Stronger salmon prices lift earnings in Cermaq

Cermaq reported an EBIT pre fair value for the second quarter of 2013 of NOK 229 million compared to NOK 60 million in second quarter 2012. The improved result was driven by a tighter salmon market and stronger prices, according to Cermaq.

- The farming results in the second quarter were mixed. Mainstream in Norway and Canada delivered strong results on the back of high prices and good biological performance, while the results in Mainstream Chile were weak, but improving, due to high cost caused by sanitary challenges. Mainstream Chile benefitted from a price increase in USD of 46 percent for fresh Atlantic salmon compared to last year, but the price for frozen products, which made up more than half of the volume, was up only 9 percent, says CEO Jon Hindar.

-The second quarter was a very eventful one for Cermaq in terms of strategic processes, and concluded with the sale of EWOS at an enterprise value of NOK 6.5 billion in July. Following closing of the transaction Cermaq expects to pay an extraordinary dividend of NOK 48-54 per share. Cermaq will review its corporate strategy and how to further develop the business from its position as the third largest global salmon farmer, and will revert to the market with an update later this year. We are also pleased to invite to a Capital Markets Day in Chile in late November, continues CEO Jon Hindar.

Cermaq's operating revenues were NOK 3 051 million (NOK 2 440 million) in second quarter 2013. Mainstream's revenues were NOK 1 124 million, an increase of 69 percent driven by both higher volume and prices. Revenues in EWOS increased by 11 percent to NOK 2 360 million as higher raw material cost lifted average selling prices even as volume declined by 4 percent compared to second quarter last year.

Mainstream reported an EBIT pre fair value and non-recurring items of NOK 169 million (negative NOK 17 million) in the quarter. Volumes sold were 28.6 thousand tonnes (22.2 thousand tonnes), an increase of 29 percent. The EBIT pre fair value per kilogram, gutted weight, was NOK 5.9 (negative NOK 0.8). EBIT pre fair value per kilogram, gutted weight, for Mainstream Chile was negative NOK 0.4 (negative NOK 4.7), for Mainstream Canada NOK 13.4 (NOK 2.3) and for Mainstream Norway NOK 12.6 (negative NOK 0.3).

- While the price trend in the Americas has been positive for salmon, the biological environment in Chile continues to be challenging, in particular relating to sea lice and SRS. The situation is manageable, but Mainstream is following the situation closely, and is working with both the industry and the regulators to improve the current status, underlines Jon Hindar.

- During second quarter and into third quarter we have seen improved enforcement of regulations, better collaboration between companies, positive effects of new sea lice products, and a strong commitment to enhance the sustainability of salmon farming through the launch of Global Salmon Initiative (GSI). Cermaq gives high priority to continue its efforts in contributing to the improvement of industry conditions. Key focus areas going forward are following up of coordinated lice treatment accelerating the development of an effective SRS vaccine and continued exchange of best practices, says Jon Hindar.

EWOS sold 250 thousand tonnes of fish feed in second quarter 2013, a decrease of 4 percent compared to second quarter 2012. Volume in Norway dropped 14 percent in the second quarter of 2013 from lower water temperatures, while the volume in Chile was up by 5 percent. EBIT pre fair value was NOK 105 million (NOK 114 million).

- EWOS produced a good result in a market which globally dropped by 7 percent in volume compared to second quarter 2012, due to lower than normal sea temperatures in Norway, concludes Jon Hindar.

Mainstream expects sales volume for 2013 of 145 thousand tonnes, 21 percent up from 2012, due to growth in Chile. Limited supply growth in combination with robust demand should continue to support a strong salmon market.

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