New record for Marine Harvest

MARINE Harvest achieved all-time high earnings in 2016, doubling its operational EBIT to EUR 700 million, compared to EUR 347 million in 2015.

Announcing the figures today, the Norwegian company said its fourth quarter EBIT was EUR 259 million, compared to EUR 90 million in the corresponding quarter of 2015.

‘Driven by high salmon prices on strong demand and reduced supply, we achieved record high operational results in the fourth quarter,’ said CEO Alf-Helge Aarskog (pictured).

‘It is very encouraging to see strong operational performance in all our entities.’

He said 2016 was ‘a great year for Marine Harvest, with both record earnings and cash flow generation. I am very proud of the work all our colleagues have put in to achieve these results’.

The company said total harvest volume was 99,634 tonnes in the final quarter, a drop of almost 10 per cent compared to 110,551 tonnes in the same period in 2015.

Problems with lice in Norway was an important reason why Marine Harvest produced 30,000 tonnes less salmon than planned last year.

Harvest guidance for 2017 is 403,000 tonnes, which is in line with the previous guidance.

Salmon of Norwegian origin achieved an operational EBIT per kilo of EUR 2.70 (1.47) in the fourth quarter, while salmon of Scottish and Canadian origin reported operational EBIT per kilo of EUR 1.83  and EUR 3.33 respectively (EUR -0.30 and EUR 0.36).

Salmon of Chilean origin reported operational EBIT per kilo of EUR 2.61 in the quarter (EUR -1.31).

In Scotland, results in the final quarter were impacted by low harvest volume and high cost due to biological issues. Consequently, biological costs per kg increased by 28 per cent in the fourth quarter of 2016 compared to the corresponding quarter in 2015.

However, the cost level improved compared to the third quarter of 2016, due to a general improvement in the biological performance of the fish being harvested.

Non-seawater costs per kg decreased compared to the fourth quarter of 2015, mainly due to reduced incident based mortality – EUR 0.9 million, compared to EUR 5.2 million in the fourth quarter of 2015.

Greater use of mechanical lice mitigation tools, such as lice flushers and well boats, contributed to an improved health situation.

Marine Harvest Scotland has also initiated projects with the aim of increasing the capacity for production of cleaning fish.

As a result of improved biology, growth performance has been favourable in the quarter, the company said.

The cost level is expected to further decrease somewhat in 2017, based on the performance of fish at the sites which will be harvested.

The fourth quarter harvest volume was 11,805 tonnes gutted weight, a decrease from the corresponding quarter in 2015 (14,095 tonnes) due to health issues and early harvest in prior quarters, as well as higher biomass in the sea in 2015.

The reference price was up by approximately 81 per cent in the fourth quarter of 2016 compared to the fourth quarter of 2015, due to strong demand and lower supply.

The recent weakening of the GBP is expected to have positive market effects for Marine Harvest Scotland.

MH Consumer Products reported an operational EBIT of EUR 22.9 million (EUR 9.8 million).  MH Feed reported an operational EBIT of EUR 10.8 million (EUR 8.0 million).

The company also announced plans to open a new processing facility in British Columbia this year, following the recent expansion in Dallas at the end of 2016.

‘We continue to strengthen the efforts in North America, with the new Dallas plant opening at the end of the fourth quarter and a new value-added facility opening in British Columbia in the end of the second quarter of 2017,’ said Aarskog.

‘Marine Harvest is also nominated to purchase farming assets on the East Coast of Canada, which in the future can further strengthen our supply to the North American market.’

But the group will be delisting from the New York Stock Exchange, and instead only be listed on the Oslo Stock Exchange.

The decision was made after only three per cent of share trading over the past year occurred in the United States.

Seafood Analyst Allison Giskeødegård estimates that Marine Harvest will continue growing this year, despite not particularly large production.

Marine Harvest has about half of its sales in long-term contracts. The price in the contract market is likely to increase by 10-12 per kg this year and approach the spot market price of 60 kroner per kilo, which will give the company much higher profits.

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