Salmon processing plant. (Photo: Morpol)

Morpol revenues up, sales down in Q2

Salmon processor Morpol ASA had a positive EBIT pre fair value in Q2 of EUR 11.7 million versus a negative EUR 2.1 million in Q2 2010.

The company highlighted that salmon raw material prices took a dive throughout the quarter but the overall average price remained at relatively high levels, yet total sale volumes fell by 11 per cent.

Revenues in processing were EUR 89.4 million versus EUR 83.4 million during the corresponding period of 2010. EBIT for processing was EUR 2.6 million compared to a loss of EUR 2.1 million.

Although prices for raw materials were lower and sale prices to Morpol customers bred higher profitability, demand fell and volumes dropped 11 per cent from prior year levels.

Q2 farming revenues were EUR 34.6 million and EBIT for farming was EUR 10.0 million, EUR 7.7 million of which came from the UK operations Meridian Salmon and EUR 2.3 million from Jøkelfjord Laks AS.

Operating revenues in the second quarter rose significantly above Q2 2010’s at EUR 113.7 million versus EUR 83.4 million, mainly due to farming revenues in 2011 of EUR 34.6 million. The group had no farming operations in the same period in the prior year.

Processing volumes decreased year-on-year despite volumes for the Easter season, but this was offset by higher unit sale prices.

Total sale volumes fell by 11 per cent compared to last year but the average unit selling price went up.

Cold smoked salmon sales were flat compared to the second quarter of last year and specialties jumped by 58 per cent due to Easter sales. Still, volumes of other products and lower price by-products declined by 13 per cent and 25 per cent, respectively.

"Even though salmon raw material prices are dropping¬ -- they still remained high on average in the quarter -- we had a strong result from the farming operations and expect that the second quarter will be a turning point in the results of processing,” said Jerzy Malek, CEO.

“The lower salmon prices are expected to increase processing margins for the rest of the year. Despite a reduction in demand and lower volumes we expect sales to pick up as retail prices decrease," he continued.

Last July, Morpol divested its sea bass and sea bream operations in Spain (Culmarex SA) to Canadian Cooke Aquaculture Inc for a total enterprise value of EUR 48.7 million, a transaction that will reduce Morpol's net debt by approximately EUR 40 million.

Morpol expects lower salmon purchase prices into Q3 to improve profitability and hike margins in Q4. Regardless, profitability is dependent on both the prevailing raw material salmon prices and consumer demand.

Growth may be limited or even decrease year-on-year in H2 2011 unless retail prices fall further, the company said.

Related articles:

- Cooke Aquaculture buys Morpol subsidiary
- Morpol reports good results despite high raw material costs

By Natalia Real
[email protected]
www.seafood.media

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