Below is a summary of the business news of relevance in Iceland the week beginning on 29 May 2023. The summary, which is based on publicly available information only, is prepared by the BBA//Fjeldco team for the benefit of clients and contacts of the firm and is subject to the disclaimer noted below.
Wednesday, 7 June 2023
Public Offering in fishing gear and rope manufacturer Hampidjan oversubscribed over three times
Return on equity of Icelandic banks below US and Europe averages
Banks correct in maintaining access to capital markets
Islandsbanki predicts economic growth of 2.5 – 3.1% in 2023-2025
Trade between Iceland and UK has increased since Brexit
Investors exiting securities funds – outflow 17 billion ISK this year
Danish consultancy COWI buys Icelandic engineering firm Mannvit
Biopharmaceutical company Oculis raises 40 million USD
Icelandic airlines with the lowest operational margins
Income of sleep health company Nox Medical up 33%
Sky Lagoon spa earns a profit in its second operating year
Travel IT company Dohop raises 1.1 billion ISK
US airline Delta increases number of flights to Iceland by 50%
New business information portal for Icelandic startups
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Public Offering in fishing gear and rope manufacturer Hampidjan
oversubscribed over three times
Hampidjan Group, world leader in the production, development and servicing of fishing gear and netting, sold shares worth 10.9 billion ISK in a public offering that ended last Friday, according to a statement from the company. The offering was oversubscribed over three times as 3,700 subscriptions were received worth a total of 32.3 billion ISK. In order book A, 17 million shares were sold for a fixed price of 120 ISK per share and raising roughly 2 billion ISK, and 68 million shares were sold in order book B for the final price of 130 ISK per share, which was determined by a book-building process worth in total 8 8 billion ISK Hampidjan‘s shares are expected to be admitted to trading on Nasdaq Iceland’s main market this Friday as Nasdaq Iceland has accepted the company ‘s application for an upgrade from the First North market without conditions
Return on equity of Icelandic banks below US and Europe averages
The return on equity of Icelandic banks in 2018-2022 were 6.9% and below the 8% average of European banks and 10.4% average of banks in the US, according to a report in daily newspaper Morgunbladid. The return on equity of the Icelandic banks has been improving as in 2022 it was 9 7%, compared to 9 8% on average in Europe and 11% on average in the US
Banks correct in maintaining access to capital markets
CBI governor Asgeir Jonsson said in an interview with business website Innherji that it was important for the Icelandic banks to maintain access to foreign capital markets, when commenting on recent issuing of three year bonds by Arion Bank and Islandsbanki with a yield of up to 420 points on top of the interbank rate. He said that the banks were correct in keeping the doors open at challenging times.
Islandsbanki predicts economic growth of 2.5 – 3.1% in 2023-2025
Islandsbanki Research predicts GDP growth at 3.1% this year, 2.4% in 2024 and 2.8% in 2025. In the macroeconomic forecast published by the bank last week, it states that export growth will be the main driver of output growth this year, and that the Icelandic economy has picked up strongly after a steep contraction in the wake of the Covid-19 pandemic The outlook is for the current account balance to improve, and a more favourable current account balance and other factors enhance the likelihood of the ISK appreciating further ahead The bank predicts that the ISK will be approximately 8% stronger at the end of the forecast horizon than it was at the beginning of 2023
According to the statement from the bank, “Inflation has proven stubborn but will give way during the forecast horizon, owing to a more tranquil housing market and greater price stability abroad Demand pressures in the labour market will subside gradually, and real wages will start rising again in 2024. Persistent inflation will call for a tight monetary stance, with the policy rate set to peak at 9.5% later this year. A gradual monetary easing phase could begin early in 2024“.
Trade between Iceland and UK has increased since Brexit
Chris Barton, UK trade representative to the EU, said in an interview with daily newspaper Morgunbladid last week that trade relations between Iceland and UK are solid and that they are based on shared values and beneficial transactions going back centuries. He added that the strong relation was evident as trading between the nations is now greater than ever before, despite the complications associated with Brexit Barton was a speaker at a conference organized by the British-Icelandic Chamber of Commerce and law firm BBA//Fjeldco last week where results from a survey on post-Brexit trading were published 39% of participants said that they had not experienced any hindrances and 11% claimed that all issues had been solved However, 39% said that some unresolved issues remained following the exit of UK from EU and EEA
Investors exiting securities funds – outflow 17 billion ISK this year
Domestic investors have been fleeing securities funds this year, according to a report on business website Innherji. The outflow from securities funds that began in early 2022 is ongoing, with outflow from equity funds being 4 billion ISK so far this year and 13 billion ISK from bond funds.
