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Snæfell, a subsidiary of Samherji, has announced that it will close its coldwater shrimp processing operations next month at its Holmadrang facility in Holmavik, Iceland.
“Market conditions for the sale of coldwater shrimp have been difficult since the beginning of the pandemic and are not expected to change in the coming seasons.” This was the perspective with which they explained that it was impossible to rebound.
In the statement, they explained that Samherji took over the shrimp processing operation at the end of 2019, but Hólmadrang was then in a moratorium. Since then, the situation has been complicated, and although Snæfell has tried to keep the operation running, it has been unsuccessful.
From the beginning, they have made it clear that it did not affect to salary payments or financial obligations. In addition, the company has paid no dividends since Snæfell took over the business. However, they also needed the money to upgrade facilities.
“It is evident that significant renovations of both housing and equipment are necessary for the processing operations to remain competitive. According to the assessment of a specialized party, the cost of new equipment is not less than 500 million ISK. Added to this amount is such a high cost due to housing refurbishment,” the statement explained. Moreover they added that, “Hólmadrang’s board of directors assesses that the operation does not support such an investment.” So the outlook worsened day by day, and despite actively seeking other ways to ensure continuity, it appeared that there was no way to reverse the decision to close.
205 million ISK loss last year and negative gains
In the past few years, there have been consistent financial losses. According to the annual accounts, the previous fiscal year resulted in a loss of 205 million ISK (EUR 1,37 million /USD 1,49 million), along with a negative equity of 360 million ISK (EUR 2,41 million /USD 2,68 million)
In addition, the other major problem presented by the company was the need for raw material purchases. The processing facility is unfavorably located and, as a result, implies expensive transportation costs for raw materials for processing. In addition, the company explained the lack of cold storage in Hólmavík, which has caused associated costs.
Founded in 1983, Samherji is one of Iceland’s largest fishing companies, specializing in intensive fishing, land development, and aquaculture. Samherji operates under the brand ICE FRESH SEAFOOD and distributes its products to customers through Samherja Ice Fresh Seafood. The company’s core focus is promoting sustainable fish populations and responsible ocean resource management.
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