Domstein closes Måloy whitefish fillet factory

Domstein ASA’s (OSE: DOM) is discontinuing its whitefish fillet production in Måloy. The factory has an annual turnover of over 150 million NOK and employs around 90 people; 86 of them will receive their notice. Espersen A/S is taking over cod fillet production and is moving it to its factories in Poland and Lithuania. For this Domstein will be compensated 21,6 million NOK in total.

Domstein and Brødrene Larsen Eftf. AS have signed an LOI on saithe fillet production transfer to Larsen’s Kalvåg factory in Norway. Other parts of the production will be moved to Domstein’s own factory in Kungshamn, Sweden. In total Domstein expects reduced turnover of about 70 million NOK annually and similar reduction in balance sheet, strengthened working capital and liquidity position and a one-off gain of 10 million NOK in 2012 accounts from these measures.

Domstein family, which founded Domstein ASA in 1925, still owns 50% of the company. The company is active in various activities within fishing industry primarily in Norway and Sweden. It also owns 50% of Norway's largest autoline fishing company Ervik Havfiske AS. Ervik Havfiske has 12 modern longliners, which do all their fish catching by hook and line.

Espersen A/S is a a world leader in processing of frozen fish block and frozen fillets. The company focuses on white fish like cod, haddock, Alaska pollock and saithe. Domstein has factories in its home country of Denmark but also in Koszalin, Poland, Klaipeda, Lithuania and Qingdao, China.

Brødrene Larsen Eftf is also a family business with long traditions. It has in recent years invested heavily in renovation of facilities and has made a production facility acquisition as well. It has thus grown into an important player in cod slaughter. That is rather seasonal work so the company is happy to diversify into more round-the-year saithe processing, which had already been becoming more important.

Domstein’s property holdings in Norway are organised into a real estate company called Domstein Eiendom AS. Domstein’s head office in Måløy lies is co-localized with Norway Pelagic ASA’s (OSE: NPEL) head office. Norway Pelagic also has a production facility in Måloy but NPEL has been investing into its operations in Måloy as of late with the building of a new cold storage just last year and extensive modernization in recent years.

Domstein felt that in order to stay competitive it needs to make such a move as its production facilities are in Norway and Sweden alone. Domstein said the situation has been grim for years and it saw no possibility to make whitefish production profitable in Måloy facility. This should tell something about the current profitability challenges whitefish processing factories in Norway face. Domstein has long been focusing on attaining highest environmental standards and the two companies aim to develop a brand called “Domstein Sustainable Seafood”together. Domstein will market and sell Espersen’s products in Norway and Sweden. Domstein’s share has climbed 1% in today’s trading.