October 24, 2013
Continuous losses by the Norwegian supermarket chain ICA, combined with ever higher raw material salmon prices led to Enghav’s filing for bankruptcy, the Norwegian seafood distributor’s CEO Jan Dahl told Undercurrent News.
But even in administration the company is still operating at 100%, and a potential bid from an interested party could ensure the business’ continuation, said Dahl.
On Wednesday, the Norwegian processor Domstein said Enghav, in which it owns 35%, was filing for bankruptcy.
Commenting to Undercurrent, Dahl said Enghav had been working on a refinancing of the business, which had made losses in 2011 and 2012, and posted a poor second quarter.
However, the plans hit a snag over the weekend, and on Monday evening, the board and management decided to go into administration, said Dahl.
Enghav — which distributes the Sea Fraiche and Sakana brands – has debts of NOK 140 million, according to Dahl, and assets of NOK 80m. The group made negative earnings before interests and taxes (ebit) of NOK -3m in 2012, on revenues of NOK 777.9 million (€95m/$131m).
What pushed the company over the brink, said Dahl, was the combined effect of ICA’s troubles and the salmon prices.
ICA’s Norwegian stores have experienced a spectacularly poor performance in the past years, to the extent that some are predicting the chain could be out of the market unless things change. The Norwegian arm of the Swedish chain has lost NOK 1 billion (€122m/$169m) from 2008 to 2012, with some executives saying the chain is losing NOK 20 million a week, according to the Norwegian news website e24.
Its market share has tumbled by nearly half in the past 15 years, to just 10%.
As Enghav’s largest customer, ICA’s troubles in turn had strong repercussions for Enghav, said Dahl.
In April, ICA hit further problems when a deal it had struck with rival Norgesgruppen to share sales and distribution was suspended by the competition authority, which decided to investigate the agreement. No decision might come out before 2014.
For Enghav, the problems this caused was then compounded by the high raw material prices of salmon, a product which accounts for around a fifth of Enghav’s sales. The company, said Dahl, found itself unable to pass on the price increase.
Faced with an inability to refinance, the group filed for administration.
However, Dahl insisted, the company and its 150 staff are working as normal, and deliveries and production have not been stopped, he said.
Already an interested party has shown interest in taking over the business, or “most of it”, he added. Dahl declined to give more details about the potential bidder.
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