Everyone. I'm Vidar Aspehaug, CEO of Kaldvík, and I'm pleased to welcome you to the presentation of our first quarter results for 2026 here from our offices in Reykjavík. Joining me today is our CFO, Hjalti Hvítklett, and together we'll walk you through the key highlights and developments from the past quarter. After the presentation, we'll open the floor for questions, and as before, you're welcome to submit them by email to qa@kaldvik.is. First of all, you know this disclaimer, so we don't have to pause for a long time with that. We continue. Today we'll begin with some key highlights from the last quarter and continue by covering operational updates, financial results, and strategic updates. We'll look ahead with a brief outlook and summary before wrapping up with a Q&A session. As said, if you have questions, please send to qa@kaldvik.is.
We'll start off with the key highlights from this quarter, and throughout the presentation, we have put the respective 2025 numbers in brackets behind the 2026 numbers to give you some reference. In the first quarter, we harvested 6,441 tonnes, with a group operational EBIT of -EUR 26.5 million. The main reasons for the negative results are the completion of the early harvest of the 2024 generation that was initiated due to winter wounds, resulting in lower average weight and a superior share of 30%, combined with a challenging market situation. I will comment more on this later. Looking ahead in 2026, we will be harvesting 1,900 tonnes in Q2 this year and all will be from the 2025 generation, and we're maintaining our full harvest guidance of 17,000 tonnes.
As announced to the market, the company is going through a challenging financial situation, and in Q1 2026, we identified a risk of breaching financial covenants and thus obtained a waiver from our banking partners, combined with a subordinate shareholder loan of EUR 20 million from our main shareholder, Austur. Strategically, the new Aquaculture Bill was submitted to Parliament in March, and I'll bring some more detail on this later in the presentation. The license that we have been awaiting approval on in Seyðisfjörður is still pending. I'll also come back with an update on the strategic review in this presentation. Starting with our farming operations, and as presented in our Q4 report last year, our 2024 generation experienced severe challenges with winter wounds, and we decided to initiate early harvest of this generation.
We were very optimistic for the 2024 generation, as this was the first- generation to receive a tailor-made vaccine towards winter ulcers, that was not enough to solve our problems with wounds. As previously communicated, part of the 2024 generation had a challenging release in the late fall due to delays and a dramatic and early drop in sea temperature. The winter 2024-2025 was extreme, with an unusually early start of the winter temperatures and significantly lower temperatures than normal throughout Q4 2024 and Q1 2025. The figure on the right illustrates this, showing the temperature for the last quarter of 2024 compared to the average temperature for the same period since 2010, shown in blue. A result of this, we decided to harvest the 2024 generation, aiming to harvest the complete generation as soon as possible.
By the end of Q1 this year, we finalized the harvest of the complete 2024 generation, approximately six months earlier than originally planned. The consequence is that the 2024 generation generated approximately 5,500 tonnes less harvest volume than anticipated, mainly due to lower average rate. Also, the superior share ended at 27% for the total generation and 30% in Q1, affecting the price achievement. The disappointing results with the 2024 generation has had a major impact on the financial situation of Kaldvík, and it's pretty much the main reason for the financial challenges that we are in currently. Thus, we are happy now to have put this generation behind us and look ahead with a promising 2025 generation and a new production strategy aiming to avoid similar situations in the future. Regarding the 2025 generation, things are looking better.
This was a milestone output for Kaldvík, reaching 8.25 million smolts, which was higher than our target of 7.5 million. We had a successful transfer with acceptable mortality. Even though the 2025 generation has had the same vaccine as the 2024 generation, we have had a much more favorable winter temperature this winter, closer to normal temperatures in the East Fjords of Iceland. You can see the blue line in the figure to the right that illustrates this, showing that we have normal to above average temperatures in the period. As a result, we have experienced the relatively good growth throughout the winter.
The 2025 generation is distributed across three sites in Reyðarfjörður, which is our warmest fjord, providing good biological performance and operational flexibility. As of now, we are seeing better performance in the 2025 generation than we saw at the same time for the 2024 generation. Despite some challenges related to the autumn fish during the period, fish health has remained good. At the end of Q1, we had a cumulative mortality in the 2025 generation of 13.2%, compared to 27.8% in the 2024 generation at the same time last year. Our land operations have been going through several upgrades over the last few years. Having reached a milestone of production capacity of 7.5 million smolts, our focus is now on optimizing the production. The target for 2026 is to release 7.5 million smolts, and the first outputs have already been executed with good results.
