Marine Harvest posts strong Q4 results, revises production forecast

Published on
February 4, 2015

Marine Harvest reported strong operational results for the fourth quarter of 2014 despite enduring weak prices in the Americas and biological challenges within its European operations through the period.

The Norway-based salmon farming giant achieved operational earnings before interest and taxes (EBIT) of NOK 1.032 billion (EUR 119.6 million; USD 136.9 million) in Q4 2014, down slightly from NOK 1.037 billion (EUR 120.1 million; USD 137.6 million) in the corresponding quarter of 2013. It did, however, record operational revenues of NOK 6.86 billion (EUR 795.2 million; USD 910.5 million), up from NOK 6.74 billion (EUR 781.3 million; USD 894.6 million) in Q4 2013.

In addition, its total harvest volumes for increased to 105,122 metric tons (MT) from 103,378 MT in Q4 2013. For the year as a whole, Marine Harvest produced a record 418,873 MT of salmon, up from 343,772 MT in 2013.

Looking forward, its harvest guidance for 2015 is 440,000 MT, which is down 5,000 MT on its previous forecast, chiefly because of continued production issues in Scotland.

The group’s salmon of Norwegian origin achieved an operational EBIT of NOK 12.59 (EUR 1.46/USD 1.67) per kg in Q4 2014, up from NOK 12.04 (EUR 1.40/USD 1.60) in the corresponding quarter of 2013. It harvested 69,691 MT of Norwegian salmon in the quarter.

A lot of its Norwegian production is now supplied with feeds from the group’s new fish feed plant in Bjugn, which became operational in June last year. It was intended that the facility would have an annual capacity of 220,000 MT, but this has already increased to 275,000 MT.

This makes Norway 80 percent self-sufficient and has led to the decision to not invest in a second Norwegian plant and to instead look at establishing one in another region, said Alf-Helge Aarskog, CEO Marine Harvest.

“We can manage with one good plant in Norway,” said Aarskog.

Beyond Norway, the group’s Q4 performances in Scotland, Canada and Chile were weaker than a year previously, he conceded.

Salmon of Scottish origin reported operational EBIT of minus-NOK 3.42 (minus EUR 0.40; minus USD 0.45) per kg, down from NOK 10.25 (EUR 1.19; USD 1.36) per kg in Q4 2013. This was result of biological challenges and a very low volume of 6,376 MT, compared to 11,716 MT in Q4 2013.

Aarskog confirmed that Marine Harvest expects a similar performance from Scotland in Q1 2015.

At the same time, salmon of Canadian origin achieved an operational EBIT per kg of NOK 3.69 (EUR 0.43; USD 0.49), down from NOK 10.20 (EUR 1.18; USD 1.35). Salmon of Chilean origin achieved an operational EBIT of NOK 0.35 (EUR 0.04; USD 0.05) per kg, down from NOK 2.48 (EUR 0.29; USD 0.33) per kg in Q4 2013. These results were largely attributed to a reduction in prices, which were created by significantly increased supplies from the two countries.

Chile’s total production in Q4 2014 was up 19.4 percent year-on-year to 138,200 MT, while North America’s increased 10.5 percent to 31,500 MT.

There has been some improvement in price in the North American market in the opening weeks of 2015 and Aarskog expects the trend to continue through the first quarter.

With regards to the proposed merger of Marine Harvest Chile and AquaChile that was announced last month, Aarskog believes that as well as strengthening Marine Harvest’s position in the Chilean salmon farming sector, the deal “will act as a catalyst for improvements” throughout the country as a whole.

“It is a highly fragmented industry that really needs consolidation in order to improve its sustainable biology,” he said.

If the merger goes through, Marine Harvest will own 42.8 percent of AquaChile, which will continue to be listed on the Santiago Stock Exchange. Subsequent to the merger, and after 15 June 2016, Marine Harvest has the option to acquire further shares in AquaChile that at minimum will give Marine Harvest an ownership interest of 55 percent.

The deal is subject to due diligence and approval from relevant competition authorities. But Aarskog expects the process will be completed in the third-quarter of this year.

Also included in Marine Harvest’s Q4 figures, Marine Harvest VAP Europe reported an operational EBIT of NOK 36 million (EUR 4.2 million; USD 4.8 million) compared to a loss of NOK 37 million (EUR 4.3 million; USD 4.9 million) in Q4 2013, while Morpol Processing achieved an operational EBIT of NOK 81 million (EUR 9.4 million; USD 10.7 million), up from NOK 63 million (EUR 7.3 million; USD 8.4 million).

Contributing Editor reporting from London, UK

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