Everyone, welcome to this quarter one presentation for Icelandic Salmon. We appreciate that you took your time to join us on this presentation. With me today, I have our CFO, Jónas Heiðar Birgisson, who will present our financial update, and Hjörtur Methúsalemsson that will manage the Q&A session after the presentation. You can send questions for the Q&A session to questions@arnarlax.is. Behind me today you see our site, Hringsdalur, where we put out spring fish in 2022, and that is in our new 200 meter cages that we also started to use last year and that have given very promising results so far. Icelandic Salmon AS is a listed company on the Euronext Growth market in Oslo. The company is the sole owner and parent company of Arnarlax ehf.
All operational activities of the group are performed in Arnarlax ehf and Arnarlax sustainable Icelandic Salmon is the common brand for all operational activities and products from Icelandic Salmon. The company have today four smolt facilities with a current capacity of 7 million-8 million smolts, depending on the size of the smolt. We have farming in sea on seven sites in three fjords in the Westfjords of Iceland. All our production is ASC certified, and we have a total maximum allowed biomass of 23,700 tons. We have our harvesting plant in Bildudalur that is BRC certified and have a capacity of 30,000 ton per year. All sales are done by our internal sales team, both to the domestic and into the global markets. Quarter four gave a all-time high harvest volume for Icelandic Salmon.
The quarterly harvest volume was 6,572 tons compared to quarter one 2022, where it was at 3,369 tons. We saw an increased harvest due to combination of wounds on the fish, as we reported in the quarter four presentation and a strong market situation. This together gave a lower harvest rate, which we are now compensating by delaying harvest to produce more biomass in quarter two. We kept on harvesting on the 2021 generation in Q1. The EBIT for the quarter ended at EUR 18.37 million and an EBIT per kilo at EUR 2.79. Our guidance for volumes for 2023 is 16,000 ton and we will still expect a significant increase in 2024.
We will continue to harvest on the 2021 generation in Q3, and the Q2 volumes for this year will be very low due to the high harvest in Q1. We see an increased cost compared to Q4 2022 with the harvesting on the 2021 generation. This cost increase is affected by a price increase on our input factor, especially feed, that have been allocated to our biomass during the production. We expect a stable cost development in 2023. Biological challenges on autumn fish in the 2022 generation gave a one-off effect on our EBIT of approximately EUR 1.8 million.
There is, by the way, a very good performance on the spring fish on the 2022 generation, and the 200 meter cages has been a success on exposed site. In 2023, we will implement changes in our output strategy for smolts. Two important things that we are changing is that we narrowed down the output window and will not put smolts into sea after 15th of September every year. We also this year expect an increase in smolt weight of 33% from 150 g to 200 g in average. The market prices have been strong, and we see a strong price achievement compared to market price. Even though it's hard to reach Nasdaq prices on average when they are so high as they were in the first quarter.
We did see a negative price effect due to quality downgrades. The fact that we are able to export our production fish gives us a better price achievement on the production fish than we see for comparable fish in Norway for the same period. High sekunda share due to wounds have a total negative effect on the price achievement, and the percentage of downgrades in the quarter was 21%. Due to that, we did increased harvest in Q1. The size of the harvested fish was relatively low, compared to our normal harvest, which gave a reduced sale to the American market, which is mainly a market for fish about six kilos. For sales and marketing update, we still see a strong interest for Icelandic Salmon.
We have been working closely with more companies across North America and Europe to promote our high quality sustainable Icelandic Salmon. One fun fact related to this is that Arnarlax Salmon will be served during the US Open tennis tournament for the participants of the tournament. They of course want only the best quality food, and we will supply them with the best quality salmon. It's not a big volume, but it's a good confirmation about the quality of our product. Last month we shaked hands with the chef for the tournament in our main office in Bildudalur that this will happen. We have also had an active focus on participation in seafood exhibitions, and we see big interest for our salmon, both from new and existing customers at the shows.
High market price has also been a part of the reduced volume to the North American market, but total in the quarter, we sold 18% of our volume to the North American market, and those 18% represented 21% of our revenues. Volumes to United States is then slightly down compared to quarter four 2022, and it's slightly up compared to quarter one 2022. Our contract share in quarter one was 8%, and we expect it to be approximately 10% for full year 2023. A brief update on our license status in seawater. Arnarlax now holds licenses of 23,700 tons of Maximum Allowed Biomass in the Icelandic Westfjords. That's the three fjords, Ísafjörður, Patreksfjörður, and Tálknafjörður.
