Austevoll Seafood ASA 4th quarter and preliminary result for 2010
The Group reported operating income of NOK 3,504 million for the quarter (Q4 2009 NOK 3,201 million). EBITDA before value adjustment for biomass in Q4 was NOK 754 million (Q4 2009 NOK 556 million), reports www.megafishnet.com with reference to Austevoll Seafood.
Sales prices achieved for fishmeal and oil, Atlantic salmon and trout in Q4 2010 have been higher than the prices achieved in Q4 2009. The Group achieved good prices for its other products, but these were more in line with the prices achieved for Q4 2009.
The transaction involving the sale of 100% of the shares in Epax Holding AS was completed in the fourth quarter, and a gain from this sale of NOK 73 million has been recognised on the accounts. The sale generated NOK 562 million in cash for AUSS.
EBIT before value adjustment for biomass in Q4 was NOK 573 million (Q4 2009 NOK 423 million). EBIT after value adjustment for biomass in Q4 was NOK 700 million (Q4 2009 NOK 488 million). Write-downs of NOK 51 million were made during the quarter, mainly related to vessels in Peru which the Group does not expect to use in the future.
Income from associated companies for Q4 totalled NOK 60 million (Q4 2009 NOK 23 million). The largest associated companies are Norskott Havbruk AS (owner of the Scotland-based fish farming company Scottish Sea Farms Ltd.), Norway Pelagic ASA and Brødrene Birkeland AS.
The Group's net interest costs in Q4 2010 totalled NOK 52 million (Q4 2009 NOK 59 million).
The result before tax for the quarter totalled NOK 678 million (Q4 2009 NOK 454 million). The result before tax with value adjustment for biomass for the quarter totalled NOK 551 million (Q4 2009 NOK 389 million).
Fishmeal and fish oil
Operating income in Q4 2010 totalled NOK 374 million (NOK 444 million in Q4 2009) and EBITDA amounted to NOK 36 million (NOK 147 million in Q4 2009).
The second season for anchoveta fishing in Peru started on 20 November and lasted until the end of January 2011. The total quota was stipulated as approx. 2.1 million tons for the season. As a result of an unusually large mix of small fish, there were several interruptions during the season which finally closed on 18 January 2011.
AUSS' fleet in Peru fished approx. 38% of their quota before ending the season. For the industry as a whole, a total volume of under 800,000 tons was fished, representing approx. 38% of the quota established for the season. The developments during this season, in our opinion, indicate that Peru has a satisfactory and proactive management of its fishing resources, based on a long-term philosophy and sustainability.
As is normal for the fourth quarter, production in Europe was good. However, the fourth quarter saw a slight decline in the volumes received for production when compared with the same quarter in 2009.
The lower volumes of raw ingredients in both Europe and Peru had an obvious impact on operating margins and volumes sold for the quarter. In total, approx. 37,000 tons of fishmeal and fish oil were sold in Q4, compared with approx. 66,000 tons in the same quarter of 2009. The prices for fishmeal and oil have, as expected, been higher in Q4 2010 when compared with the same quarter last year.
Write-downs of NOK 42 million were made during the quarter, mainly related to vessels in Peru which the Group does not expect to use in the future.
Operating income in Q4 2010 totalled NOK 209 million (NOK 204 million in Q4 2009) and EBITDA amounted to NOK 97 million (NOK 18 million in Q4 2009).
The transaction comprising the sale of 100% of the shares in Epax Holding AS was executed in November. The transaction generated NOK 562 million in cash for AUSS, with a gain from the sale of NOK 73 million recognised on the accounts.
The total volume sold for consumption is distributed as follows; approx. 1,000 tons of frozen products Chile) compared with 5,400 tons in the same period last year.
Approx. 337,000 boxes of canned products were sold, compared with approx. 461,000 boxes for the same period in 2009 (Chile and Peru). During the period, the Group sold approx. 136 tons (October) of high and low concentrate Omega 3 oils compared with approx. 362 tons in the same period last year.
Prices realised for canned products were in line with the same period last year, while the Group achieved higher prices for frozen products than during the same period last year. The business segment has been impacted by low volumes of own fishing for consumers in Chile. In Peru, production has been based exclusively on purchased materials. The low volume of raw materials affected the utilisation of the segment's production facilities and thereby the products available for sale.
In Q4, a write-down of NOK 9 million was made to goodwill related to one of the sales and distribution companies in Chile.
Production, sale and distribution of Atlantic salmon and trout
This business segment comprises Lerøy Seafood Group ASA. In Q4 2010, the segment reported operating income of NOK 2,574 million (Q4 2009 NOK 2,184 million) and EBITDA before value adjustment of biomass of NOK 602 million (Q4 2009 NOK 366 million). The segment reported harvests of 35,770 tons gutted weight of salmon and trout in Q4 2010 compared with 35,000 tons in the same quarter last year.
Lerøy Seafood Group ASA completed the take-over of 50.71% of the shares in Sjotroll Havbruk AS on 10 November, and Sjøtroll Havbruk AS is consolidated within the Group with effect from November 2010.
The segment has experienced a significant growth in operating result and in EBITDA when compared with Q4 2009, totalling 64 %. This growth is the result of an increase in volume and an improvement in prices achieved for the main products, Atlantic salmon and trout, and an extremely positive development in sales and distribution.
The market was positive throughout the quarter and the segment has a strong position on the major global fish market.
Pelagic Northern Atlantic
Operating income in Q4 2010 totalled NOK 449 million (NOK 417 million in Q4 2009) and EBITDA amounted to NOK 24 million (NOK 24 million in Q4 2009).