In accordance with our new production strategy, which I will comment further on later in the presentation, we are now completing 80% of our outputs before the end of July, compared to 60% last year. Also, we are receiving smolt from several external parties this year as part of our strategy to utilize synergies from partners to give more flexibility, optimize our production plan, and reduce the overall risks. As examples of improvement initiatives ongoing in land, our land station in the south is on target in their production and have successfully tested improvements in their smoltification routines using new light regimes. Also, our land site in the north is on track, and we experienced that the new water treatment system at Kópasker is performing as expected, and the new freshwater on-growing facility in Rifós, which is the big building in the picture, is running full speed.
Some information on harvesting and sales in Q1 2026. We harvested 6,441 tonnes, of which all was from the troublesome 2024 generation. Despite reaching a superior share of only 30%, the overall price achievement ended at EUR 5.59 per kg for the quarter. As we're all aware, there have been and still is a volatile market situation with respect to salmon prices. For the second half of 2026, we have secured a fixed price contract for approximately 35% of our volume, providing revenue predictability and downstream protection. As part of our production and sales strategy update, and after a detailed assessment of the cost and complexity of certification requirements relative to the commercial benefits, we have decided to gradually phase out and discontinue our Whole Foods Market certification. That concludes the operational update.
Now I'll pass the word to Hjalti, who will run you through the financial updates.
Thank you, Vidar. First off, we have highlights from the quarter, which was marked by high cost and low superior share from the 2024 generation. As Vidar already mentioned, challenging year, operational EBIT for the group was - EUR 26.4 million, and EBIT per kilo amounted to a -EUR 4.1. This is driven by different factors, mainly in the end harvest of the 2024 generation, with high cost price, lower market prices, and lower superior rates. Revenue reached approximately EUR 36.5 million. Despite low superior share of 30% and end harvest of the 2024 generation, the overall price achievement ended at EUR 5.6 per kg. Total assets are lowered by EUR 44 million during this quarter. This was primarily driven by harvest and therefore also lower biological assets.
Total liabilities decreased by EUR 10 million in the quarter. This was primarily driven by a decrease in trades and other payables. You see equity ratio there at 53% at the end of the quarter, slightly down from the previous quarter. In Q1, we identified a potential risk of breaching our financial covenants under the senior bank debt facility and started a constructive dialogue with our lenders. Following these discussions, we secured a waiver from the financial parties. This included a waiver of the EBITDA covenant for 2026 and also a deduction in the minimum liquidity requirements, down from EUR 10 million to EUR 5 million. We also have got an increased availability under the revolving facility for the year, bringing the headroom to around EUR 5 million on top.
As part of the overall solution, our largest shareholder also stepped in and provided a subordinate loan of EUR 5 million. Net interest and debt decreased by EUR 11 million during the quarter. EBITDA was EUR -23 million. The change in working capital amounts to EUR 32 million, primarily due to lower biomass at the end of the quarter. CapEx investment, EUR 0.9 million, and financial items amounted to EUR 4.5 million. We have postponed the publication of the 2024 and 2025 Annual Report to June 12th. This decision was made to allow additional time to complete the remaining audits and review procedures. The audit process has been more prolonged than anticipated. This is driven by several factors. As communicated in our Q4 update, 2025 has been a challenging year, particularly related to the 2024 generation, which also impacted the Q1 2026 performance.
These complexities have required additional audit work and validation.
In addition, there's also been a change in CFO during the reporting period, which also affects the timing. Overall, the delay is procedural in nature and not due to any single issues, but rather the combined effect of a complex operating year and a thorough audit process. Regarding the financial calendar, we have communicated before that we will provide quarterly company updates, while the financial reports are issued semi-annually with a half-year report and an annual report. Next company update is first half, which is scheduled for August 27th. We also have further information on the financials for the first quarter in the appendix, where we have the income statement, the balance sheet, cash flow statement, and also alternative performance measures. Then I give the word back to you, Vidar.
