Grieg Seafood ASA Best ever quarterly results
Highlights - second quarter 2010
- Greatly improved results in all regions. Historically high earnings, reports www.megafishnet.com with reference to Grieg Seafood.
- Strong salmon market, good demand and good prices in both second quarter and first half-year.
- Greatly improved results in Canada after temporary weakening in first quarter 2010.
- EBIT before fair value adjustments of biomass increased by 132% to NOK 172.4m in the second quarter of 2010 (NOK 74.3m).
- EBIT before fair value adjustments of biomass increased by 237% to NOK 287.8m in the first half of 2010 (NOK 85.4m).
- Establishing new sales company for the Norwegian operations together with Bremnes Seashore.
- Strengthening of the organisation within biology and feed.
Results second quarter 2010
The strong trend from the first quarter continued through the second quarter. The Group's operating profit before fair value adjustments of biomass was NOK 172.4m in the second quarter, compared with NOK 74.3m in the same period in 2009. The salmon market continues to be characterized by strong demand and a decline in the global supply of salmon.
Earnings per kilo in the second quarter were at a historically high level in all regions. As expected, the results in Canada strengthened in the second quarter following the reorganisation of one production area that temporarily weakened the operating results in the first quarter. In addition to good market prices, the continued positive development of production costs and the biological situation have contributed to the improved performance. Historical fixed price contracts, sale of pacific salmon and writedowns and provisions relating to PD in Rogaland has affected the quarterly result negatively.
The Group's EBIT was NOK 12.59 per kg (NOK 5.73 per kg). Rogaland achieved an EBIT of NOK 13.22 per kg (NOK 7.99 per kg), while Finnmark reached an EBIT of NOK 11.72 per kg (NOK 9.59 per kg). The EBIT in Shetland also showed a strong increase and reached NOK 14.24 per kg (NOK -1.68 per kg), while the result in Canada increased to NOK 14.37 per kg (NOK 5.15 per kg).
In the first half-year the operating profit before fair value adjustments of biomass increased from NOK 85.4m in 2009 to NOK 287.8m in 2010.
The Group's total harvested volume in the second quarter rose by slightly more than 5% to 13 696 tons, while the volume for the first half-year increase by 43% to 31 776 tons.
The pre-tax profit for the first half-year was NOK 546.7m against NOK 442.6m in 2009.
The equity ratio at the end of the second quarter was 45.3% (38.8%). The cash flow from operations was NOK 245.3m in second quarter 2010, compared to NOK 62.2m in the same period in 2009. Net interest bearing debt was NOK 1,075.0m at the end of the second quarter 2010, compared to NOK 1,377.0m at the same time last year.
New sales company in Norway
Grieg Seafood and Bremnes Seashore have decided to set up a new jointly owned sales company for the operations in Norway. The establishment of the new sales company is part of Grieg Seafood's sales and market strategy. Through cooperation with Bremnes Seashore, the sales company will be strengthened as a result of higher sales volumes and a more complementary product assortment in the area of processed products. Grieg Seafood will have a 60% shareholding in the sales company.
Outlook
The strong market for salmon continued through the second quarter. The decline in supplies from Chile contributed to continued high prices. So far in the third quarter prices have been at a historically high level.
The supply side is expected to remain tight for the remainder of the current year and in 2011. There is likely to be a gradual increase in supplies from Chile from the second half of 2011. The overall demand for salmon has been maintained, despite the higher price level.
Grieg Seafood has seen an improved trend in production costs in most production areas. The improvement in operations is expected to be maintained, and a better fish health situation and lower mortality will also contribute to lower production costs.
The increased number of PD cases in Southern Norway is a negative development, even though this is not likely to have a material negative impact on Grieg Seafood's profitability. The situation nevertheless underlines the need to maintain a strong focus on initiatives aimed at keeping the spread of PD at a minimum.
Grieg Seafood expects a harvested volume of 67 000 tons in 2010. The expected harvested volume in 2010 has been reduced by a total of 1 000 tons in view of the PD situation in Rogaland and slightly lower production because of low seawater temperatures. Some postponement of volume from 2010 until 2011 is also a possible consequence of market assessments and a desire to optimise both production and market conditions.
The Board of Grieg Seafood is satisfied with the company's development, in relation to market development, profitability and operational and biological developments.