We are currently in a process to establish bigger sites in Ísafjörður for better Maximum Allowed Biomass utilization. Bigger sites gives room for more cages on each site, by that the opportunity to utilize the best sites better and also the utilization of the Maximum Allowed Biomass. The application we have in Ísafjörður for 4,500 tons more Maximum Allowed Biomass is in process and has been delayed. This is biomass that will probably be auctioned out, the framework around the auction system in Iceland is, at the moment, not in place. An environmental assessment is being worked on related to the expansion of the 4,500 tons of biomass alongside an assessment for the expansion of our current sites in Ísafjörður. The exact timeline for this process is still undetermined.
Our application for farming in Ísafjörður is still in process. We expect a license there for 10,000 tons, despite there is an uncertainty the share of fertile salmon. There is a risk assessment for sailing routes that is now being carried out by the authorities and is affecting all license applications for seawater operations. That include our applications as well, so this is a process that will go on throughout the autumn of this year. We are expecting a new risk assessment in 2023. The Marine Research Institute will, according to law, reevaluate the risk assessment this year, and that is a process that will be going on every third year going forward. We are very excited to see the outcome of this assessment.
I will then give the word to our CFO, Jónas Heiðar Birgisson, for the financial update. Thank you so much.
Good morning, everyone. I would like to begin by thanking Bjørn and welcoming you all for this presentation. I am pleased to provide you with an overview of Icelandic Salmon financial position for the first quarter of 2023. In the first quarter, Icelandic Salmon net cash flow from operational activities was EUR 29.8 million, mainly driven by favorable market condition, a high harvesting volume in both fourth quarter last year and first quarter of 2023. We are fortunate to have a good return rate from our customers, and we remain committed to maintaining low risk in sales by purchasing credit insurance for all our customers and following strict procedures when selling our high quality product.
During the first quarter, Icelandic Salmon harvesting volume remained high, and we ended the quarter with an even higher account receivable balance than at the end of last year, or EUR 23.9 million, which will benefit our cash flow in the second quarter. While we continue to invest in growth projects, our current focus is on seawater equipment such as net, barges, and cages. With net cash flow from investing activities totaling up to EUR 8.8 million in the quarter. We expect to continue our investments throughout the year, with the main emphasis on seawater equipment and continuing growth plans. Due to the group's all-time high quarterly harvest volume and low production, we saw a decrease in our biological assets at fair value in the quarter.
The biological asset at cost value in sea decreased by 34%. That includes the one-offs that Bjørn Hembre mentioned earlier, where we wrote off value of EUR 1.8 million due to mortality. We also had change in our fair value adjustment summed up to negative EUR 3.7 million within the quarter. We anticipate a low harvesting volume in second quarter and a good growth to build up the biomass in sea, which will have an impact on our operational cash flow in the second quarter. At the same time, our biological assets value will increase. The net cash flow from financial activities in the quarter was negative of EUR 13.4 million, with loan repayment totaling EUR 12.5 million.
As of the end of the first quarter, our group's net interest-bearing debts amounted to EUR 36 million, representing a decrease of EUR 20 million within the quarter. Our balance sheet reveals that the group's total asset decreased between the quarters. That's mainly due to decreased value of biological assets. Meanwhile, the balance of accounts receivables and cash and cash equivalent increased by EUR 60 million from end of last year. We are proud of our operational performance in the quarter, where we are seeing our best quarterly results ever. We are still a small company operating from a small community in the Westfjords of Iceland. This great achievement would not be possible without our hardworking employees and support from our local community.
Icelandic Salmon's good operational performance in the first quarter has led to a decrease in debt levels and increase in equity ratio, with a total equity of EUR 155 million and equity ratio of 68%, further enhancing our already strong financial position. Moreover, the group's net interest-bearing debt towards 12-month rolling EBITDA ratio stood at 0.7 at the end of the first quarter, indicating even a further stronger position. The success will support our ongoing refinancing process, which we plan to complete by end of June 2023, beside the current loan agreement being valid until June 2024. Furthermore, this robust financial position enables the group to pursue our investments and support our growth project plans. Now, before we conclude, I would like to remind everyone that our group's annual statement for 2022 is available on our website at arnarlax.is.
We will in short time proceed with the Q&A session, and we hope you'll join us for that as well. Thank you for attending and giving us your time.
