Smoked salmon processing plant. (Photo: Morpol)

Morpol reports good results despite high raw material costs

NORWAY
Friday, May 20, 2011, 03:40 (GMT + 9)

Salmon company Morpol ASA reported a positive EBIT pre fair value of EUR 6.2 million for the first quarter and an operational EBIT of EUR 7.3 million compared to EUR 5.2 million in the same quarter of 2010.

As well, operating revenues shot up to EUR 127.1 million compared to EUR 90.2 million in Q1 2010, mainly due to farming revenues not included in 2010 and also to better unit prices in the processing division.

At the same time, overall sale volumes in the quarter fell by 3.1 per cent year-on-year, but price increases for customers raised the average unit selling price.

While revenues were up in processing at EUR 103.5 million versus EUR 90.2 million year-on-year, EBIT for processing dropped to EUR 0.3 million from EUR 5.2 million, mostly because raw material purchase prices rose and were only somewhat offset by the increased sale prices for Morpol customers.

Farming revenues in the first quarter were EUR 31.6 million and EBIT pre fair value stood at EUR 8.1 million.

Salmon raw material prices remained high and impacted processing margins negatively.

In the first quarter of the year, sale volumes skidded due to the timing of Easter (three weeks later than in 2010), which has always paired to strong demand for smoked salmon. This plus a slower demand brought sales of cold smoked salmon and specialty salmon down by 5 and 11 per cent, respectively, while other products remained flat.

Morpol CEO Jerzy Malek (Photo: Morpol)

"Despite the short-term pressure on processing margins, we believe we have built a solid platform to return to higher operational margins when there is a better balance between supply and demand on the raw material side. We have continued to take market share in key areas such as France and UK, and we have a strong base to further expand" said Morpol CEO Jerzy Malek. 

Moreover, Morpol acquired Norwegian salmon farming company Jøkelfjord Laks AS in the first quarter and its results appear in the consolidated results for Q1.

Through its subsidiary Lakeland Smolt, Morpol has invested in land and a building in Rosyth, Scotland for EUR 4.2 million. Morpol bought the facility to establish a large-scale value-added processing plant, which will contribute to the expansion of its market strength in the UK and other regions.

At the end of the first quarter 2011, Morpol showed a net interesting bearing debt of EUR 199.1 million compared to EUR 72.2 million in the corresponding period of 2010. The increase is attributed to acquisitions of farming operations during the last three quarters.

Related articles:

- Morpol's Q4 harmed by high salmon prices 

- Morpol buys Jøkelfjord Laks AS 

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

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