Packaging line of salmon products. (Photo: SalMar)

High prices outweigh biological challenges for SalMar

SalMar informed that continued high prices produced strong results for the company in the fourth quarter, despite continued biological challenges. 

"We are pleased with the results, but are conscious that they are due mainly to a strong market and high salmon prices. Biological challenges linked to PD and salmon lice remain an issue, with the impact on cost levels that this entails," says SalMar's CEO, Leif Inge Nordhammer.

Operational EBIT came to NOK 348 million (USD 57.5 million) at the close of the period, a marginal decrease from the previous quarter, but a substantial NOK 222 million (USD 36.7 million) increase compared with the same period the year before.

Operational EBIT for 2013 as a whole totalled just over NOK 1.2 billion (USD 198.3 million), the highest in the Group's history.

The average price of salmon was 55 per cent higher in the fourth quarter than in the corresponding period the year before.

SalMar's gross operating revenues totalled NOK 1.8 billion (USD 297.5 million), up some NOK 500 million (USD 82.6 million) on the fourth quarter 2012.

The Group harvested a total of 34,100 tonnes of salmon during the period (29,600 tonnes), which resulted in an overall operational EBIT per kg in the fourth quarter of NOK 10.20 (USD 1.69) compared to NOK 4.26 (USD 0.70) in the same period the year before.

The company says that operational developments during the quarter may still be described as challenging, though regional variations are substantial.

Operations and profitability in the SalMar Central Norway and Rauma segments remain affected by efforts to deal with PD-related issues, while salmon lice are a growing problem in both areas. Profitability in SalMar Northern Norway has returned to historic high levels. Villa Organic also made progress with regard to cost levels, although it will still be some time before SalMar reaches its targeted cost level in the segment.

The Sales & Processing segment achieved a consistently high level of productivity through the quarter, despite the increased proportion of PD-infected fish being harvested. However, the segment's financial performance was negatively affected by the Group's fixed-price contracts.

Despite the biological challenges, SalMar says 2013 was an extremely good year for the comany, as high salmon prices and substantial non-recurring gains resulted in record earnings for the Group.

The board of directors considers SalMar's financial position to be very good, and is therefore recommending a dividend of NOK 8 per share. In the opinion of the board, SalMar has ample financial capacity for further growth.

As for the outlook, the Group says that based on estimates of the existing biomass, supply of Atlantic salmon is expected to be limited during this year.

In Norway, output of Atlantic salmon is forecast to increase by around 7 per cent to just over 1.2 million tonnes, while growth in Chile is expected to flatten out, with a total output expected to reach 477,400 tonnes, up 2 per cent on 2013.

Only minor changes in volume are expected in the other regions, so the overall output of Atlantic salmon is expected to rise by some 5 per cent in 2014.

SalMar expects to harvest 133,000 tonnes in Norway in 2014, with output from Norskott Havbruk (Scottish Seafarms) forecast at 25,000 tonnes in 2014.

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Address:	Industriveien 51,
City:	Kverva
State/ZIP:	(NO-7266)
Country:	Norway
Phone:	+47 7244 7900
Fax:	+47 7244 7901
E-Mail:	[email protected]
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