Watch this quarter three presentation for Icelandic Salmon. My name is Björn Hembre, and with me today I have our CFO, Róbert Róbertsson. After the presentation, there will be a Q&A session where you can ask questions by raising hand in Teams or type your question into the chat for the meeting. Icelandic Salmon is, as most of you know, a company listed in Euronext Growth in Oslo and the First North list in Reykjavík, and is the sole owner of Arnarlax ehf, where we perform all our operations in Iceland. We are fully integrated from egg to sales and have four smolt facilities with sufficient capacity for production of 25,000 tons- 30,000 tons of harvest volume. We have our farming sites in the Westfjords of Iceland with a total maximum allowed biomass of 23,700 tons.
All production in sea is ASC certified, and we also harvest our own fish in our harvest plant in Bíldudalur, with a capacity in that plant of 30,000 tons per year. We have a BRCGS certification on the harvest plant. We also sell all the fish by our own sales team out in the global and domestic market. If we look at the highlights for the quarter, the harvest volume was 5,200 tons compared to 3,800 tons in quarter three 2025. In quarter three this year, we had an EBIT that ended at EUR 1.4 million, improving from negative EUR 9.4 million in Q3 2025. We see in the quarter an improvement in biological performance for all generations in sea. Most of the harvest in Q3 was from our 2024 generation, which will be harvested out the first week in October.
We also started harvesting from the spring output of the 2025 generation, which shows a decreased cost level. The reduction in cost out of stock on our harvest volume, combined with good capacity utilization and still more effects of our ongoing cost-saving project, gave us a reduced operational cost. We also saw a good performance in our smolt production and a satisfying result on the smolt output for 2026. There was also an improved price achievement toward market price. This was mainly driven by the fact that the tariffs into the U.S. market was removed on July 24th, and also a strong China market. In addition, of course, a good job done by our sales team. I will then give the word to you, Róbert, for a financial update.
Thank you, Björn, and good morning. This is the first slide of two slides on the group balance sheet. The main story this quarter is that the balance sheet grew. This is the best growth period in sea, and investments in our biological assets are the main contributor and in line with expectations. Total assets increased by EUR 11 million to EUR 281 million. The increase is mainly in current assets, which rose by EUR 12 million from EUR 123 million up to EUR 135 million.
Fixed assets were broadly stable and ended at EUR 145 million. Total liabilities rose by EUR 14 million and ended at EUR 168 million. Non-current liabilities increased by EUR 10 million and ended at EUR 137 million, while current liabilities rose by EUR 4 million. This is consistent with the higher net debt I will cover on the next slide. The equity ratio decreased from 43% down to 40%.
Assets grew by EUR 11 million, like I said, but liabilities grew more. We remain comfortably within our covenant framework and expect pressure on covenant compliance to remain limited throughout 2026. Fair value adjustments was EUR 200,000 and had limited effect on the result and on the equity. Available liquidity stood at EUR 36 million at the end of the quarter.
On the next slide, we present the development in net interest and debt during the quarter, and it increased by EUR 10.7 million and ended at EUR 134.4 million. Most of the increase sits in net debt, which rose by EUR 10.4 million and reached EUR 122.5 million. Leasing was almost flat, up only EUR 300,000 and ended at EUR 11.9 million. If we walk through the bridge from left to right, EBITDA, we generated a positive cash contribution from EBITDA of EUR 5.1 million in the quarter. Taxes paid, EUR 2.7 million went out in taxes.
This is the production tax for the first half of the year, which was paid in August. The production tax for the second half will be paid in February next year. Working capital, this is the largest driver. As expected, working capital absorbed cash this quarter of almost EUR 8 million. As I said earlier, third quarter has historically been the best growth period, thus increased investments in our biological assets are in line with expectations.
Net investments, CapEx investments reached EUR 600,000 in the quarter and EUR 2.2 million year-to-date. Net interest paid was EUR 2.6 million. Finally, leasing and other items added EUR 1.9 million. In short, EBITDA covered the tax payment and part of the interest, but the working capital build pushed net interest-bearing debt up by EUR 10.7 million during the quarter. That puts us at EUR 134.4 million in net interest-bearing debt, including leasing.
That concludes the group's financial, and I will hand the word back to you, Sir.
Thank you, Róbert. Give you a little update on sales and market. We saw in the quarter a strong improvement in total price achievement compared to market price. This was driven by the before-mentioned zero tariffs into the U.S. and also strong interest from the Chinese market. This led to that the volume going into Europe decreased to 47% of our total volume compared to 65% in quarter two. This is the first quarter where we have less than 50% volume going into Europe. This is very positive since the European market is the market where we are least competitive with other salmon-producing nation when it comes to logistic cost and transport time. The superior share of the harvested volume was 96.7%, which also contributed well to the improved total price achievement. Total price achievement year-over-year increased with EUR 0.87 per kg from Q3 2025 to Q3 2026.
The share of volume going into the North American market was for the quarter 36%, and that is up from 16% in the quarter two. The share of volume going into the Asian market was 17%, down from 19% in Q2. This decrease is driven by the strong demand from the North American market, which show interest for the same sizes as the Asian market.
I was myself attending the Seafood Expo in Qingdao in China last week, and felt the very strong interest for our salmon there. The demand is driven by good quality and a very good reputation of our packing station in Bíldudalur, which has a strong focus in China. They don't talk about companies, they only talk about the packing number for the packing station. We have a very good reputation there, and that contributes very well to the price achievement in that market.