Pelagic Northern Atlantic comprises the sales company Atlantic Pelagic AS, which carries out all sales activities for the production companies Austevoll Fiskeindustri AS, Sir Fish AS, Modolv Sjoset AS and North Capelin Honningsvag AS. This company is also responsible for the results of the production companies Austevoll Fiskeindustri AS, Sir Fish AS,Modolv Sjoset AS and North Capelin Honningsvag AS.
The fourth quarter is normally a good production and sales quarter for this business segment. The season started slightly earlier than usual this year, due to the transfer of 70,000 tons of mackerel from the 2009 quota to 2010. Receipt of materials in the fourth quarter has been dominated by NVG herring and a smaller volume of mackerel, due to the fact that the season for these fish started as early as August.
Cash flow from operating activities for the fourth quarter 2010 was NOK 487 million (NOK 353 million in Q4 2009). The strong cash flow from operations reflects the good operating result achieved for the quarter. Cash flow from investment activities for Q4 2010 was NOK -65 million (NOK -19 million in Q4 2009). Cash flow from investments in Q4 2010 comprises normal maintenance investments, acquisition of shares in Sjøtroll Havbruk AS and the sale of shares in Epax Holding AS. Cash flow from financing activities for Q4 2010 was NOK 1,062 million (NOK -184 million in Q4 2009). Cash flow from financing in the quarter comprises payment of ordinary instalments, changes in short-term credit, taking up a new bond loan in AUSS and taking up new financing in connection with the acquisition of shares in Sjotroll Havbruk AS. Net change in cash in Q4 2010 was NOK 1,484 million (NOK 150 million in Q4 2009). The Group's cash reserves at the end of December 2010 totalled NOK 2,811 million compared with NOK 1,623 million at the end of December 2009.
Financial information, 2010 as a whole
At the end of December, the Austevoll Seafood Group reported operating income of NOK 12,744 million (NOK 11,325 million at 31 December 2009).
The Group achieved an EBITDA before value adjustment for biomass at end December of NOK 2,541 million (NOK 1,922 million as of 31 December 2009).
EBIT before value adjustment for biomass in 2010 was NOK 1,984 million (2009 NOK 1,442 million). EBIT after value adjustment for biomass in 2010 was NOK 2,282 million (2009 NOK 1,503 million).
Income from associated companies for 2010 totalled NOK 192 million (2009 NOK 80 million).
The Group's net financial costs in 2010 totalled NOK 249 million (2009 NOK 253 million).
The result after tax for the year totalled NOK 1,766 million (2009 NOK 988 million).
The Board of Directors is satisfied with the Group's profit performance.
Balance sheet as of 31 December 2010
At the end of December 2010, the Group had a total balance sheet of NOK 19,042 million compared with NOK 16,291 million at year-end 2009. At the end of December 2010, the Group equity was NOK 9,111 million compared with NOK 7,095 million at year-end 2009. The equity ratio was 48% as of end of December 2010 compared with 44% as of year-end 2009.
Net interest-bearing debt amounted to NOK 3,162 million at the end of December 2010 compared with NOK 4,091 million in the same period last year. The Group's cash reserves at the end of December 2010 totalled NOK 2,811 million compared with NOK 1,623 million at the end of December 2009. The Group's cash reserves do not include unutilised drawing rights.
Risk and uncertainty factors
The Group's risk exposure is described in the consolidated annual report for 2009.
Group activities are mainly global and will always be more or less impacted by developments in world economy. Based on the unrest on the financial markets in recent years, the general consensus is that the uncertainty related to macroeconomics is higher than what could be considered as normal. Although this situation may have an impact on the real economy for the majority of markets, we believe that AUSS' core business is founded on long-term sustainable values within interesting seafood industries.
The Group is exposed to risk related to the value of investments in subsidiaries in the event of price changes in the raw material and finished goods markets, to the extent that these changes impact on the company's competitive edge and earnings potential over time. Operating conditions and price developments, including marine biomass, fishing conditions, for the Group's input factors are also central parameters which have an impact on Group risk.
Changes in fishing patterns and quota regulations result in fluctuating catch volumes from quarter to quarter and from year to year, and subsequently in the utilisation of the Group's production facilities. The seasonal fluctuations in catch volumes create similar fluctuations in the interim key figures.
The main share of the Group's liabilities has a floating interest rate.
The Group is exposed to fluctuations in foreign exchange rates, particularly for the EURO, USD, Chilean Peso and Peruvian Soles. Measures to reduce this risk include forward contracts and multi-currency overdraft facilities. Furthermore, parts of the long-term liabilities are adapted in relation to earnings in the same currency.
As of 31 December 2010, the company had 3,952 shareholders in relation to a comparison figure of 4,192 shareholders at the end of December 2009. The share price was NOK 49.60 at year-end 2010 compared with NOK 36.20 at year-end 2009.
The Board of Directors intends to propose to the company's ordinary general meeting a dividend payment of NOK 1.50 per share in 2011.
Market and outlook
Fishmeal and fish oil
Fishmeal prices took a downward trend in the fourth quarter but have shown a strong recovery to date in the first quarter of 2011, with current levels per ton of USD 1,800-1,850 (FOB Peru, Standard 65-66%). Fish oil prices have been on the increase in Q4 and to date in Q1, supported by the increasing prices for vegetable oils. Demand for the products from the most important markets is expected to remain regular and high.
The Board of Directors expects to see a high demand for the Group's consumer products in the future, along with increasing prices.
Production, sale and distribution of salmon and trout
The development in demand for Atlantic salmon and trout has been positive throughout 2010 and to date in 2011. A higher increase in the global offering of salmon and trout is expected in the near future when compared with the past two years. Correspondingly, we expect to see a positive development in global demand for Atlantic salmon. The above-mentioned factors, combined with expectations for improved productivity for the segment, including improvements to biology, allow for a positive attitude towards developments.