Refinancing in place: Pan Fish's book equity at the end of the third quarter was NOK -601.6 million. The group was refinanced in October and, adjusted for conversion of NOK 900 million of debt, equity capital would have totalled NOK 298.4 million at the end of the third quarter. Although equity capital is tight, based on the budgeted salmon prices the company has sufficient liquidity to carry out the planned changes.
Market balance must be restored. The company takes the view that the current low prices for farmed salmon will not persist. Pan Fish believes that there will be a more balanced ratio between supply and demand in 2004, which may lead to higher prices and consequently improved profitability within the industry.
"Pan Fish is still faced with many challenges, although we believe we will see a slow improvement in our markets. Into 2004, we also expect to benefit continuously from the positive effects of the restructuring measures which have and will be carried out, to enable us to achieve our objective of becoming a lowest-cost producer. Combined, these factors will help Pan Fish maintain its ambition to return to profitable operations in 2005", says Pan Fish's Managing Director and Group CEO, Atle Eide.
Operations and prospects
Fish-farming: The company's fish-farming businesses had an overall turnover of NOK 674.4 million in the third quarter, compared with NOK 736.6 million in the same period last year. 23 553 tonnes of round weight salmon were slaughtered during the period, compared with 22 152 tonnes in the third quarter 2002, and 26 031 tonnes in the second quarter this year. The fish-farming business as a whole made an overall operating loss (EBIT) of NOK 72.4 million in the third quarter, compared with an operating loss of NOK 142.0 million in the same period last year.
The company's activity in the Faeroes was hit during the period by outbreaks of the ILA salmon virus. This has delayed the task of finding a long-term strategic solution to ensure that operations can continue and develop. As previously announced, there is a risk that further write-downs will be required in this area of the fish-farming business in the order of NOK 100 million.
Processing: The company's value-added processing (VAP) business continues to perform well, and had a third-quarter turnover of NOK 217.7 million, compared with NOK 199.5 million in the same period last year. This resulted in an operating profit (EBIT) of NOK 7.2 million, compared with an operating loss of NOK 19.5 million in the same period last year.
Prospects: "The fish-farming industry must continue its efforts to restore the balance in the market for farmed salmon. Pan Fish will continue to play an active part in this endeavour, and we are confident that the actions taken within our own group and in the market in general will enable us to return to profitable operations in 2005," comments Group CEO Atle Eide.
Pan Fish will continue to maintain a strong focus on costs, in order to strengthen the company's relative position vis-à-vis its competitors. As part of the effort to improve the company's financial position, Pan Fish will carry on working to dispose of those parts of the business defined as non-core operations.
"We will maintain our objective of becoming a lowest-cost producer and, with our refinancing now in place, we can focus seriously on the task of realising this company's true potential," says Atle Eide.
Attachment:
Interim Report 3rd Quarter 2003 http://hugin.info/209/R/926653/126352.pdf
Presentation 3. Quarter 2003 http://hugin.info/209/R/926651/126351.pdf
For further information, please contact:
Group CEO Atle Eide, +47 911 52 977
Or: www.panfish.no