will have to rely on oil for power. “Oil prices are high at the moment, whereas the price of electricity has taken into account that it is curtailable as it is now. So this will bring a rise in cost.” The capelin season is around the corner, meaning that fishmeal factories will have high energy needs.