SalMar achieved its strongest ever operational EBIT in the first quarter 2014 as a result of record high salmon prices. Although biological challenges once again had an impact on earnings during the period, the company's ongoing programmes are now bearing fruit and are leading to a steady improvement in underlying operational performance. SalMar made an operational EBIT of NOK 485 million during the period, a rise of NOK 137 million from the previous quarter and a substantial NOK 250 million more than in the corresponding period last year.
The result is due to high salmon prices, but we are also seeing indications of improved operating performance and reductions in underlying costs from some of our farming segments," says SalMar's CEO Leif Inge Nordhammer. "At the same time, the biological situation remains challenging. The growing intensity of salmon lice infestation and increasing resistance to treatment that we see ahead could affect fish growth rates and harvesting plans in coming quarters, with attendant consequences for costs."
The average price of salmon was 32 per cent higher in the first quarter 2014 than in the same quarter last year. SalMar's gross operating revenues rose to NOK 1.6 billion, up around NOK 350 million from the first quarter 2013. In total the Group harvested some 27,800 tonnes of salmon during the period (23,200 tonnes). As a result, operational EBIT per kg in the quarter came to NOK 17.45 (NOK 10.14).All the fish farming segments posted satisfactory results, although regional differences remain considerable. Operations at SalMar Central Norway and the Rauma segment were affected by biological and logistical challenges, with EBIT per kg closing the quarter at NOK 19.35 and NOK 15.68 respectively. SalMar Northern Norway, on the other hand, posted a record EBIT per kg of NOK 21.05.
The Sales and Processing segment is now able to keep PD-infected fish in holding pens prior to harvesting, which has improved production efficiency. However, lower than normal harvesting volumes reduced capacity utilisation. The segment's results were also negatively affected by the Group's fixed-price contracts, which accounted for 35 per cent of the total harvested volume during the period. From sales revenues of just under NOK 1.4 billion in the period, the segment made an operating loss of NOK 28 million. Contracts are expected to account for approx. 40 per cent of volume in the coming quarter.
The current average weight of the fish transferred to the sea in the spring of 2013 is lower than the corresponding 2012 generation had at the same point last year. Although this will have an impact on the volume harvested in the coming quarter, the overall level is still expected to be slightly higher than in the first quarter.Based on the estimated standing biomass at the close of the period, the global output of Atlantic salmon is forecast to grow by around 7 per cent in 2014 as a whole. SalMar is experiencing strong demand in all the company's core markets, and expects the salmon market to remain strong for the rest of the year.
SalMar is keeping its harvesting forecast unchanged, and still expects to harvest 133,000 tonnes in Norway in 2014. Norskott Havbruk (Scottish Seafarms) expects to produce a total of 25,000 tonnes in 2014, with SalMar's 50 per cent share coming to 12,500 tonnes.
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