We also still see a growth in volumes on sizes below 6 kg in China for sales to the retail market, and this is important for further growth in the Chinese market. In October, we got a direct flight from Keflavík to Beijing. It started operating in the beginning of the month, and the first salmon is now sent with this flight directly to China from Iceland. This gives us a shorter and very competitive transport time into the Chinese market, and will be a benefit for us going forward. This flight that is operated by Air China will have three flights a week to Beijing from Keflavík. The contract share for quarter three was 7%, and the contracts continue to contribute positive to the total price achievement towards the market price.
If we then take a look into the future as we see it, the guided volume for 2026 is 20,000 tons and is reduced due to movement between years. Volume guidance for 2027 is 18,000 tons, and this is affected by biological challenges that we have faced on our autumn 2025 generation in October and so far in November in Q4 2026. We foresee a stable cost development in Q4, when we will be harvesting only from our spring 2025 generation. We expect higher feed prices going forward, and also expect a slight increase in cost in 2027 due to that. We still see a potential of harvesting 26,000 tons on our existing licenses. Most CapEx to reach that goal is done, and remaining CapEx needed is put on hold until new framework for the industry is known.
The contract share for the year is expected to be approximately 10%. As I have mentioned, we see a strong demand for Icelandic salmon in the market, and with the zero tariffs into the U.S., we still expect strong price achievement towards the market price going forward. The license application in Ísafjarðardjúp is still a work in progress. The risk assessment for sailing for the 10,000-ton license there is now being finalized, and constituting the final step towards approval of that license. The license was awarded in 2024, but revoked due to, among other things, a missing risk assessment for sailing. Other hot topic for the industry in Iceland is new law for the industry. A new aquaculture law was presented to the parliament, Alþingi, in June, containing many positive elements, but was, as we all know, not approved.
This has resulted in continued uncertainty on key regulation for both the industry in total and also for Icelandic Salmon. The lack of clarity on key regulation is unsustainable and is sadly making it irresponsible and impossible for us to commit to further growth and CapEx right now. There is a clear need for a change in regulation, and particularly a change in the unfortunate and excessively high industry-specific tax. A predictable, more reasonable, and compatible tax regime with potential for growth and more optimized monitoring from the authorities are key to continued development of fish farming on Iceland. We therefore hope for a resolution soon, putting in place a framework for the industry that will enable continued investment and growth, value creation, and creation of local jobs in our communities. So that was what we planned to present for you, and thank you to the presentation.
We will now move straight in Q&A session, so please raise your hand or send questions in the chat, and Róbert will follow up that. So feel free.
So the first question that we have received is as follows: What caused the biological challenges on the fall 2025 generation? And can you comment on the harvest profile toward 2027, first half versus second half in percentage? And how will the biological challenges on the fall 2025 generation impact cost kilo coming quarters?
So if you start with the first one, what caused the biological challenges on the fall 2025 generation?
The biological challenges on the 2025 generation was a combination of some gill issues, which is something that can happen in the autumn, combined with low oxygen levels due to algae bloom. It was several reasons that worked together towards some increased mortality.
Then the next—
Yes.
Yeah, sorry. Go ahead.
You can take the next.
Yeah. Can you comment on the harvest profile for 2027, first half versus second half in percentage?
I don't have the exact percentage, but the harvest profile will be a bit backloaded. I would say between around 35%- 40% first half and the rest second half of the year.
Mm-hmm. How will the biological challenges on the fall 2025 generation impact cost per kilo coming quarter? I think the cost level in Q4 will definitely be affected by the incidents or issues that we are having with the 2025 generation. 2025 generation are split into two sites. One site is probably our best site and will be harvested out in Q4 and in Q1. But the site with the issue, the other 2025 generation, or yeah, from the 2025 generation, that will, part of it will go into, potentially go into an early harvest, which will affect the cost level in Q4. The final question was, how many smolt will you release to sea in 2027?
We expect an increase of around 800,000, so we should be close to 6 million smolts in 2027.
Mm-hmm. Then we have a similar question. Can you elaborate on the biological challenges that impact 2027 harvest? How much do the biological challenges hit on an isolated basis? I think you have answered most of that—
I do not think we could say a specific number on the potential loss in Q4. That is way too early. We are not halfway in the quarter. I think we have basically said what we could tell around that issue.
Mm-hmm. When is it reasonable to expect that Icelandic Salmon reaches its potential of 26,000 tons?
That is very dependent that we get a new law into place with an acceptable tax level and also foresee a potential for further growth, because that is what the industry needs now to move forward. When we see the new law approved in Alþingi, I think we can be more specific on that. Until that is uncertain, we basically are where we are.
One more question here. In the salmon presentation, it is stated that the cost is expected lower in fourth quarter versus the third quarter. It sounds like that might not be the case. As it stands now, the projected cost level for Q4 is lower than Q3. However, to be on the conservative side and indicate a stable cost level is, like I said, conservative towards the market. As it stands now, lower, but with the issues that we are navigating with one of our sites from the 2025 generation, the cost level might be stable quarter- on- quarter. I do not believe that we have received any further questions. If you have any further questions, please feel free to reach out to me or Björn via email, and we will try to answer afterwards.
Yeah. Of course, if anyone wants one-on-one meetings on Teams, we are also available for that.
Sorry, there is one more question. Does this mean that the 20,000 tons is the max capacity for the coming years?
Yes, that is. Of course, we have smolts for up to 30,000 tons, but we will. We need to know the framework before we do the final investments, mainly on equipment in the seawater operation before we proceed with the growth.
I think this concludes this session.
Then I will thank you all for joining us and wish you a great day. Bye-bye.
Bye-bye.