Danish consultancy COWI buys Icelandic engineering firm Mannvit
Last week the Danish consultancy company COWI bought the Icelandic construction and engineering consultancy company Mannvit for an undisclosed price, according to daily newspaper Morgunbladid The two companies have cooperated in recent years and have a shared vision on the importance of sustainability The number of employees at COWI is 7,500 whereas Mannvit employs 250 people
Biopharmaceutical company Oculis raises 40 million USD
Last week the Icelandic biopharmaceutical company Oculis, which is listed on Nasdaq NY, completed an offering of equity worth 40.25 million USD. 3.5 million shares were sold for 11.5 USD per share, or 5% below market value. 5 million shares were on offer but the board had decided to turn down all offers under 11.5 USD. Oculis was founded twenty years ago by two Icelandic medical professors and the company is now headquartered in Switzerland with operations in the US, Europe, and China
Icelandic airlines with the lowest operational margins
According to a report in US Airline Weekly and reported by business website Innherji, the two Icelandic airlines Play and Icelandair have the lowest operational margins in Q1 2023, i e EBIT as a proportion of revenues, of the 58 global airlines that the magazine researched The margin of Play was negative by 54% and Icelandair was negative by 26%. Birgir Jonsson, CEO of Play, says that the first quarter of any year is always difficult and that the operational objective is to minimize the loss during winter
and maximize profit during the summer Bogi Nils Bogason, CEO of Icelandair, says that the operational margin last year was 1 5% and that expected margin this year is 46%
Income of sleep health company Nox Medical up 33%
The income of the sleep health company Nox Medical increased by 33 4% last year to 31.6 billion EUR, according to a report in business gazette Vidskiptabladid. The profit was 8.7 million EUR and total assets amounted to 34.1 million EUR, an increase of 41% from 2021. The company holds no interest-bearing debts. By the end of last year, equity was 27.9 million EUR, up 46% from 2021. The total number of employees of Nox Medical in 2022 were 78.
Sky Lagoon spa earns a profit in its second operating year
The new spa resort Sky Lagoon near Reykjavik, which opened in April 2021, returned 410 million ISK in profit last year in its first full operating year The income was 3 3 billion ISK, up 140% from 2021 while operational costs were up 100% to 2 8 billion ISK
Travel IT company Dohop raises 1.1 billion ISK
Icelandic travel IT company Dohop, which lost 935 million ISK in 2022 on top of a loss of 761 million in 2021 while increasing revenues from 318 million ISK to 1.1 billion, earlier this year raised 1.1 billion ISK by selling equity worth 375 million ISK and bonds worth 750 million ISK, according to business gazette Vidskiptabladid. According to a statement from Dohop, the financing is for marketing as there is now a significant demand for the services and solutions of the company.
US airline Delta increases number of flights to Iceland by 50%
Daily newspaper Morgunbladid reports that US airline Delta Air Lines will offer 808 flights this summer to and from Keflavik and US destinations, which is up 50% from last year An important addition is a new route to and from Detroit Other routes are New York and Minneapolis where the number of seats on offer is up 27% All in all, Delta will be offering 146 thousand seats to and from Iceland this summer The US market is the most important market for tourism in Iceland as one of three visitors to the country is travelling from the US.
New business information portal for Icelandic startups
Business Iceland, the organisation responsible for marketing Iceland’s export industries, has partnered up with global data platform for intelligence on startups, Dealroom, in order to set up an ecosystem portal for Iceland, according to tech and startup news outlet Northstack The database counts more than 400 startups, 250 funding rounds and 100 investors in the Icelandic ecosystem The purpose of the portal is to make it easier for people to gain access to information about the cuttingedge environment in Iceland
