Pan Fish (OSE: PAN): Pan Fish posted good results in its two most important production areas, Norway and Chile, in the third quarter. Operating profit before fair value adjustment of the biomass (IFRS) totalled NOK 245.5 million in the third quarter 2006, compared with NOK 35.2 million in the corresponding quarter last year. At the same time Marine Harvest, which will remain independent of Pan Fish pending receipt of final regulatory clearances from the UK and French competition authorities, has posted good results in Norway, and made progress in its other areas. If the un-audited figures reported by Marine Harvest were consolidated with those of the Pan Fish Group, the two companies combined would have made an EBIT before fair value adjustment of the biomass of NOK 797.8 million during the quarter.
"We are well on the way to building the world's leading seafood company. A high level post-merger planning effort, has been initiated, and we expect final clarification with regard to competition authority approval of the Marine Harvest acquisition in the UK and France by 20 December this year. We are pleased with the results posted in the third quarter by the important production areas Chile and Norway. Measures have been implemented to improve the profitability in Scotland. Marine Harvest, which is still operated independently of Pan Fish pending receipt of regulatory approvals, has reported a good performance in all areas, particularly Norway, where the company achieved an EBIT/kg of NOK 16.90," says CEO Atle Eide.
Key figures from the third quarter 2006[1]
- Gross operating revenues totalled NOK 1,652.0 million in the third quarter 2006, compared with NOK 392.4 million in the same period in 2005.
- Operating profit before depreciation and fair value adjustment of the biomass (EBITDA) totalled NOK 326.4 million in the third quarter 2006, compared with NOK 72.2 million in the same quarter in 2005.
- The Group's EBITDA margin was 19.8 per cent in the third quarter 2006, compared with 18.4 per cent in the corresponding period last year.
- Earnings per share in the quarter amounted to NOK 0.10, compared with NOK 0.07 in the same period last year.
- Net interest-bearing debt totalled NOK 7,540.3 million at the end of the third quarter 2006. The equity ratio was 56.7 per cent at the same point in time.
Business units
The Pan Fish Group divides its operations into two business units, Fish Farming and VAP. Fish Farming had gross operating revenues of NOK 1,106.5 million in the third quarter, compared with NOK 958.4 million in the same period last year (this is a pro forma figure arrived at by adding together Pan Fish and Fjord Seafood's individual results). Operating profit (EBITDA) before fair value adjustment of the biomass totalled NOK 342.2 million, compared with NOK 213.0 million in the same period last year. There is a substantial variation in volume and return on investment between the various producing countries. Norway, which accounted for roughly half of gross revenues in the quarter, experienced difficult conditions early in the quarter, but subsequently went on to perform satisfactorily. However, developments and results in Scotland have not reached the targets set.
VAP had gross operating revenues of NOK 671.6 million in the third quarter, compared with NOK 477 million (pro forma) in the third quarter 2005. Operating profit totalled NOK 7.3 million, compared with NOK 8.7 million in the corresponding quarter last year. The decline in profits within this area is due to the fact that prices for finished products sold to customers have not risen sufficiently to fully offset the rise in raw materials prices.
Marine Harvest
Marine Harvest has posted extremely strong results in the third quarter 2006. Particularly we would highlight the Norwegian fish farming operation which with an EBIT/kg of NOK 16.90, is only marginally lower than in the previous quarter despite both lower volumes and reduced prices. Strong progress has also been made in Chile compared with the previous quarter. This is driven by lower costs and higher prices in the US market. At the same time, efforts to streamline the Company and realise synergies continue unabated in the run-up to an expected integration with Pan Fish and Fjord Seafood.
Pan Fish, Fjord Seafood and Marine Harvest are preparing for integration of the three companies. Integration of Pan Fish and Fjord Seafood is already underway. Integration plans with respect to Marine Harvest will be implemented subject to and only after receiving the necessary approvals from the UK and French competition authorities.
Further developments
The price of Atlantic salmon in the EU has normalised in the third quarter, after the record high prices achieved in the previous period. However prices and margins remain high for the time of year compared with historical figures. Also for the Group's other main markets, prices are favourable as compared with previous years, and no further negative effects of trade restrictions are expected in what remains of 2006. The company expects a good balance between the global supply of farmed salmon and demand, both in established and new markets, in the next couple of years.
Pan Fish (including Fjord Seafood) expects to harvest approx. 38,000 - 42,000 tonnes gutted weight in the fourth quarter 2006. The total volume of fish harvested by Pan Fish (including Fjord Seafood) will therefore come to approx. 121,000 - 125,000 tonnes gutted weight for 2006 as a whole.
The Board is pleased with the results for the third quarter given the strain on the organisation due to the ongoing processes in relation to the acquisitions of Fjord Seafood and Marine Harvest. The Board further emphasises that the competence and resources inherent in the new, combined, Pan Fish is unique in a global perspective and should form a solid basis for long term strong profitability in the Company.
For further information, please contact:
CEO Atle Eide, +47 911 52 977
CFO Trine Sæther Romuld, +47 991 63 632
[1] Fjord Seafood is consolidated with effect from the second quarter 2006. Unless otherwise stated, comparable figures for 2005 relate only to Pan Fish. The figures for the second and third quarter do not include Marine Harvest, since Pan Fish is still awaiting the necessary approvals from the UK and French competition authorities and has not yet taken control of the company.
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