Financial performance

The Icelandic fishing industry has been profitable since the early nineties. The topmost figure shows the profitability of the consolidated industry, on average the profit of the industry has been 6.1% of total revenues. Only in 1997 and 1999 did the industry lose money, 1.4% in 1997 and 1.3% in 1999. The figure indicates as well, that the profitability of the industry has been improving in recent years. Every year since 2001 the profit of the fishing industry as a whole has been above 5% of revenues, but between 1993 and 2000 the profitability of the industry was never above 5%. The best years were 2001, when the profit of the industry was 18.1% of revenues, and 2006, when the profit was 16.9%. The reasons for the increased profitability of the industry are mainly twofold, increased productivity and higher prices.

The fluctuations of the Icelandic currency (króna=ISK) explain some of the variation in profitability. When the index is high, the ISK is weak and when it is low, the ISK is strong. The ISK was lowest in 2001 which was the best year ever for the Icelandic fishing industry. On the other hand, 2005, when the ISK was strongest, was the 2nd worst year for the industry since 2001.

The second figure shows the prices of groundfish, shrimp, fish meal and oil from 1993 to 2006, indicating that the prices of fish meal and oil have increased the most, being 150% higher in SDR in 2006 than in 1993. On the other hand, the prices of shrimp have declined slightly being 5% lower in SDR 2006 than 1993. For the most important category, groundfish, prices have been increasing almost steadily since 1993, being 40% higher 2006 than 1993.

The quantity exported explains some of the variation in profitability. The total exported quantity of fisheries products is relatively stable during the whole period. There have been years, however, when the quantity exported has been considerably lower than in other years. Those years are 1982, 1983 and 1991. In those years, Icelandic catches of capelin were very low, so the export of fish meal and oil was at a minimum. This has a significant impact on the total export of Icelandic seafood, because in a normal year fish meal and oil are over 40% of total export volume.

Freezer trawlers have generally presented the most profitable aspect of the fishing industry. On average, the profit earned by freezer trawlers was 8.9% of revenues between 1993 and 2006. The best year for the freezer trawlers was 2001 when their profit was 16.5%, but the worst year was 1997 when they lost 3.4% of revenues. Shrimp processing and fishing, on the other hand, have as a rule been the least profitable sector of the Icelandic fishing industry with average their profits of only 3.3% of revenues. The main reasons for the low profitability of this segment of the fishing industry are sharply decreasing catches of shrimp together with falling prices. Consequently, the fishery has all but disappeared.

The average profit of pelagic sector has been 5.8% of revenues during the period observed. What is special about the profit of this segment of the fishing industry is that its profit is by far more variable than that of other branches of the Icelandic fishing industry. For example, the standard deviation of the profit of the pelagic sector is almost double that of the freezer trawlers. The reason for this is that catches, especially of capelin, the most important species, are highly variable. Furthermore, the prices of fish meal and oil fluctuate much more than prices of other fish products. The best year for the Icelandic pelagic fish industry was 1996 with a profit of 21,4% of revenues, but the worst year was 1999 when the industry lost 20.1% of revenues.

The profitability of the groundfish industry has been increasing steadily since 1993. The profitability of this sector shows a high correlation with the fishing industry as a whole, since it constitutes the mainstay of the Icelandic fishing industry. Its profit has on average been 6.1% of revenues, which is the same figure as applies to the entire Icelandic fishing industry. The groundfish industry has been profitable every year since 1997 when it exhibited a loss of 5.5% of revenues. The best year was 2001 with a profit of 19.6% and 2006 also came out well, returning a profit of 18.5%.

Stefán B. Gunnlaugsson, University of Akureyri