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Marine Harvest Staying Afloat in Rough Waters

GENERAL - Marine Harvest ASA achieved an operational EBIT of MNOK 55 in the first quarter, compared to MNOK 49 in the corresponding quarter last year.

The Norwegian, Canadian and Scottish operations, all showed good operational improvements. Harvesting of small ISA-affected fish in Chile lead to significant losses in this business unit. Currency effects had a positive impact on revenues and financial items, but a negative impact on EBIT.

Demand for salmon has proven to be resilient, with stable or increasing demand in most markets. Volume-weighted prices in local currencies were in line with prices in the first quarter of 2008.

Adjusted for high feed cost, the cost level is under control and decreasing in Norway, Scotland and Canada. Marine Harvest has undertaken an intensive harvesting of ISA-affected salmon in Chile. The harvested fish had low weight and low quality, a high cost and a low price per kilo. Operations in Chile will be restructured in the second quarter.

With strong demand, increasing prices and decreasing costs, I have an optimistic view on the development for the rest of 2009, says Åse Aulie Michelet, chief executive officer of Marine Harvest.

Marine Harvest reported operating revenues of MNOK 3 217 in the first quarter of 2009 (3 160), with operational EBIT of MNOK 55 in the period (49). EBIT was MNOK 101 in the period (-410). A total volume of 76 177 tonnes HOG was sold in the first quarter 2009, compared to 83 135 tonnes HOG in the same quarter last year. The strengthening of USD and EUR towards NOK from the first quarter last year, more than outweighed the effect of lower volumes on operational revenue. Volatile currency rates also had a direct and negative effect on operational EBIT of MNOK 82 compared to a positive effect of MNOK 79 in the first quarter last year. This effect is related to short term positions. The cash flow from operation was MNOK 327 in the first quarter 2009, compared to MNOK 608 in the first quarter of 2008.

Substantial changes in currency rates and interest rates, with impact on debt in foreign currencies and valuation of interest rate hedges, contributed to net financial items of MNOK 254 in the first quarter (-224). Currency effects also impacted the balance sheet through valuation of debt in NOK and valuation of cash flow hedges, leading to an equity ratio of 47,8 per cent at the end of the first quarter, compared to 42,3 per cent at the end of the fourth quarter 2008.

Marine Harvest Norway delivered an operational EBIT per kg of NOK 2.79 in the first quarter (3.89), while Marine Harvest Chile had an operational EBIT per kg of NOK -13.74 in the period (-5.71). Adjusted for direct currency effects Marine Harvest Norway achieved an operational EBIT per kg of NOK 5.36 (3.16) Marine Harvest Canada and Marine Harvest Scotland reported operational EBIT per kg of NOK 5.88 and NOK 6.97 respectively (1.71 and -5.03). Marine Harvest VAP Europe reported an operational EBIT margin of 3.3 per cent in the first quarter (3.0 per cent).

Marine Harvest expects to harvest a volume of 296 000 tonnes of salmonids in 2009, of which 73 000 tonnes are expected to be harvested in the second quarter.

- Both demand and prices have developed favourably so far in 2009. From April, global supply of salmon will fall. We have achieved good cost control in Norway, Canada and Scotland. From the second quarter we will gradually start harvesting salmon fed on lower cost feed. During Q2 we will implement a new business plan for Chile. This will have negative financial consequences on EBIT in this quarter, mainly as accounting effects. I am very encouraged by the strong market, and our operational improvements in key regions, and expect continued improved performance in 2009, says Åse Aulie Michelet.

Further Reading

- Go to our previous news item on this story by clicking here.
- Alternatively, view our report - A New Reality Beckons in Chile - by clicking here.
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