IMPROVED OPERATIONAL EFFICIENCY IN CENTRAL NORWAY IN A QUARTER CHARACTERISED BY FALLING SALMON PRICES
The SalMar Group posted an operating profit before fair value adjustment of the biomass of NOK 134 million in the third quarter 2011.
SalMar Central Norway improved its operational efficiency compared with the second quarter, but the phasing in of the InnovaMar plant and a relatively low share of fixed price contracts affects its results in a quarter characterised by falling salmon prices.
The results posted by SalMar Northern Norway, whose entire volume is sold in the spot market, reflect the fact that around 50 per cent of the quarter's volumes was sold in September, when spot prices were at their lowest point in the quarter.
As expected, and communicated in previous reports, the Rauma segment's results were affected by the PD virus being detected early in the lifecycle of the fish harvested by Rauma Gruppen in the second half of 2011. Although this has had only a limited effect on the fish's biological development, production cost per kg for Rauma Gruppen in the second half of 2011 are NOK 1-2 higher than in the first half of the year.
The SalMar Group generated gross operating revenues of 1,077.2 million in the third quarter 2011, compared with NOK 1,002.3 million in the corresponding quarter in 2010. The Group made an operating profit before fair value adjustment of the biomass of NOK 134.0 million, compared with NOK 300.7 million in the corresponding quarter in 2010. This gives an operating profit of NOK 5.51 per kg gutted weight for SalMar Central Norway, NOK 1.73 for SalMar Northern Norway and NOK 3.06 for segment Rauma.
SalMar owns 50 per cent of Norskott Havbruk AS which operates fish farming facilities in mainland Scotland, the Orkneys and Shetland. The business generated gross operating revenues of NOK 154.6 million in the quarter, and made an operating profit before fair value adjustment of the biomass of NOK 20.9 million. Operating profit per kg gutted weight in the quarter came to NOK 4.67.
At the close of the quarter SalMar owned 24.8 per cent of the listed Faeroe Islands fish farming company P/F Bakkafrost. In the third quarter 2011 the company posted an operating profit before fair value adjustment of the biomass of NOK 72.8 million. SalMar's share of the profit after tax and fair value adjustment of the biomass came to NOK 38.9 million.
Commenting on the results, CEO Yngve Myhre said, "The third quarter gave somewhat mixed results for the SalMar Group. Although SalMar Central Norway enhanced its operational efficiency compared with the second quarter, there is still room for improvement, particularly within the VAP activities at InnovaMar. Growth and development within the biomass is good, but there is still room for further improvements within our biological production going forward."
The SalMar Group, including its 50 per cent share of Norskott Havbruk AS, harvested some 34,140 tonnes gutted weight in the third quarter. SalMar Central Norway harvested 23,100 tonnes, SalMar Northern Norway harvested 5,800 tonnes, the Rauma segment harvested 3,000 tonnes, while 2,240 tonnes was harvested in mainland Scotland/Orkneys/Shetland.
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.
In SalMar's view the long-term outlook for the Group and the industry as a whole is good, despite the fact that salmon prices are low compared with recent years. However, SalMar expects the balance between supply and demand, as well as salmon's position as healthy and competitive food will result in the price of salmon stabilising over time at a level that will provide good earnings for the most efficient fish farming companies.
For further information, please contact:
Yngve Myhre, CEO, +47 916 30 174
Roar Husby, CFO, +47 982 06 974
See also the company's website: www.salmar.no
