Strong Q3 results from SalMar

THE fast growing Norwegian fish farmer SalMar delivered a strong performance in the third quarter of 2018, driven by cost improvements and good prices.
The operational EBIT for the quarter totalled NOK 939.1 million, up from NOK 801.3 million in the same period last year.
The group harvested a total of 36,100 tonnes in the quarter, compared with 34,000 tonnes in both the previous quarter and the third quarter 2017.
However, Scottish Sea Farms, 50 per cent owned by SalMar, saw a decline in volumes, harvesting 8,100 tonnes, compared with 9,400 tonnes in the third quarter 2017.
The company generated revenues of NOK 547.3 million in the third quarter 2018, compared with NOK 631.9 million in the corresponding period in 2017, the decrease attributed largely to the lower harvested volume.
Underlying operations have been good, said the company in a statement, but the financial result reflects higher costs in Shetland than in the second quarter, as well as lower volumes harvested in mainland Scotland and Orkney.
The fish harvested in the quarter have had a favourable average weight. Contract sales accounted for 39 per cent of the volume. EBIT per kg gutted weight came to NOK 19.25 in the period, compared with NOK 19.46 per kg in the same period last year.
Overall, SalMar’s gross operating revenues totalled NOK 2.8 billion in the period, up from NOK 2.7 billion on 2017.
The price of salmon in the period averaged NOK 54.80 per kg, down NOK 1.75 per kg on 12 months ago. Despite the lower prices, SalMar increased its EBIT per kg by NOK 2.31 to NOK 26.03.
CEO Olav-Andreas Ervik said: ‘Efficient operations and a strong biological performance have helped SalMar deliver a strong financial result.
‘This achievement has been made possible by the dedication and hard work of our employees, whose efforts have contributed to lower costs, good price achievement and increased efficiency in our harvesting and processing plants.’
The sales and processing segment posted a profit of NOK 73.1 million in the quarter, up from NOK 46.2 million.
Around 42 per cent of the volume was sold under fixed-price contracts at above spot price. Record high volumes have led to improved capacity utilisation and operating efficiency in the harvesting and processing plants.
Based on estimates of the standing biomass at the close of the third quarter 2018, the global supply of Atlantic salmon in 2018 as a whole is expected to rise by four per cent and five per cent in 2019.
Combined with expectations of strong demand, this indicates a balanced salmon market, with the outlook for continued favourable earnings.
SalMar maintains its target to harvest 143,000 tonnes of salmon in Norway in 2018. Scottish Sea Farms is expected to harvest 26,000 tonnes, while Arnarlax (Iceland) is expected to harvest 6,100 tonnes in 2018.
Picture: SalMar CEO Olav-Andreas Ervik