The profitability of Norwegian salmon farming companies : a study of profitability variation

Abstract

The conditions in the Norwegian salmon farming industry are constantly changing. Locally and globally, regulations, consolidation and technological advancements are some of the factors having a deep impact on the current industry. To ensure competitiveness, it is essential to emphasise on profitability and taking the correct strategic decisions. The objective of this thesis is to indicate what may cause variation in profitability in the current Norwegian salmon farming industry, and what will be important in the future. The study has an explorative and descriptive purpose. Our study object consists of 169 different Norwegian salmon farming companies, representing roughly 70% of the industry. To indicate possible reasons for profitability variation, we have studied the competition environment of the companies, important sources of profitability and the correlation between several factors and economic performances. Our main findings reveals that purchasing costs and cost efficiency in terms of other operating costs seems to explain variation in relative profitability. The price of salmon naturally has a great impact on the profitability of the industry. Further on, there is also a correlation between debt ratio and relative profitability.