High volume drives rise in earnings in the quarter
Continued high prices, a favourable harvesting profile and a 54 per cent volume increase compared with the same period last year resulted in higher operating revenues and a stronger operational EBIT for SalMar in the second quarter. Continuing biological challenges associated with measures to combat salmon lice and PD have, however, had a negative impact on profits.
The Group generated gross operating revenues of NOK 1.74 billion during the period, NOK 312 million more than in the second quarter 2013. Operational EBIT totalled NOK 447 million, up from NOK 316 million in the same period last year. SalMar harvested a total of 35,100 tonnes of fish during the period, giving an EBIT per kg of NOK 12.75. In the second quarter last year the volume harvested came to 22,800, while the EBIT per kg was NOK 13.84.
The price of salmon averaged NOK 40.29 during the second quarter 2014, some 15 per cent less than in the previous quarter and 5 per cent less than in the same period last year. However, SalMar achieved good prices in the period. This was due to a high contract rate, as well as a favourable distribution of the volume harvested through the quarter. Assisted by the early harvesting of some stocks on the expectation of falling prices as the quarter progressed.
"The bulk of the improvement in earnings can be put down to high volume and a high contract rate. Operations are still affected by cost associated to PD and keeping the sea lice at a low level. Although we are in the period where the sea lice situation is demanding, we are seeing signs of improvement in the underlying cost situation," says SalMar's CEO Leif Inge Nordhammer.
Operations in SalMar Central Norway and the Rauma segment remain affected by the biological situation. Nevertheless, a favourable harvesting profile in SalMar Central Norway and sales of organic salmon from Rauma have had a positive impact on their results during the period. The biological situation in SalMar Northern Norway is generally good, but an unfavourable harvesting profile had a negative impact on results during the period.
The Sales and Processing segment had a contract rate of around 40 per cent during the period, but improved contract positions resulted in an operating profit of NOK 12 million, compared with an operating loss of NOK 64 million in the corresponding period last year. The contract rate for the third quarter 2014 is expected to be in the region of 55 per cent. The segment is still experiencing difficulties relating to capacity utilisation at its harvesting and processing facilities.
During the second quarter SalMar signed a five-year agreement to refinance and extend the term of the Group's debt. The agreement has a total framework of NOK 5 billion.
SalMar is experiencing strong demand in all the company's core markets, and expects developments in the remainder of 2014 to be good. The halt in exports to Russia may, however, pose a challenge in the short term.
SalMar expects to harvest some 73,500 tonnes of salmon in Norway in 2H 2014. Norskott Havbruk still expects to harvest 25,000 tonnes in 2014, of which SalMar's share is 12,500 tonnes.
Please find enclosed the complete report for the second quarter and first half of 2014.
For more information, please contact:
CEO Leif Inge Nordhammer
Tel: + 47 916 85 250
CFO Trond Tuvstein
Tel: + 47 918 53 139
E-post: trond.tuvstein@salmar.no
Web: www.salmar.no
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
