Disease takes chunk out of Cermaq profits
Disease at its Norway and Canada salmon farms has hit Cermaq’s third quarter earnings, including a 33 percent drop compared to the same quarter in 2011.
Cermaq’s EBIT for the third quarter was NOK 232 million, down from NOK 348 million in the third quarter of 2012. However, the company’s fish feed division, EWOS, saw solid results due to high volume and capacity utilization, which compensated for low salmon prices and biological challenges.
EWOS sold 388,000 metric tons (MT) of fish feed in the quarter, up 5 percent compared to the same time period last year. The growth was due to a 16 percent increase in Norway. In other regions, volume came down while maintaining stable market positions. EBIT increased to NOK 346 million in the third quarter of 2012, compared to NOK 290 million in the corresponding quarter last year.
“This is in total a satisfactory result based on the current challenging salmon market,” said CEO Jon Hindar. “The underlying operational farming cost has been stable with a reduction in Mainstream Norway, which previously was communicated and expected. EWOS is at the same time demonstrating its capability of optimizing the production capacity in a peak production period.”
Mainstream Norway reported an EBIT of NOK 10 million, a loss of NOK 10 million compared to 2011. excluding the NOK 20 million biomass write-down due to PD. EBIT value per kilogram, gutted weight, was NOK 0.8. The EBIT per kilogram for Nordland was NOK 2.0 and Finnmark was negative NOK 2.4. The production cost in both regions came down compared to second quarter 2012, but a 4,000 MT lower sales volume compared to previous estimates had a negative impact on the cost per kilogram for Finnmark in the quarter.
Mainstream Canada’s EBIT pre fair value was a loss of NOK 26 million, excluding the NOK 33 million biomass write-down due to IHN. The corresponding EBIT pre fair value per kilogram, gutted weight, was negative NOK 4.6. The reduction in profit was mainly caused by lower prices. Severe algae bloom and low dissolved oxygen levels resulted in a NOK 4 million additional charge in the quarterly result. Apart from the IHN outbreak and high algae bloom levels, the biological performance in Canada is good.
Mainstream Chile reported an EBIT pre fair value loss of NOK 57 million (profit of NOK 65 million). EBIT pre fair value per kilogram, gutted weight, was negative NOK 8.2. For all species the prices were significantly lower compared to last year as well as against second quarter 2012. Production cost increased compared to third quarter last year, but came somewhat down compared to second quarter 2012. The biological performance is generally stable, although some increased SRS particularly on trout has been experienced. Mortality is considered at a manageable level reflecting the increased biomass from last year. The acquisition of Cultivos Marinos Chiloé was completed early October 2012 adding above 30,000 MT of new capacity for Mainstream Chile.