Supplies of farmed Atlantic salmon will remain tight this year thereby keeping average market prices at a high level of around EUR 7.20 (USD 7.64) per kg over the course of the next 12 months, according to Marine Harvest CEO Alf-Helge Aarskog.
Delivering the Norway-headquartered salmon producer’s fourth-quarter 2016 results, Aarskog confirmed that overall, the global farmed salmon supply in the last quarter fell by 10.5 percent or 61,200 metric tons (MT) year-on-year to 522,000 MT with the volumes produced in the European market decreasing 6.5 percent to 352,100 MT, falling 19.2 percent in the Americas to 152,900 MT and down 6.2 percent to 13,600 MT in Australia.
In terms of market supply, the total salmon volume into Europe in this period fell by 8.4 percent to 293,200 MT, while the supply to the Americas totaled 134,900 MT and 61,100 MT went to Asian markets, representing year-on-year declines of 10.7 percent and 11.7 percent respectively. The total global supply in the quarter amounted to 519,400 MT, down 8.8 percent year-on-year.
With the shortage of fish in the market, Q4 2016 prices increased between 47 and 71 percent year-on-year, averaging EUR 7.39 (USD 7.84) per kg in Norway, USD 6.50 (EUR 6.90) in Chile and USD 7.86 (EUR 8.34) in North America.
These “fantastic prices” have continued into the first-quarter of 2017, highlighted the company’s CFO Ivan Vindheim.
For 2017, Marine Harvest expects there to be low volume growth – between -1 percent and 4 percent – with a best-case global production of 2,034,000 MT, although Vindheim highlighted that volumes out of Norway so far this year are lower than previously expected and if this trend continues there could be some adjustment of the numbers.
The one big challenge to the industry and the only real “uncertainty in the numbers” remains sea lice, added Aarskog.
Marine Harvest’s own production guidance for 2017 is 403,000 MT, up 6 percent. Of this Norway is forecast to contribute 250,000 MT, Chile 45,000 MT, Canada 42,000 MT and 54,000 MT will come from its Scottish operations.
Despite a drop in the volumes that it harvested, Marine Harvest posted its best ever quarterly operational earnings before interest and taxes (EBIT) of EUR 259 million (USD 274.9 million) in Q4 2016, up from EUR 90 million (USD 95.5 million) in the corresponding period of 2015, with Aarskog attributing the operational results to the record prices and strong demand. Consequently, the company posted an all-time high operational EBIT for the full year of EUR 700 million (USD 743.1 million), which was more than double the total achieved in 2015.
