Falling costs and a larger harvest saw Norwegian-headquartered salmon farmer SalMar deliver higher earnings.
The company's total operational earnings before interest and taxes (EBIT) of NOK 801.3 million (USD 97.6 million, EUR 82.9 million) in the third quarter of this year were up from NOK 576.3 million (USD 70.2 million, EUR 59.6 million) in Q3 2016.
"Strong operations in all segments and an improving biological situation have enabled SalMar to once again deliver strong financial results, despite a fall in salmon prices through the quarter," SalMar CEo Trond Williksen said. "It is particularly pleasing that the steady reduction in costs we have achieved in recent periods continued in the third quarter, and that the extensive efforts and substantial investments we have made over time to deal with salmon lice are now starting to pay off."
SalMar highlighted that prices fell through Q3 2017 – from NOK 65 (USD 7.92, EUR 6.72) per kg at the start of the period to around NOK 50 (USD 6.09, EUR 5.17) per kg in mid-September, before increasing to NOK 55 (USD 6.70, EUR 5.69) per kg by the close of the period. The average price of salmon (NASDAQ Salmon Index) for the third quarter as a whole came to NOK 56.55 (USD 6.89, EUR 5.85) per kg, which was NOK 11.28 (USD 1.37, EUR 1.17) per kg less than in the previous quarter, and NOK 3.92 (USD 0.48, EUR 0.41) per kg down on the corresponding period of 2016.
Nevertheless, the company generated gross operating revenues of NOK 2.7 billion (USD 329 million, EUR 279.3 million) in the last quarter, up from NOK 2.3 billion (USD 280.3 million, EUR 238 million) in Q3 2016. Meanwhile its harvest increased by 4,400 metric tons (MT) year-on-year to 34,000 MT, giving an EBIT of NOK 23.60 (USD 2.88, EUR 2.44) per kg for the third quarter. The EBIT per kg in the second-quarter was NOK 28.12 (USD 3.43, EUR 2.91).
Regionally, Fish Farming Central Norway's cost per kg of biomass harvested fell for the third successive quarter. SalMar said the segment's biological situation improved through the quarter, and costs are expected to hold steady in the fourth-quarter.
The biological situation for Fish Farming Northern Norway was also good, contributing to a reduction in costs from the previous quarter, it said. As in previous years, SalMar experienced a slight increase in lice numbers in the quarter, but said that the company is “well equipped to meet any biological challenges,” and so costs are again expected to hold steady.
Its sales and processing segment posted a higher operating profit of NOK 46.2 million (USD 5.6 million, EUR 4.8 million) in the quarter. Contract sales accounted for 45 percent of the volume in the quarter, falling to 40 percent in Q4 with price levels similar to the first-half of 2017.
SalMar expects to harvest around 134,000 MT of salmon in Norway in 2017 as a whole, with Fish Farming Central Norway producing 86,000 MT and Fish Farming Northern Norway contributing 48,000 MT. Additionally, Norskott Havbruk (Scottish Seafarms) and Arnarlax are expected to harvest 32,000 MT and 9,500 MT respectively.
Next year, SalMar expects to harvest around 143,000 MT in Norway, while 27,000 MT of salmon is forecast from Norskott Havbruk and 11,000 is anticipated from Arnarlax.
