The SalMar Group achieved satisfactory results in central Norway, demanding quarter for northern Norway and Scotland.
The SalMar Group generated gross operating revenues of NOK 395 million in the third quarter 2008, compared with NOK 462 million in the corresponding quarter in 2007. Operating profit before fair value adjustment of the biomass was NOK 74 million in the third quarter 2008, compared with NOK 107 million in the same quarter last year. The change can largely be ascribed to a lower harvest volume and somewhat lower margins due to increased production costs.
"SalMar's Central Norway fish farming business posted satisfactory margins, though achieving good margins in the VAP business remains a challenge," said CEO Leif Inge Nordhammer. "In northern Norway our results are affected by a (planned) low harvest volume in the quarter as well as high unit costs associated with harvesting of the remaining ISA-infected salmon. Both regions are under a certain amount of pressure with regards to costs, but we are working systematically to counteract this through the implementation of a series of measures to improve our efficiency. These measures, combined with a great focus on biological factors, are important for us and our future performance," Mr. Nordhammer said.
The SalMar Group generated gross operating revenues of NOK 395 million in the third quarter 2008, compared with NOK 462 million in the corresponding quarter last year. The change can largely be ascribed to a 20 per cent reduction in the harvest volume compared with the same quarter in 2007.
The Group made an operating profit before fair value adjustment of the biomass of NOK 74 million in the third quarter 2008, compared with NOK 107 million in the corresponding quarter in 2007. This resulted in an operating profit per kg gutted weight of NOK 7.3 for SalMar Central Norway and an operating loss per kg gutted weight of NOK 0.6 for SalMar Northern Norway in the third quarter 2008.
SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farming facilities in mainland Scotland, the Orkney Islands and on Shetland. The business generated gross operating revenues of NOK 174 million in the third quarter 2008 and made an operating profit of NOK 8.6 million, compared with NOK 26 million in the corresponding quarter in 2007.
SalMar's key figure for profit performance under IFRS is EBIT (operating profit) before fair value adjustment of the biomass. Adjustment of the fair value of the biomass results from the requirement to value biological assets (the biomass) at fair value instead of cost price. SalMar reports EBIT before fair value adjustment of the biomass in order to show the underlying performance of its operations during the period.
The SalMar Group, including 50 per cent of Norskott Havbruk AS, is expected to harvest around 70,500 tonnes gutted weight in 2008. For the year as a whole this breaks down as approx. 45,500 tonnes for SalMar Central Norway and approx. 13,000 tonnes for SalMar Northern Norway. Norskott Havbruk is expected to harvest around 24,000 tonnes, of which 50 per cent (12,000 tonnes) falls to SalMar.
The price of salmon in the third quarter 2008 was higher than in both the third quarter 2007 and the second quarter 2008. Exports from Norway rose in the third quarter by around 4 per cent compared with the same period last year, which is also the case for 2008 as a whole. Exports to the EU grew by around 5 per cent. On the whole demand is growing most strongly in France, Poland and Russia.
SalMar expects there to be a relatively good balance between supply and demand for Atlantic salmon for the rest of the year. As a result we believe in satisfactory salmon prices in coming months despite the current turmoil in the world's financial markets.
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