Hello, everyone, and welcome to the Q&A session of our presentation. My name is Hjörtur Methúsalemsson, and I'll be directing the questions to my colleagues here. I want to remind you that you can still send in questions to questions@arnarlax.is, and we will do our best to address the questions that come in. I noticed when Bjørn was talking about the all-time harvest summary, he said Q4, but that was of course right at that time. He of course meant to say Q1 because that surpassed Q4 now in the last quarter. Just to make that clear. We can start with questions.
They are coming in here. If we start with, you, Bjørn, how is the smolt output status for 2023, and how many smolts are going into sea?
The status of the groups that are going into sea this year is good. We actually don't guide on the number of smolts, we see an increase from last year of about somewhere between 20% and 25%. That looks good, and we also see that we are increasing the average weight with 33% from 150 g last year to 200 g this year. The biggest groups will be, yeah, somewhere around 700 g. We are on a good track with the smolt strategy.
Excellent. Excellent. We have questions coming in. We have one question here from Olav Treit. Can you comment on expected harvest volume and cost level for Q2?
The harvest volume will be very low. We are using quarter two more or less to produce more biomass in sea. Try to utilize our MAB as good as possible since we did a quite intensive harvest in quarter one. It will be very low. A low volume is of course going to... For the harvested volume the cost will be a bit high though, some fixed cost there as well. Yeah. It's-
Yeah.
Yeah.
Okay. We have a question here from Axel Jacobsen. He is wondering about, can you comment on the harvest size that was in Q1, and how was this compared to Q4?
The harvest, average harvest weight for quarter one was, approximately 4.3 kilo. I don't have the exact number for quarter four, but that was, significant higher than that. Yes.
Yeah. Okay. We have a question here from Bergstein Pálsson. He is wondering, is there any news on dual listing on the Icelandic Stock Exchange?
There is no other news that we. Of course, we said that that was something we were working on, in an earlier presentation. It's still something we are working on. We have no, like, news at the moment, but it's a work in progress.
Yeah. We have another question from Olav Troa. What should we think of fixed cost for Q2?
Yeah. What should you think? That's. We don't, of course guide on exact numbers, but of course there will be some fixed cost in quarter two. Yes.
We have a question here from Nils-Ole Kroeigaard . How do you expect cost per kilo to develop through 2023? Any more inflations that will be reflected in P&L?
As I said in the presentation, we expect a stable cost level. It seems that we have been at the peak of the feed prices, which of course affect our cost maybe the most. That peak has been gone into our stock, cost of our stock. We expect a stable cost development for rest of the year.
Okay. Yeah. We have a question here from Vilhjálmur Gíslason at Gildi. What are your expectations for the new risk assessment? Are there any indication of increased licenses as a result, or are there any downside scenarios in this regard?
We haven't actually got any indication how this will turn out. The only thing we know is that the Marine Research Institute is working with the risk assessment, and that is, of course, good to know. We have no indication. We of course have big hopes, but no indications and are maybe not expecting a huge change. We are hoping for some increase.
Yeah. Okay. We have a question here from Yngve Myhre regarding license applications. Assuming you get some share of fertile salmon in Ísafjarðardjúp, what is the potentials for 2024 stocking?
It's if we get it in Ísafjarðardjúp, we need to see if we will get ready and to put out in 2024. For 2025, it should have a positive effect for the potential for the output. Yes.
Yeah. Okay. There was one question here regarding the popularity of Icelandic Salmon. Like, what is it about Icelandic Salmon that makes it so special that it's getting to U.S. Open?
We. Of course, it's salmon. Salmon itself is of course popular. We have been able, through communication with our customers and their customers, to build a confident about the quality, that when it comes to color and it, we see that they have very little gaping, soft fish, black spots and things like that, which is quite normal to see in salmon and it's very rare in our salmon. I think that, all together, over time has kind of built a reputation about the good quality.
Yeah. Okay, good. Here's a question to you, Jónas. How will the low volumes expected in Q2 affect the financial status of the company?
The low volume in the second quarter will of course have a effect on our operational cash flow. I think the company and we are prepared for this low harvesting period, and we ended the first quarter on a strong financial position. We, we're of course building up our biomass, as Bjørn mentioned, and continuing our investments in our growth projects. Yeah, I think we're ready, but it will of course have a an effect.
Yeah. It looks like we have touched on all the questions that have been sent in. So I will just thank you for joining us here. Have a great day.