Good margins despite lower prices
SalMar's earnings remained strong in the third quarter, despite biological challenges and lower salmon prices. The company achieved an Operational EBIT of NOK 438 million during the period, compared to NOK 360 million in the corresponding period last year. 60 per cent of the volume in the period was sold under fixed-price contracts and helped to boost the company's profits.
SalMar generated gross operating revenues of NOK 1.8 billion in the third quarter 2014, NOK 110 million more than in the same quarter in 2013. Operational EBIT totalled NOK 438 million, up from NOK 360 million in the corresponding period last year. In all, SalMar harvested around 36,400 fish in the third quarter, which gave an EBIT per kg of NOK 12.01. 34,800 tonnes of fish were harvested in the third quarter 2013, which gave an EBIT per kg of NOK 10.36.
The price of salmon averaged NOK 35.29 per kg in the third quarter, NOK 5.00 less per kg than in the previous quarter, and NOK 3.59 per kg less than in the corresponding period last year. However, contract sales covering 60 per cent of the quarter's output resulted in good prices being achieved.
"We are posting satisfactory results, even in a market with lower prices. We see an improvement in the underlying cost of the harvested biomass and the contract share has been 60% in the quarter. However, performance has been negatively affected by costs related to keeping salmon lice levels low," says SalMar's CEO Leif Inge Nordhammer.
Operations in the segments SalMar Central Norway and Rauma are affected by biological issues. However, SalMar Central Norway's favourable harvesting profile, along with a high proportion of organic fish from the Rauma segment have helped to boost the period's results. The overall biological situation for SalMar Northern Norway is satisfactory.
The Sales and Processing segment achieved a record result in the quarter, with an operating margin of 5.7 per cent. The improvement is largely attributable to a high contract rate. Volumes which in previous periods were sold to Russia were reallocated to new and existing markets during the quarter. With the prospect of higher salmon prices ahead, the contribution made by fixed-price contracts is expected to fall somewhat moving forward. The contract rate is expected to be around 60 per cent in the fourth quarter.
SalMar is experiencing strong demand in all its core markets and expects developments in the remainder of 2014 to be good.
SalMar expects to harvest around 37,000 tonnes of Atlantic salmon in the fourth quarter 2014. Norskott Havbruk is expected to harvest around 27,000 tonnes in 2014 as a whole, with SalMar's share being 13,500 tonnes. SalMar expect to harvest 137 000 tonnes from its Norwegian activities in 2015. Scottish Sea Farms expects to harvest a volume of 31,000 tonnes.
Please find enclosed the complete report for the third quarter 2014.
For more information, please contact:
CEO Leif Inge Nordhammer,
Tel: + 47 916 85 250
CFO Trond Tuvstein,
Tel: + 47 918 53 139
Email: 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.
