Another strong quarter for SalMar in a strong salmon market
SalMar Northern Norway and Rauma continued to post very strong results. SalMar Central Norway's underlying performance was also good, but results for the quarter was affected by contract positions and costs incurred in connection with the start up of the secondary processing facility at the new plant. The underlying strong performance in all segments can be attributed to a combination of high salmon prices and continued high operational efficiency.
The SalMar Group generated gross operating revenues of NOK 1,004.8 million in the first quarter 2011, compared with NOK 617.9 million in the corresponding quarter in 2010. The Group made an operating profit before fair value adjustment of the biomass of NOK 282.0 million, compared with NOK 152.7 million in the same quarter last year. This resulted in an operating profit per kg gutted weight of NOK 16.02 for SalMar Central Norway, NOK 16.94 for SalMar Northern Norway and NOK 17.15 for Rauma.
SalMar owns 50 per cent of Norskott Havbruk AS which operates fish farms in mainland Scotland, the Orkneys and Shetland. The business generated sales revenues of NOK 225.3 million during the quarter and made an operating profit before fair value adjustment of the biomass of NOK 69.0 million. Profit per kg gutted weight came to NOK 12.53.
SalMar owns 23.3 per cent of P/F Bakkafrost, a listed Faeroe Islands salmon farming company. Bakkafrost posted an operating profit of NOK 96.5 million in the first quarter, which corresponds to NOK 17.68 per kg gutted weight. SalMar's share of the profit after tax and fair value adjustment of the biomass was NOK 25.3 million.
Commenting on the Group's performance, CEO Leif Inge Nordhammer said: "The first quarter was another good quarter for the SalMar Group. It is particularly satisfying to see that both SalMar Northern Norway and the Rauma segment have followed up a strong 2010 with a successful first quarter in 2011. We would have liked to see SalMar Central Norway post higher margins, but the results were negatively affected by a relatively large proportion of fixed price contract positions. Also, the secondary processing facility did not go into operation until the end of March, and the results for the quarter are therefore affected by both start-up costs and a lack of contributions from the secondary processing to cover fixed costs."
The SalMar Group, including Rauma Gruppen and 50 per cent of Norskott Havbruk AS, harvested around 21,180 tonnes gutted weight in the first quarter, with SalMar Central Norway harvesting 11,570 tonnes, SalMar Northern Norway 4,960 tonnes, Rauma Gruppen 1,890 tonnes, while operations in Scotland/Orkneys/Shetland harvested 2,760 tonnes.
During the first quarter SalMar acquired Krifo Havbruk AS, which owns one licence in central Norway. As announced in a stock market notification dated 14 March 2011 SalMar has also - with effect from 12 April - acquired 100 per cent of the shares in Bringsvor Laks AS. Bringsvor Laks operates two licences off the coast of Sandsøya, near Ålesund in Møre & Romsdal. The company has no smolt production or harvesting facilities. Following SalMar's takeover Bringsvor Laks plans to harvest some 1,400 tonnes gutted weight in 2011, principally in the second and third quarters. This output will be reported as part of the Rauma segment, and is additional to the segment's previously published guiding of 9,000 tonnes.
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.
SalMar considers its outlook to be very good. Despite record high salmon prices, the company is experiencing strong demand. SalMar believes this strong demand combined with developments in the global output of salmon provide grounds for prices to remain high in the second half of 2011. At the same time, Norway's aquaculture industry has considerable growth potential.