Weaker prices, lower volumes and higher production costs cut deep into Marine Harvest’s profitability in the second quarter of this year. The Norway-based salmon farming giant achieved operational earnings before interest and taxes (EBIT) of NOK 719 million (EUR 78.7 million; USD 87.6 million) in Q2 2015, compared with NOK 1.2 billion (EUR 133.5 million; USD 148.6 million) in the corresponding period of 2014.
The company posted operational revenues of NOK 6.58 billion (EUR 719.9 million; USD 801.4 million) in the last quarter, up slightly from NOK 6.56 billion (EUR 717.7 million; USD 799 million) in Q2 2014. The total volume harvested was 104,158 metric tons (MT), down from 114,176 MT a year previously. As a result, the company has revised its harvest guidance for this year to 430,000 MT, which is 10,000 MT lower than its previous guidance.
Salmon of Norwegian origin achieved an operational EBIT per kg of NOK 9.80 (EUR 1.07; USD 1.19), down from NOK 12.16 (EUR 1.33; USD 1.48) in Q2 2014, while salmon of Scottish and Canadian origin reported operational EBIT per kg of NOK 5.44 (EUR 0.59; USD 0.66) and NOK 2.12 (EUR 0.23; USD 0.26), down from NOK 12.19 (EUR 1.33; USD 1.48) and NOK 11.01 (EUR 1.20; USD 1.34), respectively. Salmon of Chilean origin reported operational EBIT per kg of NOK -4.64 (EUR -0.51; USD -0.56) in the quarter, compared with NOK 5.50 (EUR 0.60; USD 0.67), a year previously.
The figures include contributions from Sales and Marketing, including MH Consumer Products, which reported an improved operational EBIT of NOK 48 million (EUR 5.2 million; USD 5.8 million) compared to NOK 20 million (EUR 2.2 million; USD 2.4 million) in Q2 2014. The performance from MH Feed also improved with an operational EBIT of NOK 27 million (EUR 3 million; USD 3.3 million), compared with NOK -18 million (EUR -2 million; USD -2.2 million).
“I am very pleased with the strong operational performance and result in Marine Harvest Fish Feed, and the good cost performance in Canada. Rising production costs in Europe due to challenging biology remains a concern,” said Alf-Helge Aarskog, CEO of Marine Harvest.
The company said it has continued to see weak prices in Marine Harvest Chile’s main markets as well as persistently adverse farming conditions. In response to these challenges and the termination of the merger process with AquaChile, it has initiated a restructuring process of these operations. Measures being taken include a reduction of its smolt stocking from 17 million to 11 million smolt and the equivalent of 200 full-time positions cut from its manning. In relation to the restructuring, a provision in the amount of NOK 84 million (EUR 9.2 million; USD 10.2 million) was recognized in the quarter.
According to the Outlook Statement from the Board of Directors, Marine Harvest’s market organization will put effort into developing current and new markets for Chilean salmon through, among other things, introducing more value-added concepts and new products in the American markets. It said the company is currently working with major retailers to develop and strengthen this work.
“The second-quarter was a challenging quarter. However, the third-quarter has started strong, with improved prices in all main markets. With an expected limited supply growth in the periods to come, we expect the market balance to remain tight,” said Aarskog.
