A strong quarter and very good year for SalMar Group
The SalMar Group posted an operating profit before fair value adjustment of the biomass of NOK 346 million in the fourth quarter 2010, reports www.megafishnet.com with reference to SalMar.
This is an increase of 97 per cent compared with the same quarter in 2009. For 2010 as a whole operating profit before fair value adjustment of the biomass totalled NOK 972.8 million, up 66 per cent from 2009. The board is recommending a dividend payout of NOK 4.00 per share, a total of NOK 412 million.
The Central Norway and Northern Norway segments both posted strong results in the quarter, while Rauma Gruppen's results were somewhat affected by low volumes and the timing of sales made in the quarter. The underlying strong performance in all segments can be ascribed to a combination of high salmon prices and continued high levels of operational efficiency.
The SalMar Group generated operating revenues of NOK 1 149.7 million in the fourth quarter 2010, compared with NOK 756.5 million in the corresponding quarter in 2009. The Group made an operating profit before fair value adjustment of the biomass of NOK 346.0 million, compared with NOK 175.3 million in the corresponding quarter in 2009. This resulted in an operating profit per kg gutted weight of NOK 16.11 for SalMar Central Norway and NOK 15.68 for SalMar Northern Norway.
SalMar owns 75.5 per cent of Rauma Gruppen, which operates eight fish farming licences in Romsdalsfjord in Møre & Romsdal, western Norway. The business generated operating revenues of NOK 97.2 million in the quarter, and made an operating profit before fair value adjustment of the biomass of NOK 17.9 million. The margin per kg gutted weight in the quarter came to NOK 13.29.
SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farming facilities in mainland Scotland, the Orkneys and Shetland. The business generated operating revenues of NOK 255.1 million in the quarter, and made an operating profit before fair value adjustment of the biomass of NOK 64.1 million. The margin per kg gutted weight came to NOK 10.13 in the quarter.
SalMar owns 23.3 per cent of the listed Faeroes aquaculture company P/F Bakkafrost. The company posted an operating profit of NOK 96.0 million in the fourth quarter, of which SalMar's share after tax and fair value adjustment of the biomass was NOK 28.9 million.
Commenting on SalMar's results, CEO Leif Inge Nordhammer said: "The fourth quarter 2010 completed a very good year for the SalMar Group. Naturally, the high price of salmon made a substantial contribution to the company's strong performance both in the fourth quarter and in 2010 as a whole. Throughout 2010 we have been working to facilitate for further volume growth throughout our value chain. The construction of the new harvesting and VAP plant in Frøya, the acquisition of new farming licences, the exploitation of synergies and the further development of our organisation have all been important focus areas. With the foundation that has now been laid we expect substantial growth and increased efficiency for SalMar in the years ahead. We feel confident that we have, through the year, laid a strong foundation for the company's future development."
The SalMar Group, including Rauma Gruppen and 50 per cent of Norskott Havbruk AS, harvested around 25,750 tonnes gutted weight in the fourth quarter, distributed as follows: approx. 16,750 tonnes by SalMar Central Norway, 4,500 tonnes by SalMar Northern Norway, 1,350 by Rauma Gruppen and 3,150 tonnes in Scotland/Orkney/Shetland.
SalMar's key figure for profit performance under IFRS is EBIT (operating profit) before fair value adjustment of the biomass. Adjustment of the fair value of the biomass results from the requirement to value biological assets (the biomass) at fair value instead of cost price. SalMar reports EBIT before fair value adjustment of the biomass in order to show the underlying performance of its operations during the period.
The SalMar Group expects to harvest some 103,500 tonnes gutted weight in 2011, distributed as follows: approx. 65,000 tonnes by SalMar Central Norway; approx. 18,000 tonnes by SalMar Northern Norway; approx. 9,000 tonnes by the Rauma segment; while Norskott Havbruk aims to harvest some 23,000 tonnes, of which SalMar's 50 per cent share totals approx. 11,500 tonnes. This represents a rise of 30 per cent compared with 2010.
As previously announced, SalMar acquired 23.29 per cent of the listed Faeroes aquaculture company P/F Bakkafrost during the quarter, as well as two licences in Møre og Romsdal through the acquisition of Stettefisk AS. Following the close of the quarter SalMar has also agreed to acquire Krifo Havbruk AS, which owns one licence in central Norway.
On Monday, 14 February a tear was discovered in a net pen at one of SalMar's facilities in Central Norway. SalMar deeply regrets the incident and its consequences for the reputation of the entire industry. The fish escaped when the net pen was torn in connection with delousing operations. SalMar has clear internal routines regarding control of net pens after such operations, and it is deeply regrettable that it seems like the internal routines were not followed in this instance. SalMar will, of course, carry out a thorough investigation of the incident and assess the need for additional measures to ensure compliance with internal routines for escape prevention. SalMar has initiated a number of activities in relation to recapture of the escaped salmon and will continue to work towards limiting the environmental impact of the incident. SalMar will also draw upon external organizations with relevant competence in this regard.
SalMar considers the company's future outlook to be very bright. Despite historically high salmon prices, the company is experiencing strong demand. SalMar believes that strong demand combined with developments in the global output of salmon give grounds to expect high prices also in 2011. At the same time the Norwegian aquaculture industry has a considerable growth potential.