Codfarmers: Financial results Q1, 2010
Q1/10 revenue of 43.5 MNOK compared to 31.9 MNOK in Q1/09. Total harvest of 2 810 tons (r.w) of own production and 110 tons (r.w) sold for external producers, reports http://www.megafishnet.com/ with reference to Codfarmers.
> The average FOB (Oslo) sales price in Q1/10 was 20.2 NOK/kg compared to 24.7 NOK/kg in Q1/09. Low average market prices in general and large volumes of small fish explain the drop in price. Harvest of fast maturing fish at Kjerkvika resulted in significant average size reduction.
> Contract sales account for 41% of total sales in Q1/10.
> EBIT of -9.0 MNOK in Q1/10 compared to -6.3 MNOK in Q1/09. EBIT in Q1/10 is mainly explained by the following factors:
(1) Administration and sales costs of 4.8 MNOK in Q1/10.
(2) Negative contribution of 0.6 MNOK from fish sold in the period.
(3) Net result from subsidiaries of - 3.2 MNOK. Depreciations accounts for MNOK 2.1
> Biological assets per Q1/10 have a fair value of MNOK 58.9. The expected break even price for harvesting through fourth quarter 2010 is NOK 28.1 per kg (before adm/sales).
> Agreement on sale of certain assets at book value of 14.1 MNOK to Mainstream AS. The sale comprises transfer of boats, moorings and feeding machines.
> Cash per Q1/10 of 0.9 MNOK, prior to incorporation of the following liquidity positions:
(1) Cash credit from DnB NOR of 5 MNOK not drawn
(2) Insurance compensation after fire at Halsa related to equipment and machinery of 4.2 MNOK.
Expected pay out in Q2/10
(3) Cash settlement after sale of Cluster Kjerringøy of MNOK 8.4. Expected pay out in Q3/10
(4) Sale of equipment to Mainstream Norway AS MNOK 7.8. Expected pay out during Q2/10
> Refinancing plan in process. The Company has met the major stakeholders
(2) P rotector (Insurance company)
(3) Innovation Norway
- Insurance settlement has secured fixed harvesting costs of max NOK/kg 4.8 until May 2010. Volume is spread amongst 4
harvesting plants: Norsal (Steigen), Williksen (Nord Trønderlag), Nesset (Nord Trønderlag) and Myremar (Myre).
- Evaluating all options for future harvesting based on cost effectiveness, investment requirements, logistical and
- Codfarmers has finalized a deal with Protector (insurance company), which implies that;
- Protector participates in the share issue with NOK 10 million
- Cash settlement for building is NOK 8 million
- Remaining cash settlement for machinery and equipment of NOK 4,2 million to be paid out.
- Codfarmers will not build a new processing plant at Halsa. COD owns remaining plant and land.
- The deal is subject to a successful share issue of NOK 50 million and agreement with Innovation Norway
- The operations at the hatchery and the pre-ongrowing facility are still on hold.
- In agreement with MarineBreed the holding of their genetically selected brood-stock is maintained at a minimum level. The fish (F2-generation) is still growing according to calculations from the breeding program, estimating a 60% improvement compared to the population F0. This fish is adjusted by light-manipulation to spawn first time in August 2010.
- A decision on public funding of a 2-year R&D-platform involving brood-stock husbandry and a small scale hatchery production over two years is postponed until May 2010.
83% increase in total cod volumes - 20% drop in average fresh cod price overall (wild and farmed)
- In Q1/10 the average FOB export price on whole gutted fish was 20.1 - 19% down on Q1/09.
- Codfarmers' export volume of whole gutted fish increased by 56% on Q1/09 and accounted for 48% of the total Norwegian export volume.
- As expected, the planned harvest of slow growing fast maturing fish resulted in an average size reduction with 62% 1-2 kg fish, 4% 0-1 kg and a considerable share of production grade fish.
- The larger cod sizes 2-3 and 3-4, which normally pull up the average price were under particular pressure from significant landings of large wild cod fetching prices only moderately above those of the large 1-2 kg fish.
- Contract sales accounted for 41% of the total sales value in Q1. The largest 1-2 kg segment held its price also during Q1 because of contract sales, but the 2-3 kg contract prices had to be dramatically reduced.
- Fresh cod consumption in Europe continues to increase in line with quota increase and absorbs the growing fresh cod export volumes. A "normalisation" of the trade in the salted and dried markets albeit at lower prices the supply of fresh cod is better balanced compared to 2009.
Short-term; Volume pressure easing significantly during end of Q2 with prices starting to recover
- The high demand for fresh cod now generated combined with the usual seasonal reduction in supply of fresh wild cod will see prices rising from mid Q2 and onwards.
- Continued harvest of small fish at COD in Q2 will extend the pressure on average prices although offset by growing contract sales to Southern Europe.