This is the first time in five years that Royal Greenland had positive interim results (Photo: Royal Greenland)

COMPANY OF THE WEEK: Improvement For Seafood Group Royal Greenland

The leading seafood group Royal Greenland achieved a profit after tax and minority interests of DKK 12 million (USD 2.28 million) in the first half of the financial year 2010/2011. This is the first time in five years that the Group has announced positive interim results.

The interim result is DKK 69 million (USD 13.11 million) better than the previous year, when Royal Greenland had a half-year loss of DKK 57 million (USD 10.83 million). Royal Greenland achieved an operating profit (EBIT) of DKK 84 million (USD 15.96 million) for H1, which is also its best result in five years. The markedly improved profits are partly the result of a successful turnaround project, and partly due to the fact that Royal Greenland has gained market share in all major markets.

Royal Greenland supplies a broad range of seafood products adapted to the needs of the modern consumer and market trends

Royal Greenland experienced significant growth, with a rise in revenue of 13 percent compared to the previous year. There has been growth in virtually all markets, but France, China and the Nordic markets have shown particular progress. A significant portion of the growth was created on the basis of Greenland products, including both boiled and peeled prawns, and shell-on prawns. In addition, as a direct result of its acquisition of the factory in Cuxhaven in northern Germany last spring, Royal Greenland has posted some very positive figures for lump-sucker roe.

Royal Greenland is a vertically integrated organisation with its own fleet of fishing vessels

Demand for the company’s products from Greenland is favourable, but earnings are being challenged by rising raw materials prices for halibut and prawn. The average cost per kg of these species is about 20 percent higher than last year. This figure does not include the subsequent price increases for halibut in the Uummannaq and Upernavik areas, and the price of lump-sucker roe is also expected to be around 30 percent higher than last year.

As is well known, the cost of electricity, water and transport is much higher in Greenland than in other countries where Greenland species are otherwise fished. As consumer prices are approximately the same irrespective the country of origin of the fish, Royal Greenland must as far as possible seek to compensate for its higher infrastructure costs by investing in automation and processing.

Royal Greenland is a full-range seafood supplier with products tailored to meet the demands from both retail and food service

The modernization implemented at the prawn processing plant in Ilulissat is one expression of this automation and processing strategy. A similar modernization programme is now being concluded at the prawn processing plant in Sisimiut, and two weeks ago, a major investment was completed at the halibut factory in Qasigiannguit which will enable a greater degree of processing in products from Greenland.

Royal Greenland's European factories in Wilhelmshaven, Germany and Koszalin, Poland have also generated increased activity. Royal Greenland's financial flexibility is intact, with a positive cash flow from operations of DKK 129 million (USD 24.50 million). The Group's liquidity binding will continue to be a constant area of focus.

Royal Greenland has its own experienced Product Development Team supplying new and unique products and processing technologies

During the autumn, Royal Greenland will repay DKK 315 million (USD 59.83 million) of the Group's debt, including the first DKK 50 million (USD 24.50 million) instalment on the subordinated loan from the government of Greenland. These payments are expected to be completed within the existing financial framework.

The company's equity ratio has risen, and now comprises 30 percent (including the subordinated loan capital). Return on invested capital in the first half-year amounted to 7 percent.

Company's Outlook

In connection with the appointment of the new management and the implemented turnaround project, Royal Greenland is in the process of defining a new strategy to develop and strengthen the company. The first results of this work will already have an impact in the financial year 2011/2012.

For the current year, an operating profit in the region of DKK 180-190 million (USD 34.20-36.1 million) is expected, and a result after minority interests and tax in the region of DKK 50-75 million (USD 9.5-15.25 million). It is however emphasised that there are uncertainties associated with market trends in Japan, as a consequence of the earthquake and subsequent tsunami. Japan is an important market for Royal Greenland, with a sales share of almost 10 percent.

About Royal Greenland A/S

Royal Greenland A/S is one of the world's leading groups on the seafood market. The company supplies a broad range of seafood products adapted to the needs of the modern consumer and market trends. Royal Greenland is a vertically integrated organisation with its own fleet of fishing vessels, sourcing teams procuring seafood all over the world, state-of-the-art production facilities, an extensive distribution network and a highly professional sales organization. 

Source: Royal Greenland

Margaret E.L. Stacey
Editor Companies and Products
[email protected]
www.seafood.media

Address:	Postboks 1073
City:	Nuuk
State/ZIP:	(3900)
Country:	Greenland
Phone:	+299 324 422
Fax:	+299 323 349
E-Mail:	[email protected]
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