Pan Fish (OSE:PAN): The salmon market was strong in the first half, and Pan Fish is optimistic with regard to market developments in both the short and medium term. The company's biomass (stocks of live fish) is rising again, and production costs for the fish now reaching harvesting weight are set to plunge. The Group's second quarter results have been affected by low harvesting levels due to the decision to cut production volumes last year. Pan Fish's recent refinancing has put it on a sound financial footing and the company will play an active role in the consolidation process expected in the industry. Pan Fish wishes to reinforce and further develop its leading market position, and will seek to grow both organically and through acquisitions. This will however be balanced against the market's ability to absorb volumes at profitable prices.
The Group achieved gross operating revenues of NOK 461.8 million in the second quarter 2005. The reduction compared with the same quarter last year is primarily due to a 35 per cent cut in harvesting volumes. However, the biomass is now rising again and will continue to do so until the company returns to full production in the course of the next three years. Pan Fish made a loss after depreciation (EBIT) of NOK 20.4 million in the second quarter 2005, compared with a loss of NOK 7.5 million in the same quarter in 2004. IFRS adjustments and non-recurring items had a net negative impact on operating profit of NOK 23.8 million during the quarter, NOK 17.9 million of which relate to write-downs and provisions associated with the winding up of the Danish business Vestlax Hirtshals. The net result for the Group in second quarter 2005 was NOK -32.8 million, compared to NOK -9.7 million in second quarter 2004.
|
(NOK million) |
2Q 2005 |
2Q 2004 |
|
Gross operating revenues |
461.8 |
592.0 |
|
EBITDA |
36.6 |
41.6 |
|
EBIT |
-20.4 |
-7.5 |
|
Loss before tax |
-32.8 |
-9.7 |
Solid foundation for growth and industry consolidation
Pan Fish was refinanced in May 2005, putting it on a sound financial footing. It now has a consolidated equity ratio of 35 per cent and a net interest-bearing debt that is less than half what it was a year ago. Net interest bearing debt was reduced by NOK 711.7 during the second quarter 2005.
"We now have a solid long-term financial foundation that is commensurate with our objective of restoring production to a level which fully exploits our existing infrastructure and production licenses. However it is the positive development on cost of fish in sea that is most satisfactory. We are confident that we will be able to take the position as cost leader when we have returned to full production. At the same time we are in a position to play and active and leading role in the extensive consolidation process we expect the industry to undergo in the next few years," says Pan Fish CEO Atle Eide.
Operations and outlook
Fish farming: The fish farming business achieved gross operating revenues of NOK 411.9 million in the second quarter 2005, compared with NOK 519.1 million in the same period last year. The business made an operating profit of NOK 17.2 million, compared with a loss of NOK 2.8 million in the same period last year. No fish were harvested in Canada or the Faeroes in the second quarter 2005. Production costs for marine phase fish continue to fall sharply. Pan Fish will harvest between 27,000 and 32,000 tgw in the second half 2005.
VAP: Pan Fish's value added products business (VAP) achieved gross operating revenues of NOK 74.4 million, down from NOK 131.8 million in the same period last year. VAP made an operating loss of NOK 32 million, compared with a loss of NOK 11.9 million in the same period last year. This includes NOK 17.9 million in write-downs and provisions associated with the business in Denmark. The Danish business Vestlax Hirtshals has been wound up.
Outlook: "The markets in both the EU and USA are very strong at the moment, and today's price levels have not been seen for several years. Demand is strong in both regions which, combined with a moderate growth in production, means that we expect to see a reasonably balanced market over the next few years," says CEO Atle Eide. "In the time ahead Pan Fish will bring a rising volume of increasingly cost-effectively produced quality salmon to the market. Over the next three years our costs will drop sharply from current levels, and the volume of output from our existing facilities and licenses will rise to around 100,000 tonnes round weight. To sum up, Pan Fish is entering a strong market armed with a solid balance sheet, falling costs and rising volumes," he continues.
For further information, please contact: CEO Atle Eide, +47 9115 2977
The full report including tables can be downloaded from the following link:
