Turnaround for farmed salmon?


Steven Hedlund

Published on
September 7, 2010

Global farmed salmon production is expected to grow 8 to 10 percent next year and up to 12 percent in 2012, said Marine Harvest executives during the company’s annual capital markets day in Stavanger, Norway, on Tuesday.

According to the world’s largest farmed salmon producer, global farmed salmon output totaled 1.32 million metric tons in 2009 and should fall to between 1.22 million and 1.25 million metric tons this year — a drop of 5 to 8 percent.

The Norwegian company also projects global farmed salmon output to reach between 1.31 million and 1.38 million metric tons in 2011 and between 1.41 million and 1.55 million metric tons in 2012, returning the total to pre-2009 levels.

The much-publicized infectious salmon anemia outbreak in Chile was responsible to drop in supplies over the past two to three years.

“We have chosen a quite conservative strategy in Chile,” Marine Harvest CEO Alf-Helge Aarskog told Bloomberg on Tuesday. “We want to make sure we can stay on a sustainable production in Chile for the next few years, not growing out of our mind.”

Chile’s farmed salmon production is forecasted to plunge to as little as 81,000 metric tons this year, after it crashed from 363,000 metric tons in 2008 to 215,000 metric tons in 2009. However, the country’s farmed salmon output is projected to total as much as 156,000 metric tons in 2011 and 257,000 metric tons in 2012, according to Marine Harvest.

Aarskog added that Marine Harvest expects to increase its farmed salmon production around 5 percent over the next three to five years. He told Bloomberg that there’s “ample” room for organic growth but didn’t rule out the possibility of acquisitions. Marine Harvest “will always be looking and following what is available in the market,” said Aarskog.

As for the company’s financial projections, Marine Harvest said it’s striving for a dividend capacity of NOK 1.1 billion in 2011 — that’s based on per-kilogram EBIT (earnings before interest and taxes) of NOK 6. Should it attain a per-kilogram EBIT of NOK 8 or NOK 10, its dividend capacity would reach NOK 1.7 billion and NOK 2.4 billion, respectively, next year.

Buoyed by low supplies and high prices, Marine Harvest achieved an EBIT, or operating income, of NOK 792 million (USD 126.4 million, EUR 98.7 million) in the second quarter of 2010, nearly triple last year’s second-quarter total.

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