Norwegians increase share in Shetland Catch as Russian sanctions continue to bite
Shetland Catch has been posting losses for the second consecutive year - Photo: Shetland News Shetland Catch has been posting losses for the second consecutive year - Photo: Shetland News NORWEGIAN seafood company Pelagia has increased its shareholding in local company Shetland Catch from 50 to 75 per cent, it emerged this week.
The news comes after the pelagic fish processor posted a significant loss of £1.3 million for the second consecutive year.
The company has been hit hard as a result of EU sanctions against Russia imposed in the wake of its annexation of Crimea in 2014.
Shetland Catch has been exporting about 18,000 tonnes of mackerel and herring to Russia and the Ukraine every year, accounting for around 40 per cent of its business.
On Thursday, Shetland Catch chairman John Goodlad said he hoped closer cooperation with Pelagia would bring benefits for the local operation.
"Like many pelagic processors we have struggled over the past two years. The trend in the industry is very much towards bigger companies," he said.
"There are all kinds of opportunities that we see for our business in working more closely with them and being integrated into the big Pelagia operation.
"For the last seven or eight years Pelagia has been a shareholder in the company. They are a big operator in Norway where they have 16 plants."
Goodlad confirmed that the Catch incurred a loss of around £1.3 million in the year to 31 March 2016.
With losses of over £600,000 in 2014/15, that means Shetland Catch has lost around £2 million over the last two years.
Goodlad said: "The biggest change in Shetland Catch has been Russia's invasion of Crimea and Ukraine."
As a result of Russia's military operation the EU and Ukraine imposed sanctions against the county, which Putin retaliated to by stopping all imports of seafood from the EU.
It shows how global politics can have a devastating impact on a medium-sized company thousands of miles away from any conflict.
Historically, the Russian market has been a core one for Shetland Catch, with relatively good prices and steady demand.
"To lose that overnight was hugely challenging," Goodlad said. "We had to look for alternative markets in Europe, which is difficult, and we had to sell more of our products to Nigeria.
"We have done relatively well in securing new markets, but we have never been able to replace the Russian market in terms of the financial benefit."
Shetland Catch managing director Simon Leiper added that Pelagia was planning to invest in the company to ensure the Lerwick operation remains the preferred landing destination in the area.
"We are currently exploring opportunities to invest in the production area so that we remain competitive," he said.
"For example, through this investment, we have already placed an order for equipment to extract roe, which will expand and add value to our herring season."
The Pelagia investment will give the company a 75 per cent shareholding in Shetland Catch. However, voting rights on the board of directors will remain 50/50 between the Norwegian company and local shareholders Shetland Fish Producers Organisation (SFPO) and Lerwick Port Authority.