Marine Harvest: 2010 Overview

At a glance

Harvest volume of Atlantic salmon has been growing steadily since the 1990's, increasing year on year and peaking in 2008 with 135,000 tonnes harvested.

Harvest has fallen over the last two consecutive years, however this is due only to the ISA outbreak in Chile. Norwegian harvests have continued to increase.

The historic price and volume relationship is as would be expected, when supply increases price falls and vice versa.

Industry supply outlook 2010

Norway is the highest producing country, with a high year on year growth of nine per cent. Chile has previously been the second largest producer, however production is expected to fall further in 2009, possibly by 70 per cent.

Harvest is expected to increase in North America, between two and five per cent, however it is expected to fall in the UK.

Overall, despite the positive growth in Norway and North America, total production in 2010 is estimated to fall by four to eight per cent, with harvest totaling between 1,212 - 1,261 thousand tonnes (HOG).

Focus areas

Marine Harvest are focusing on four areas of the market.

Procurement: Being a large industry player, Marine Harvest can utilise economies of scale to their advantage. They are looking at global contracts for feed, optimal recipes and are working closely with suppliers.

Farming: Through best practice management, Marine Harvest are improving disease prevention and handling of diseases. They are aiming to standardise all procedures.

Processing: Looking at primary and secondary processing, Marine Harvest are increasing efficiency of plants through high utilisation and best practices, such as hygiene, quality systems and standardised processes. Improving the upstream/ downstream balance, as well as reducing exposure to non salmon species will aid secondary processing.

Market/ logistics: By thinking and acting globally, Marine Harvest hope to optimise global market opportunities.

Outlook: Marine Harvest expect a tight market in 2010 and 2011. Global supply growth is expected to be limited the coming years.

Strong forward prices for 2010 and 2011 have been confirmed by recent sales contracts.

There is potential for improved price achievement from a better organised and coordinated sales function, including VAP activities.

Strong results are expected in Q2, and for the remainder of 2010, based on market balance and improved operational performance.

A new and robust five year financing with low financial commitments is in place as well as a dividend policy established.