Higher salmon prices boosting cash flow for Cermaq ASA
Cermaq's pro forma EBIT pre fair value was NOK 113 million in third quarter 2013 versus a loss of NOK 97 million in third quarter 2012. The improvement is primarily due to higher salmon prices which have lifted earnings in all farming regions. Cermaq expects to increase its sales volume by 14% in 2014, half of this increase will be in Norway and Canada, according to the company.
Cermaq's pro forma financials for third quarter 2013 showed operating revenues of NOK 1.1 billion versus NOK 0.7 billion in the same quarter last year, and an EBIT pre fair value and non-recurring items of NOK 113 million versus a loss of NOK 97 million the previous year. These numbers are not including EWOS which is classified as discontinued operations in the quarter. The sale of Cermaq's shares in Copeinca resulted in a gain of NOK 114 million in the quarter, classified as financial income.
- We have had a strong focus on the processes related to the closing of the EWOS sale during third quarter. I am very pleased that this complex transaction has been closed according to plan, says CEO Jon Hindar in a comment.
Volumes sold in third quarter were 27,900 tons, an increase of 3,400 tons versus same quarter last year, but some 3,000 tons lower than estimate. Mainstream reported an EBIT pre fair value and non-recurring items of NOK 144 million, versus a loss of NOK 73 million the previous year, an improvement of NOK 217 million.
- This is an acceptable quarter where a strong market has helped improve results in all regions. Profitability in Chile is still too weak, but both operations and earnings at the end of the quarter showed a positive development, Jon Hindar continues.
Mainstream Canada reported an EBIT pre fair value and non-recurring items of NOK 43 million, an improvement from a loss of NOK 26 million the previous year, even though volumes sold declined from 5,600 tons to 4,400 tons. EBIT per kilo was 9.6 NOK. Good prices in the North American market and the IHN outbreak last year are the main factors behind the improved result.
Mainstream Chile's earnings in third quarter improved significantly versus last year with EBIT pre fair value at break-even level, and the Chilean operation also saw an earnings improvement towards the end of the quarter. EBIT for the same quarter last year was a loss of NOK 57 million. Volumes sold increased from 7,000 tons to 10,600 tons. EBIT per kg for Coho was NOK 4.6, while the EBIT margins for Atlantics and trout were slightly negative.
The biology in Chile has improved in several areas, especially for the sea lice level, while antibiotics usage continues to be somewhat high due to SRS.
- The current market balance and Mainstream's production plans indicate a good Coho season, and we also see strong demand from new markets such as Brazil and Russia, Jon Hindar concludes.
Mainstream Norway delivered an EBIT pre fair value of NOK 8 per kg versus NOK 0.8 last year, and volumes sold of 12,800 tons which is 900 tons more than last year. EBIT for Nordland was NOK 9.7 per kg and NOK 5.7 per kg for Finnmark. The PD outbreak in July had a negative EBIT impact of NOK 25 million for the Finnmark operation. Mainstream Norway sold approximately 20 percent of its volume on fixed price contracts which had a negative impact of around NOK 1 per kg.
Cermaq expects 20,000 tons, or 14 percent, increased sales volume in 2014 compared to 2013. Half of this increase will be in Norway and Canada. Volumes sold in Canada will revert back to a normal level after the IHN outbreak in 2012. The increase in Norway is driven by better capacity utilization in Finnmark and rebuilding of volumes after the PD outbreak. The growth in Chile is primarily a consequence of the reallocation of capacity towards Atantics from trout after the acquisition of CMC in 2012.