Aquaculture for all

Satisfactory Fourth Quarter for Cermaq

Salmonids Economics +2 more

NORWAY - Norwegian fish farming company Cermaq's EBIT in fourth quarter 2013 was NOK 214 million compared to a loss of NOK 173 million in fourth quarter 2012.

The improvement is largely coming from higher salmon prices which have lifted earnings in all farming regions.

The Board of Directors propose an ordinary dividend of NOK 1.80 per share, equivalent to 42 per cent of the adjusted net result of the continuing part of Cermaq.

Chile delivered an EBIT of NOK 86 million after six consecutive quarters of losses.

Fish health in Chile remains a concern, but the underlying development is positive and unit cost improved slightly compared to previous quarter. Group volume is expected to grow by 7 percent in 2014 reaching 152 thousand tonnes.

Pro forma operating revenues were NOK 1.7 billion in fourth quarter versus NOK 1.2 billion in the same quarter last year. The proforma EBIT and revenues exclude EWOS which was divested by the end of October 2013.

"This is our first quarter as a pure salmon farmer after having closed the sales transaction for EWOS in October. I am encouraged by the enthusiasm the organization shows in focusing on developing the farming business further, and by the improved management structure achieved by including the regional operational management in the Group management team," said CEO Jon Hindar.

Volumes sold in fourth quarter were 42.7 thousand tonnes, a decrease of 4.0 thousand tonnes versus the same quarter last year, but some 2.0 thousand tonnes above the previously communicated estimate.

The farming operations reported an EBIT pre fair value and non-recurring items of NOK 248 million, compared to a loss of NOK 146 million in the previous year, an improvement of NOK 394 million.

"This is an acceptable quarter where a strong market has helped improve the performance in all regions," Mr. Hindar added.

"Norway and Canada presented good results, and so did the Coho specie in Chile. Atlantics and trout in Chile are still weak, but both species produced positive earnings and good improvement in margins compared to third quarter 2013 as well as fourth quarter 2012."

In Chile the earnings in fourth quarter improved significantly versus the previous year with EBIT pre fair value and non-recurring items at NOK 86 million. EBIT for the same quarter last year was a loss of NOK 132 million.

Volumes sold increased from 24,600 tonnes to 25,900 tonnes.

EBIT per kg for Atlantics and Coho was NOK 1.7 and NOK 6.4 respectively, while trout came in at NOK 1.8. Ex cage cost for Atlantics was USD 4.81 per kg in fourth quarter 2013. Cermaq announced an ex-cage cost target of USD 3.8 per kg for 2015 at its Capital Markets Day in Chile in November 2013. In addition the company targets an improvement of USD 0.2 per kg in relative achieved prices from better product quality. The activities implemented to secure these earnings improvements proceed as planned.

The biology in Chile has improved in several areas, especially related to the sea lice level, while antibiotics usage continues to be somewhat high due to SRS, however low compared to the Chilean industry average. The development in sea lice levels is encouraging since fourth quarter seasonally is more challenging from a biological perspective due to higher sea water temperatures.

In Norway the EBIT pre fair value and non-recurring items was NOK 9.8 per kg versus NOK 1.5 per kg last year, and volumes sold of 13,900 tonnes which is 2,100 tonnes less than last year. Norway sold approximately 32 per cent of its volume on fixed price contracts which had a negative impact of around NOK 2.2 per kg.

Biomass write down at one site in Finnmark had a negative EBIT impact of NOK 0.6 per kg for Norway. EBIT for Nordland was NOK 11.6 per kg and NOK 8.1 per kg for Finnmark.

Canada reported an EBIT pre fair value and non-recurring items of NOK 25 million, an improvement from a loss of NOK 38 million the previous year.

Due to the IHN issue in 2012, volumes sold declined from 6,100 tonnes to 2,900 tonnes, providing an EBIT per kg of NOK 8.7. Good price development in the North American market is the main factor behind the improved result.

Adjusted for the extraordinary dividend of NOK 4.7 billion paid in January 2014, the pro forma net interest bearing debt as of 31 December 2013 was NOK 2.1 billion. The corresponding pro forma equity ratio was 53 per cent.

Cermaq paid a record extraordinary dividend of NOK 51 per share in January 2014 based on the sale of EWOS. The Board of Directors will in addition propose an ordinary dividend for 2013 of NOK 1.80 per share, equivalent to 42 per cent of the adjusted net result for the continuing operations.

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