Norway-headquartered salmon producer Marine Harvest has posted operational earnings before interest and taxes (EBIT) of EUR 180 million (USD 199.6 million) in the third quarter of this year, up from EUR 78 million (USD 86.6 million) in the corresponding quarter of 2015.
The company’s best ever operational results for a quarter were attributed to record-high salmon prices in what is traditionally the period with the lowest prices, as well as strong consumer demand and an 8 percent reduction in supply. CEO Alf-Helge Aarskog added that it was “especially encouraging” to see its Chilean business unit “back in the black” for the first time since 2014.
“It is also very encouraging to see record high operational results in the feed business area,” he said.
While Marine Harvest reported operational revenues of EUR 850 million (USD 943.3 million) in Q3 2016, up from EUR 752 million (USD 834.4 million) a year previously, its total harvest volume for the quarter was down to 97,215 metric tons (MT) from 105,963 MT in Q3 2015. As such, the harvest guidance for 2016 is 381,000 MT, which is 19,000 MT lower than the previous guidance and 9 percent lower than last year’s output.
These declines are largely due to biological challenges – mainly sea lice – in Norway and Scotland, said Aarskog.
Its harvest guidance for 2017 is 403,000 MT, up 6 percent.
Ivan Vindheim, CFO of Marine Harvest, confirmed the shortage of salmon available to the market continues to drive prices “through the roof,” but added that there is also strong underlying demand. With global supply growth expected to be modest next year – between zero and 6 percent – the high price situation is likely to persist.
“That is unfortunate. We want to produce the [volumes] that are demanded, and at the moment we are not capable of doing that,” said Vindheim. “We are making more money than ever, but unfortunately we are not building the industry.”
Aarskog believes the industry “has no one to blame but itself” for not seizing on the growth opportunities given the situation in Norway this year.
“Hopefully we can get some speed into the Directorate of Fisheries so that we get new technology out there and start to use it to actually grow this business, because it’s highly needed. The consumers are there and they want our products,” he said.
According to Aarskog, the market balance going forward is expected to remain tight.
“Combined with the unparalleled market demand we have seen in 2016, the future looks promising. We will continue to ramp-up marketing efforts in important markets such as the U.S. where we are about to open up a new processing plant in Dallas. Production costs are increasing and Marine Harvest will continue the work for lower production costs,” he said.
Supported by the quarter’s positive financial results, the company’s board has decided upon a quarterly dividend of NOK 2.30 (USD 0.28, EUR 0.25) per share.