Thank you, Hjalti. A short status on our strategic updates. The strategic review of our production model is not completely concluded, but some of the main findings are already being implemented in our production plan going forward. The purpose of the review has been to analyze the entire Kaldvík value chain and identify how we can optimize production, utilize license capacity, and make effective use of our assets, given the specific conditions we operate under in Iceland. A key objective is to establish the lowest possible cost of production at an acceptable level of biological and operational risk. Initially, a project analyzing all of our production data combined with the review of scientific data, discussions with other producers and suppliers was performed to clarify the assumptions for a new production model adapted to the environmental conditions of the East Fjords of Iceland.
Further, several scenarios have been simulated as potential production models, including scenarios with reduced, stable, and increased smolt outputs. Although the output plan for 2026 now has been concluded, the complete plan for the coming years has not been finally concluded yet. However, as a result of this work, we are now adapting our output plan going forward to increase the share of fish grown with only one winter at sea. We are implementing concrete measures to reduce the risk of disease, and we are utilizing the opportunity to combine external smolt supply with our in-house smolt capacity. Further work is still ongoing to investigate opportunities to optimize fjord capacity and flexibility. Our goal is to reduce mortality to below 10% and to increase the superior share to above 90%.
We believe that we are now in the process of implementing measures that will take us long steps in the right direction. A core principle of our production strategy will be to have most of the fish only one winter at sea, but still utilizing the growth season. We can still have sites spanning two winters, but only sites then that are characterized from experience to be good two-winter production sites. Kaldvík has been active in the research ongoing to better understand the infection dynamics of the parasite Spironucleus salmonicida that has been causing increased mortality and reduced superior share in our production. After analysis of our production data and compared to Norwegian experiences, we now know that by avoiding transfers of smolt to sea in August and beginning of September, we can reduce the risk of this disease significantly.
Thus, we are aiming to completely avoid transfers in this period going forward, and most of our smolt transfers will be completed by end of July going forward. As already mentioned, 80% of our transfers will be completed by end of July this year, compared to 60% last year. This also supports our one winter main strategy. As mentioned, we are now in land focusing on optimizing the production in our land sites and have implemented an improvement program where several ongoing projects will contribute to further improve the quality of our smolt to strengthen the biological performance at sea. The transition to a one winter mainly strategy means that we will be transferring larger smolt, excluding the groups we have been struggling the most with previously, mainly the smallest fish late in autumn.
After having completed the construction projects that we have been having ongoing in our land sites for several years, we are now changing focus to optimize operations and are optimistic that we will see improvements in smolt quality and reduced biological risk going forward. Also, as already mentioned, we will have a hybrid smolt sourcing strategy, teaming up with some of the great new smolt and land-based producers in Iceland to fully utilize the combined strength of our internal smolt capacity and post-smolt production capacity with external capacity to optimize timing, sizing, and performance in accordance with our new production model at sea. Although we are not presenting a final production here in this presentation, we are already implementing the most important findings from the strategic review of our production model into our ongoing production, transitioning into the new production strategy.
80% of our smolt will be at sea before end of July. We will avoid the high risk output period in August and early September, and we will avoid the output of small smolt in autumn, strengthening our total smolt output by utilizing a hybrid smolt sourcing strategy. We will focus on finalizing the new production plan now in the coming weeks, and we'll present some more details from the new production strategy at our half-year report in August. The new Aquaculture Bill was submitted to Iceland's Parliament in March 2026. The industry has since submitted a formal response during the parliamentary process, addressing both the operational and tax framework proposed in the bill, focusing on amendments to taxation, operational flexibility, and regulatory predictability.
Dialogue with the government and Parliament has continued throughout Q2 2026, and the industry is working constructively with the legislative process to support a balanced framework that enables sustainable growth, investment, and competitiveness. Further discussions and potential amendments are expected before the bill is finalized. The new license in Seyðisfjörður is still pending. A bit about what to expect going forward. As already mentioned, and as you're aware, the market situation for salmon is volatile and hard to predict. In view of the total market situation, we have chosen to enter fixed price contracts for the next two quarters of about 35% of our production at prices that we believe are favorable, aiming to provide revenue predictability and downside protection. For Q2, we expect to harvest 1,900 tonnes, and the total harvest guiding for the year 2026 is maintained at 17,000 tonne.
