High costs in Chile slow Cermaq earnings
Norwegian salmon producer Cermaq’s second-quarter (2Q) earnings before interest and tax (EBIT), pre fair value and non-recurring items, was NOK 123 million (USD 19.8 million; EUR 14.7 million), down from a pro forma EBIT of NOK 137 million (USD 22.1 million; EUR 16.3 million) in 2Q 2013.
Strong prices and a strong market helped create satisfactory results in Norway and Canada, said CEO Jon Hindar, while earnings in the Chilean operation were hampered by high costs.
“Chile had weak results for Atlantics and trout as cost continues to be high. This is related to challenging growing conditions during 2013 and high mortality due to the SRS bacteria. The increase in ex-cage cost for Atlantics this quarter versus first quarter is reflecting harvesting underperforming sites,” said Hindar. “At the same time the underlying biological development of the biomass is improving. This development makes us uphold our target of reaching an ex-cage cost for Atlantics of USD 3.8 (EUR 2.81) per kg in 2015, as communicated at our capital markets day in November 2013.”
Group volumes sold in 2Q were 26.5 ktonnes, some 6 ktonnes below estimate due to market timing. Harvest volume was is in line with production plans and expected sales volume for 2014 is 158 ktonnes, marginally up from previous estimate of 157 ktonnes.
The sanitary situation in Cermaq's Chile operations is improving, the company reported: Sea lice levels are lower than in 2013 and 2012, and harvest weights have further increased. Use of antibiotics was reduced compared to 1Q due to less severe Salmon Rickettsial Syndrome (SRS) outbreaks and more effective treatment. Still, SRS remains a concern, also due to resulting mortality on large fish.