EXTREMELY POSITIVE DEVELOPMENT IN OPERATING PROFIT IN THE 1ST QUARTER 2011
In the first quarter of 2011, Lerøy Seafood Group had a turnover of NOK 2,225 million, representing an increase from NOK 1,873 million for the same period in 2010. The Board of Directors is very satisfied with the Group's development and with the result achieved for the period, which is the best first quarter result achieved in the history of the Group to date. The Group's operating profit before fair value adjustment of biomass was NOK 445.8 million in the first quarter of 2011, compared with NOK 255.1 million in the first quarter of the previous year. The increase in operating profit compared with the same period last year is as high as 74.8%. This is explained by higher volumes and better prices for the Group's main products, Atlantic salmon and salmon trout. As a result of the Group's long-term industrial market strategy, the prices achieved for salmon and salmon trout will naturally deviate from the spot market prices. Realised contract prices have been lower than prevailing spot prices in the quarter under review. The Group's share of contracts was 53% in the first quarter of 2011 and will, based upon the current contract situation, be around 40-50% in 2011. Committed contract prices for 2011 are substantially higher than for 2010. Taking the above into consideration along with the Group's positive market outlook, this indicates that the Group can also expect to achieve good prices in the time ahead.
Thanks to good market conditions and improved biology, the associated company Norskott Havbruk (the Scotland-based Scottish Sea Farms Ltd) saw a good development in net earnings in the first quarter, despite significantly lower volumes. Income from associated companies before fair value adjustment of biomass therefore increased from NOK 26.2 million in the first quarter of 2010 to NOK 29.0 million in the first quarter of 2011.
The Group's profit before tax and fair value adjustment of biomass in the first quarter of 2011 was NOK 458.0 million against NOK 266.9 million in the first quarter of 2010.
Some interesting key figures:
- 27.9 thousand tons gutted weight of salmon and salmon trout harvested (Q1 2010: 22.5)
- Turnover NOK 2,225 million (Q1 2010: 1,873)
- Operating profit before fair value adjustment of biomass NOK 445.8 million (Q1 2010: 255.1)
- EBIT/kg all inclusive NOK 16.0 (Q1 2010: 11.3)
- Profit before tax and before fair value adjustment of biomass NOK 458.0 million (Q1 2010: 266.9)
- Spot prices for whole superior salmon have seen an increase of 17.0% compared with Q1 2010
- Net interest-bearing debt was NOK 940 million (NOK 1,132 million at 31.03.2010)
- Equity ratio 54.8%
FINANCIAL SUMMARY 1ST QUARTER 2011
Net earnings for the first quarter of this year corresponded to a profit before fair value adjustment of biomass of NOK 5.80 per share, against a corresponding figure of NOK 3.71 in the first quarter of 2010. The number of outstanding shares is 54,577,368. The Group's annualised return on capital employed (ROCE) before fair value adjustment of biomass was 28.1% in the first quarter of this year, against 20.6% in the same quarter of the previous year. The Group's financial position is solid, with book equity of NOK 6,367 million, corresponding to an equity ratio of 54.8%. The Group's net interest-bearing debt at the end of the first quarter of 2011 was NOK 940 million against NOK 1,132 million at the end of the first quarter of 2010. During the period, a dividend of NOK 375 million has been paid. In addition, the acquisition and consolidation of Sjøtroll Havbruk AS has increased net interest-bearing debt by NOK 689 million. The reduction of net interest-bearing debt of NOK 1.3 billion over the last four quarters, adjusted for dividend and acquisitions, is extremely satisfactory.
The Board of Directors has proposed to the Annual General Meeting on 25 May 2011 that the dividend is set at NOK 10.0 per share. The shares will be quoted ex-dividend on 26 May 2011.
THE MARKET SITUATION/OUTLOOK
Expectations in terms of future developments in the world economy, including development in demand for the Group's products, have become more positive and the level of uncertainty is now much lower. That said, the Board of Directors believes there is still rather more uncertainty than normal at the macro scale. Development in demand for the Group's main products, Atlantic salmon and salmon trout, has been extremely positive so far in 2011. A higher growth in the global supply of Atlantic salmon in the next few years compared with the last two years is expected. Correspondingly, the Board of Directors anticipates a continued good development in the global demand for Atlantic salmon. High demand together with expectations for improved productivity for the Group, including improved biology, provides justification for the Board's positive attitude to the Group's development.
The Board of Directors currently anticipates a better result for the Group in the second quarter of 2011 than was achieved in the second quarter of 2010, and correspondingly for 2011 as a whole.
Questions and comments may be addressed to the company's CEO, Henning Beltestad, or to the CFO, Ivan Vindheim.
Bergen, 11 May 2011
The Board of Directors of Lerøy Seafood Group ASA
