Record first-quarter profit at Marine Harvest, sales volumes slide

Published on
May 10, 2017

Driven by all-time high salmon prices, Marine Harvest achieved record first-quarter operational earnings before interest and taxes (EBIT) of EUR 220 million (USD 239.1 million) in the opening three months of this year, almost doubling the EUR 112 million (USD 121.7 million) posted in the corresponding period of 2016.

“There have been strong prices in Europe, strong prices in the Americas and this is backed with good demand in most markets. Again, this has come with the decline in supply,” said Alf-Helge Aarskog, CEO of Marine Harvest.

On the back of the reduced supply, European prices were up 18 percent in Q1 2017 compared with the corresponding period of last year, while in the Americas, prices increased 40 percent year-on-year. In Europe, the first-quarter prices were lower than those paid in Q4 2016, but higher in the Americas, showing “a strong demand for the product and that customers are willing to pay the price,” he said.

Delivering the Norway-headquartered salmon farmer’s Q1 2017 results, Aarskog also highlighted “encouraging” strong operational performances from Marine Harvest Scotland and Marine Harvest Canada in the three-month period.

Scotland had been the “standout performer” for getting on top of the biological challenges that had affected production in recent years and was now harvesting big fish and bringing costs down, he said.

“That, in combination with good prices, gives a good result.”

Marine Harvest reported operational revenues of EUR 892 million (USD 969.5 million) in the first quarter of 2017, up from EUR 810 million (USD 880.4 million) in Q1 2016, while the total harvest volume fell by more than 13,000 metric tons (MT) to 83,768 MT, which is also 16,000 MT less than in the last quarter of 2016. 

“This was a low volume quarter for Marine Harvest,” said Aarskog, who also confirmed that the company’s second-quarter volumes would also be low.

Following significant investment in new equipment and sea lice mitigation measures, “it is about the second-half of the year,” he said.

“We said the same thing a year ago and failed, so the proof will be in the pudding. But we expect that we will see some improvement in the second-half.”

Its harvest guidance for 2017 is 403,000 MT, which is in line with the previous guidance.

The operational EBIT of its salmon of Norwegian origin in the last quarter increased to EUR 2.52 (USD 2.74) per kg – up from EUR 1.87 (USD 2.03) in Q1 2016, but lower than the EUR 2.70 (EUR 2.93) achieved in the last quarter of 2016.

Operational EBIT improvements were confirmed in its salmon of Scottish and Canadian origin compared to a year previously – amounting to EUR 3.12 (USD 3.39) and EUR 3.42 (USD 3.72), respectively. Its Chilean operation’s EBIT increased from EUR -1.55 (USD 1.68) in Q1 2016 to EUR 1.87 (USD 2.03) in the last quarter, although this figure was lower than in Q4 2016 when it achieved EUR 2.60 (USD 2.83) per kg.

Meanwhile, the MH Feed segment reported a Q1 2017 operational EBIT of EUR 100,000 (USD 108,697), down from EUR 1.6 million (USD 1.7 million) a year previously, and MH Consumer Products reported an operational EBIT of EUR 9.6 million (USD 10.4 million), up from EUR -600,000 (USD -652,188). 

Aarskog said he was “very pleased” with the result Consumer Products had achieved so far this year, improving its operations in all areas.

Marine Harvest has also entered into a term sheet to refinance its existing bank facility with a senior secured five-year EUR 1.2 billion (USD 1.3 billion) credit facility with DNB, Nordea, ABN Amro, Rabobank, Danske Bank and SEB. The principle financial covenant of the facility is an equity ratio of no less than 35 percent.

Contributing Editor reporting from London, UK

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