Pan Fish ASA first six months of 2000 - Steep rise in profits and continued growth

The Pan Fish group can once again look back on six months of strong growth in sales and profits. The company’s sales increased by 92 % to NOK 1,775.6 million and profit before tax by 522 % to NOK 551 million during the first six months of this year.

In the 6-month period, sales of farmed fish increased by as much as 221 % to NOK 1,107.7 million, while the profit from these activities rose by 418 % to NOK 449 million. The operating margin was 40.5 %. Profit from operations includes a one-off amount of NOK 152,2 million from sales of fixed assets in the second quarter. Adjusted for the one-off income, the operating margin for farmed fish was 31 % during the first six months.

The Group's processing activities contributed NOK 310.2 million to sales during the first six months, while operating at a NOK 22,8 million loss. The loss is due to the prices of finished goods lagging behind the rising prices of raw materials. The Norwegian part of our processing activities made a positive contribution during the second quarter.

Sales and logistics contributed NOK 1,304.5 million to sales during the first six months and an operating profit of NOK 17.6 million

The Pan Fish Group had a net financial income of NOK 107.7 during the first six months, after one-off income from sales of bonds in the amount of NOK 164.0 million during the fist quarter and NOK 23.7 million during the second quarter.

During the first six months Pan Fish harvested 29,000 tonnes of salmon (round weight) from its own production sites. This corresponds to about 35 % of the year's harvesting volume. In the same period last year, sales of own-produced salmon amounted to 11,363 tonnes. Prices in Norway remained at a higher level in the first 6-month period compared with the same period last year. Prices in Scotland, in local currency, are marginally higher, while the North American prices are at the same level as during the first six months of last year. On a global basis, Pan Fish has experienced a substantial growth in activity, higher prices and lower production costs, all of which has contributed to its increased profitability.

At full capacity, Pan Fish can produce about 130,000 tonnes of salmon, or about 200 Norwegian licence equivalents. The book value of the licences is NOK 642 million, representing a book value of NOK 3.2 million per licence. In other words, there are substantial reserves in the company’s production rights. Following the repurchase of its own shares, Pan Fish held 1.3 million own shares (5.2 million after the split) at 30 June 2000. The shares were acquired at an average price of NOK 108.50 each (NOK 27.13 after the split). Pan Fish has subsequently considerably increased this holding and, in order to avoid dilution of the existing shareholders, intends to use its holding actively in connection with further expansion.

With accounting effect for the second quarter, Pan Fish increased its holding in the aquaculture company Norway Seafarms AS to 99.5 %, and to 100 % in the salmon-smoking company Norsk Sjømat AS. It also bought the smolt company Rauma Vest AS in the second quarter and set up a representation office in Shanghai in China.

In the second quarter an agreement was entered into to coordinate parts of Pan Fish’s Faeroese aquaculture with the Vestlaks Group. This will have accounting effect for the third quarter. The acquisition of a further five fish-farming licences in Canada will also affect the accounts for the third quarter.

In the third quarter Pan Fish also bought a further 42 % of the shares in Norway Marine Culture AS and now owns 93 % of that company. This acquisition is part of the process of setting up a company with the focus on farming marine species, with a view to building up a product range of farmed and wild seafood for the market.

Pan Fish has furthermore made strategic purchases in the pelagic sector, securing the majority of the shares in Global Fish AS and Welcon Pelagic AS, thereby gaining control of two herring-oil factories, six processing plants for pelagic fish for consumption and a sales and marketing apparatus. This part of Pan Fish’s efforts to secure access to marine raw materials for future feed requirements.

Pan Fish continues to pursue its strategy of making production, sales and distribution solutions for farmed salmon more efficient, and expects that this will involve further expansion, both organically and through the acquisition of new production rights.