SalMar - Results for the fourth quarter 2018
"A good operational performance from all our business segments, strong demand and our highest ever harvested volume have all contributed to another satisfactory quarter for SalMar. The first generation from Ocean Farm 1 was also harvested during the quarter. The project's biological results have been good and strengthened our confidence in fish farming further out to sea. Our operations must be on the salmon's terms and not on the equipment's limitations. By continuing to invest in the entire supply chain, as well as further developing our ocean farming strategy, SalMar is building a strong platform for sustainable development and further growth" Says CEO Olav-Andreas Ervik in SalMar.
SalMar generated gross operating revenues of NOK 3.1 billion in the fourth quarter 2018, up from NOK 2.8 billion in the fourth quarter 2017. The harvested volume totalled 40,500 tonnes, compared with 39,900 tonnes in the same quarter the year before. Operating EBIT per kg came to NOK 23.11 in the fourth quarter 2018, up by NOK 5.41 per kg from the corresponding period in 2017.
SalMar's Fish Farming Central Norway segment posted a good operational result in the fourth quarter. The volume harvested in the period were fish transferred to the sea in the autumn of 2017. This generation has had a more challenging production cycle than the spring 2017 generation. As a result, we harvested a larger number of fish at lower average weights than budgeted. This increased costs somewhat compared with the previous quarter. SalMar expects the segment's costs to remain stable going into the first quarter 2019.
The Fish Farming Northern Norway segment harvested 12,200 tonnes of salmon in the quarter, a substantial 9,000 tonnes more than in the previous quarter. As expected, this higher volume has contributed to lower costs in the period. The volume harvested during the period were fish transferred to the sea in the spring of 2017. Although this generation grew more slowly than planned, its development in the last period was good. This resulted in high average harvest weights and good price achievement in the quarter. The segment expects costs to remain stable going into the first quarter 2019.
A large volume of fish helped keep efficiency at the harvesting and processing facilities at a high level. Some 38,700 tonnes of fish were harvested at InnovaMar during the quarter, compared with 32,700 tonnes in the fourth quarter 2017. Combined with a strong operational effort by the workforce, this has contributed to a positive result from all business areas. Operating profit came to NOK 79.4 million, slightly higher than in the previous quarter. Around 35 per cent of the volume was sold under contract at average prices higher than the average spot price in the period. As a result, the contract portfolio has made a positive contribution to the segment's overall result. Due to seasonal variations in the supply of raw materials, the industrial side is expected to operate at a slightly lower level in coming quarters.
As at 14 February 2019, the contract rate for the first quarter 2019 stands at approx. 30 per cent. It is expected to be around 20 per cent for 2019 as a whole. The contracts have been closed at prices above the average price in 2018, which reflects a good market with strong demand.
Based on estimates of the standing biomass at the close of the fourth quarter 2018, the global supply of Atlantic salmon is expected to rise by around 6 per cent in 2019. Combined with expectations of strong demand, this indicates a balanced salmon market, with the prospect of continued high earnings.
SalMar maintains guiding to harvest 145,000 tonnes in Norway in 2019: 95,000 tonnes in the Central Norway segment and 50,000 tonnes in the Northern Norway segment. Norskott Havbruk (Scottish Seafarms) is expected to harvest approx. 30,000 tonnes, while Arnarlax is expected to harvest 10,000 tonnes.
Based on the results for 2018, the board is proposing a dividend of NOK 23 per share.
The complete report for the fourth quarter 2018 is attached.
For further information, please contact:
CEO Olav-Andreas Ervik
Tel: +47 918 68 100
CFO Trond Tuvstein
Tel: +47 918 53 139
See www.salmar.no for more information about the company.
This information is subject to the disclosure requirements stipulated in section 5-12 of the Norwegian Securities Trading Act.