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Another Strong Quarter For SalMar

by the Fish Site Editor
25 February 2010, at 12:00am

NORWAY - The SalMar Group made an operating profit of NOK 175.3 million in the fourth quarter 2009, 30 per cent more than in the same quarter in 2008. The board of directors propose a dividend of 2,2 NOK per share, a total of NOK 226.6 million.

SalMar Central Norway continues to make progress on the back of further sound biological developments and operational efficiency, and posted very strong results for the quarter.

SalMar Northern Norway had a challenging quarter, while stable prices and cost levels led to good results in Scotland.

For 2009 as a whole the SalMar Group posted an operating profit of NOK 584.8 million, some 73 per cent up on 2008.

The SalMar Group generated gross operating revenues of NOK 756.5 million in the fourth quarter 2009, compared with NOK 556.3 million in the same quarter in 2008. The Group made an operating profit before fair value adjustment of the biomass of NOK 175.3 million in the fourth quarter 2009, compared with NOK 134.5 million in the same quarter in 2008. For SalMar Central Norway this corresponded to an operating profit of NOK 10.54 per kg gutted weight in the fourth quarter 2009, and NOK 1.03 for SalMar Northern Norway.

SalMar's CEO Leif Inge Nordhammer said: "The fourth quarter was a very good quarter for SalMar Central Norway. Good biological development and a high level of operational efficiency have reduced production costs compared both with the same quarter in 2008 and the third quarter 2009. Contract prices for processed products also made a positive contribution to the business's fourth-quarter results. The sea lice situation is under control and all our sites have a lower number of sea lice than the authorities' threshold.

"SalMar Northern Norway had a challenging quarter. Much of the volume in the quarter was sold early in the quarter (when prices were at their lowest) and the majority of the volume was from ISA sites with higher than normal production and harvesting costs. SalMar Nord AS has now emptied all the sites where the ISA previously had been identified.

"The salmon market is currently very strong, and so far in the first quarter 2010 both salmon prices and export volumes are at record levels for the time of year. The global supply of salmon is expected to fall by around 5 per cent in 2010, which combined with strong demand gives reason to expect that salmon prices should stabilise at relatively high levels for a long period of time."

SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farms in mainland Scotland, the Orkneys and Shetland. The business generated gross operating revenues of NOK 295.5 million in the fourth quarter 2009, and made an operating profit before fair value adjustment of the biomass of NOK 52.2 million, up from NOK 10.1 million in the corresponding quarter in 2008.

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 its 50 per cent share of Norskott Havbruk AS, harvested some 23,900 tonnes gutted weight during the fourth quarter. SalMar Central Norway harvested 16,500 tonnes, SalMar Northern Norway harvested 3,100 tonnes, while 4,300 tonnes was harvested in mainland Scotland/the Orkneys/Shetland.

In 2010 SalMar expects to harvest around 85,000 tonnes gutted weight, with SalMar Central Norway harvesting 56,000 tonnes and SalMar Northern Norway 17,000 tonnes, while Norskott Havbruk aims to harvest around 24,000 tonnes, of which SalMar has a 50 per cent share, ie 12,000 tonnes.

During the quarter SalMar acquired 66 per cent of the shares in Volstad Seafood AS, bringing SalMar's shareholding in the company to 100 per cent. The transaction was completed on 1 December. The acquisition of Volstad Seafood AS further strengthens SalMar's capacity and competence with regard to the sale and distribution of Atlantic salmon, particularly in Asian markets.

SalMar considers the business outlook to be very positive. A sharp drop in volumes from Chile has led to a reduction in the global supply, while demand remains very strong. SalMar therefore believes there is reason to expect good salmon prices both in the near and medium term. SalMar also believes that there is considerable growth potential for the aquaculture industry in Norway.

Further Reading

- You can view the full report by clicking here.

the Fish Site Editor