Nireus Aquaculture reports financial results 1Q 2010
HIGHLIGHTS FOR 3 MONTHS 2010
o Sales of fish and juveniles produced by the Group (biological sales) amounted to € 33.1 mi versus €24.9 mi. during the first 3 months of 2009, posting a growth of 33%. Total sales were stable at €40.3 mi due to a corresponding reduction of sales of merchandise and feed, reports www.megafishnet.com with reference to Nireus.
o Net income available to equity holders of the parent company increased to € 740 thou. from €344 thou. last year. Net income to non-controlling interests was reduced to € (427) thou. versus €224 thou. in the first 3 months of 2009, impacted by the considerably higher cost of raw materials for feed and transportation, as well as the high concentration of large size fish in the biomass.
o Interest bearing debt (€261 mi.), of which 66% is long term, remained stable. Cash balances amounted to €14.3 mi. A major goal for next year is to improve cash flows and equity ratio with a growth in fish sales and rigorous cost management.
o In Feb 2010, the number of shares increased by 18,104 shares from the conversion of 8,350 bonds with a total value of €81,580 (from the convertible bond loan issued on July 2007). Share capital consists of 63,628,748 common registered shares of a par value €1.34 each, from which 22,390 are treasury shares.
o In May 2010, NIREUS received a 3rd prize in the Management Award for Sustainable Development by PASSEPE, national member for Greece for FEAD. The award recognizes NIREUS' commitment towards environmentally sustainable practices and initiatives designed to reduce the impact on the environment.
Mr. ARISTIDES BELLES, CHAIRMAN AND MANAGING DIRECTOR OF NIREUS, COMMENTED:
"Despite the adversities of the economy, the demand for the products of the fish farming sector remains strong. At the same time, the price of the seabream has recovered solidly from last year's lows.
In the first quarter of 2010, we succeeded in increasing the sales of fish and juveniles produced by the Group by 33%, while we reduced the sales of merchandise.
We find good reason to believe that the demand for our products will remain at high levels. However, the large biological stocks resulting from the reduced fish sales during the period of the steep price decline are expected to negatively impact the production costs this year.
Finally, we will continue our efforts to create new markets for our products, to lower our production costs and to improve our cash flow position".
HIGHLIGHTS BY SEGMENT
o Sales of fish farming
products (fish and juveniles) amounted to €34 mi. compared to €31.2 mi. in the first quarter of 2009. The sales increase resulted from the significant increase of the sales of fish produced by the Group that posted a growth of 33%, while the sales of merchandise decreased significantly.
o Sales of fish feed amounted to €3.6 mi. corresponding to 4 thou. tons.
o Sales of other products (fish cages and nets, aviculture, animal culture) amounted to €2.6 mi., posting a decrease of €1 mi. Aviculture and animal culture products are sold through the 100% subsidiary KEGOagri.
- A total of €0.5 mi. was spent for PPE. The Group's investment plan was completed with the substantial investments of the previous 2 years.
- In 2007-8 NIREUS made major investments in technology that results in drastic reduction of the production time. The implementation of the selective eggs program and the inland pre-fattening units for 10 gr. juveniles achieved a decrease in production time of 7% on an annual basis. The Group has 3 inland pre-fattening units for 10 gr. juveniles, 2 in Greece and 1 in Spain. The selective eggs program will cover fully the seabream production by the end of 2010 and the seabass production by mid 2012.
- The risk from interest rate increases has been mitigated, incrementally, with forward contracts for an amount of €91 mi. The level of coverage is deemed satisfactory since €50 mi of L/T debt is guaranteed by the Greek government and carries an interest rate reduction of 50% and €20 mi. (the convertible bond loan) pays a fixed interest rate.
- The prices of raw materials for fish feed and transportation costs are expected to be higher in 2010.
- The large oversupply that occurred in the sector during the 2 previous years has resulted in large biological stocks that have burdened the production costs. This impact is expected to decrease gradually as large size fish are sold and as inventories are restocked.
- During the first 2 months of 2010, the price of seabream marked small increases but the price of seabass remained stable. Beginning in March, the prices of both species have steadily improved. NIREUS expects that the decline in the input of new juveniles and biomass growth that occured in 2009 will reduce the global supply and improve pricing. The stabilization of prices at higher levels is expected to give a positive boost to the industry and to the Group's figures.
- Global demand for Mediterranean farmed fish remains steadily increasing due to the wild stock depletion.
NIREUS expects that the current market conditions will affect the demand for seabass and seabream by a lesser extent as compared to the demand for competing products, because of their affordable prices and high nutritional value.
NIREUS is the largest producer of Mediterranean aquaculture with a top ranking position in all of its business:
market-size fish, juveniles, fish feed. The group is fully vertically integrated and operates 67 fish farms, 5 hatcheries, 3 pre-fattening units, 1 R&D center, 1 genetics center, 17 packaging plants, α fish processing plant, 2 fish feed factories, a company producing fish farming equipment and a company selling genetic material, equipment, nutrition and health products to aviculture and animal culture. The Group is export oriented and ranks 1st in total exports within the Greek food industry. Additionally, it is the largest shareholder (with a 30.2% interest) in the Norwegian company Marine Farms ASA that is listed in the Oslo Exchange and produces salmon in Scotland, seabass and seabream in Spain and the tropical fish cobia in Central America and Vietnam.
NIREUS follows principles of social responsibility and sustainability and is certified with ISO 9001: 2000, ISO 14001: 2004 and ISO 22000: 2005.
Additional information is available on the website: www.nireus.com