December 9, 2022

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Clues that salmon tax leads to split of seafood giants – NRK Norway – Overview of news from different parts of the country

The seafood industry was completely crippled when the government announced on Tuesday afternoon Seafood industry will also get tax on ground rent.

If the government gets its way, companies’ profits will be taxed at 40 per cent on top of 22 per cent corporation tax.

Robert Nass, investment director at Nordea, believes companies will do everything they can to avoid the tax hitting the biggest players.

Investment director Robert Næss predicts that if the government goes ahead with its proposal, the seafood giant will break into smaller pieces.

Photo: Nordea

Separate companies

– The practical effect is that companies will split up. There is no reason to pay 62 percent tax if you can get away with 22 percent tax. It’s something people hate, says Næss.

He predicts that companies like Movi will sell parts of the business.

Instead you get smaller companies, he says.

Movi is the world’s largest seafood company, dominated by John Fredrickson.

John Fredrickson, the big owner in the movie

Jan Fredriksson is the richest Norwegian of all time living in Cyprus. He is also the largest owner of Movi, the world’s largest seafood company, which will be hit by the government’s new salmon tax.

Photo: Ints Kalnins / Reuters

Additional duty will be levied only on companies that are allowed to produce more than 4-5,000 tonnes per annum. 7 out of 10 companies produce below this limit. As per the consultation memorandum.

The state makes the sour tax pill a little sweeter by paying a correspondingly larger portion at once. A fraction of the cost.

After the government’s tax shock, most of the companies saw their value fall by 20-30 percent. Investors expect the company’s earnings to fall sharply.

NRK has asked the Finance Ministry if this is the case The government’s goal is for the salmon giants to split up and end up in multiple hands, but the inquiry has yet to receive an answer.

Monitors the reduction of investments in land

Seafood analyst Karl-Emil Gjolas Johannessen of Pareto Securities predicts that seafood companies affected by the additional tax will hold back their investments – particularly in land plants.

– It’s natural to think that. When the government has more shares, companies have less money left over. Then there is less money to invest, says Kjolas Johannesen.

He says it’s a bit unclear at the moment what parts of the investment can be spent.

Carl-Emil Kjølås Johannessen, seafood analyst at Pareto Securities.

Karl-Emil Gjolas Johannesen, a seafood analyst at Pareto Securities, predicts a reduction in seafood companies’ investments on land.

Photo: Pareto

This is because the state, as a kind of co-investor, also picks up a large part of the bill while the state claims a large portion of the revenue in the form of a tax on cash flows, while having to pay the expenses.

– As far as I understand, this only applies to what happens in the ocean phase. For example, if you invest in offshore facilities, processing or smolt production, you will not get that investment deduction. This means companies invest less in this type of equipment, which of course creates jobs along the coast, Johannesen says.

Loss of value of NOK 55 billion

The government’s proposal to introduce a 40 percent land rent tax on fish farming for the largest companies should bring in up to NOK 3.8 billion annually to the treasury, according to government calculations.

Value of seafood companies on the Oslo Stock Exchange A fifth fell Following the government’s announcement of the introduction of a ground rent levy on salmon companies.

Seafood giants like Movi, Salmar, Leroy and others fell in value.

In total, the value of the biggest companies fell by more than NOK 55 billion, after the worst ever stock market day. According to the industry website Ilaks.no

The price drop hit Norwegian pension kroner at Folketriktfondet, which lost billions as the company’s second-largest owner.

On Thursday, most seafood companies fell further in the stock market, but the price drop was very moderate.

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