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production costs and a higher volume harvested by Fish Farming Central Norway.
At the same time, biological challenges resulted in a more demanding quarter
than expected for Fish Farming Northern Norway.
“It is very good to see that Central Norway continues the positive trend and
shows that good biological performance gives good financial results. Biological
challenges made the quarter demanding for Northern Norway, where we chose to
harvest the fish earlier than planned to minimise the biological risk, but we
see a clear improvement from the fourth quarter” says SalMar’s CEO Olav-Andreas
Ervik.
Gross operating revenues totalled NOK 3.3 billion in the second quarter 2019, up
from NOK 2.9 billion in the same period last year. The Group harvested 41,400
tonnes during the quarter, compared with 34,000 tonnes in the second quarter
2018. SalMar achieved an Operational EBIT per kg of NOK 23.90, down NOK 1.90 per
kg on the same period last year. The decrease is largely attributable to weaker
results from Fish Farming Northern Norway, as well as the consolidation of the
Icelandic producer Arnarlax with effect from 1 February 2019.
As expected, Fish Farming Central Norway increased its volume harvested in the
second quarter 2019 compared with the same period last year. The majority of the
fish harvested were transferred to sea farms in the spring of 2018, a generation
that has performed well biologically. This resulted in increased earnings
compared with both the previous quarter and the second quarter 2018. SalMar will
continue to harvest the spring-2018 generation in the third quarter, and expects
a slightly higher volume and costs at the same lever compared with the second
quarter.
Fish Farming Northern Norway performed weaker than expected. This is primarily
attributable to earlier harvest than planned to reduce biological risk in
particular related to the algae bloom at the end of May. Premature harvesting
resulted in a lower average weight for the fish, and therefore lower price
achievement and higher costs. The algae bloom also negatively impacted price
achievement, since several fish farmers were forced to harvest their stocks
early, causing a large amount of salmon in the market. SalMar expects a
substantially lower volume from Fish Farming Northern Norway in the third
quarter, with consequently higher costs. However, both volume and costs are
expected to improve in the fourth quarter.
Compared with the same period last year, Arnarlax posted substantially improved
results in the second quarter 2019, due to both a higher volume harvested and
improved biological performance. However, the result was somewhat impaired by
the fact that no fish were harvested in June, which resulted in higher fixed
costs per kilo. Arnarlax expects a slightly lower volume and a stable cost
position in the third quarter.
The Sales and Processing segment posted a profit of NOK 0.4 million in the
quarter, compared with a loss of NOK 150 million in the same period last year.
The year-on-year improvement resulted from the fact that fixed-price contracts
have a higher stipulated price than in the corresponding quarter last year. The
decrease from the previous quarter is due to lower price achievement, caused
primarily by the premature harvesting of fish in Northern Norway at a low
average weight.
As at 22 August, the contract rate stands at 27 per cent for the third quarter
2019 and 20 per cent for 2019 as a whole. Contract prices are somewhat higher
than last year’s level.
The global supply of Atlantic salmon in 2019 is expected to increase by around
6 per cent. Combined with expectations of strong demand, this indicates a
balanced salmon market with the likelihood of continued good earnings.
SalMar still expects to harvest 155,000 tonnes in 2019 as a whole: 145,000
tonnes in Norway and 10,000 tonnes in Iceland (Arnarlax) but increases their
expectations to 97,000 tonnes in Central Norway and similarly a bit down to
48,000 tonnes in Northern Norway. Norskott Havbruk (Scottish Seafarms) expects
to harvest 30,000 tonnes.
The complete report and presentation for the second quarter 2019 is attached.
For further information, please contact:
CEO Olav-Andreas Ervik,
Tel: + 47 918 68 100
Email: olav.andreas.ervik@salmar.no
CFO & COO Trine Sæther Romuld,
Tel: + 47 991 63 632
Email: trine.romuld@salmar.no
See also www.salmar.no for more information about the company.
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
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