All harvest for the rest of this year will be from the 2025 generation. To summarize, I will conclude probably with the outlook and the key points going forward. In Q1, we completed the harvest of the 2024 generation, and we're glad to see the first harvest results from the 2025 generation that looks promising. From Q2 onwards, all harvest will be from this generation. We harvested and sold 6,441 tonnes last quarter. As this was the 24 generation, we still had a low superior rate of 30%, contributing to the challenging financial situation of the company. After having identified the risk of breaching financial covenants of the company, the company obtained a waiver from the financial parties in Q1, combined with a subordinate shareholder loan of EUR 20 million from our main shareholder.
On the strategic side, we're already implementing measures resulting from the strategic review that we believe will contribute to stabilize our production and drive our mortality down and superior share up. A final production strategy will be presented at our half-year presentation in August. We are still awaiting approval of the licenses in Seyðisfjörður, and we are still seeing volatility in the market, but have secured a contract share for the next half of the year of approximately 35% of our remaining volume at, in our opinion, very favorable prices. This will provide revenue predictability and downside protection. We maintain our guiding at the 17,000 tonnes for 2026 with a harvest volume of 1,900 tonnes for Q2. We'll conclude our presentation here, and we will be open for questions.
As mentioned initially, please send questions to qa@kaldvik.is, and we'll have a short break before we're back with the questions. Thank you.
[Break]
We've got some questions here. The new strategy does not seem to directly address what you communicated to be your main problem the last few years. Wounds causing early harvest and downgrades. How do you plan to solve those problems?
Yes, the problems with wounds is a complex problem, but I do believe that we are implementing measures to reduce the problem. First of all, the losses due to wounds have been biggest and mainly the second winter at sea. By reducing to one winter strategy, we should reduce the losses due to wounds significantly. An important exception to that was the 2024 generation that started to get wounds already in the summer. We have identified some challenges related to the production in land in connection to vaccination that we believe will improve that situation as well. We also see that the challenges with peritonitis bacterium end up with fish getting blind, and we get mortalities eventually due to fish with wounds. Also reducing output in the high-risk season will reduce the challenges with wounds.
I do believe that we are addressing also the challenges with wounds in this new strategy.
Cool. Okay. Since we have a lot of questions, so maybe not be able to answer all. Is Whole Foods included in the contracts for second half of 2026?
Yes. That is included in the fixed price contract for the running year.
Another question similar to the other one. Any signs of winter wounds on the 2025 generation during this winter? For example, on the autumn fish, where you say you have some challenges.
Of course, we do see some with wounds, that has not been the main challenge there. The autumn fish that have seen some challenges is the fish in Haugesund that went out the latest. There we've had Pasteurella in some of the groups that went out in August and beginning of September. We've also seen losses due to peritonitis bacterium, especially in the groups that went out the latest. Wounds have not been the predominant problem in that fish.
What's available liquidity at the end of Q1?
We had cash on hand, if you look in the appendix, EUR 10 million. We have also the subordinate loan and availability adding up to around EUR 20 million.
This again on Whole Foods. How do you end the contract with Whole Foods? Are the contracts for the rest of 2026 with Whole Foods?
Okay. I already answered the second part of that question, why do we end it? As I said in the presentation, the certification requirements affect our production in a negative manner, we've made a lot of calculations and assessments on the indirect cost of this certification. Conclusion is that this is not beneficial for our production and that we will be better off with improving the production, improving the biology, and not having then the certification from Whole Foods Market.
A question on vaccine. Do you use the standard Norwegian winter wound vaccine on the 2026 generation?
We have made adjustments to our vaccination strategy, and we are using the PHARMAQ vaccine for the 2026 generation. Yes.
Regarding the 2025 generation, what is your best estimate for superior share on the 2025 generation?
We are estimating 80% at the time. Yes.
This was a confirmation of what we have addressed. I think so.
Okay. Thank you very much for listening and seeing our presentation, and see you next time.
Thank you.