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THE Marine Harvest Group has reported sharply reduced profits in the third quarter of 2011.
Operating profit (EBIT) dropped to NOK 457 million (£52 million) for the quarter compared to NOK 759 million in the corresponding quarter of 2010 while net earnings (profit) dropped to only NOK 18 million (£2 million) compared to NOK 670 million in Q3 2010.
Meanwhile the world’s largest salmon farming company warned that the situation would have been worse if it did not have a high share of contracts at favourable prices reducing the impact on margins from a steep decline in spot prices. Marine Harvest added that it has implemented several measures to prepare for a challenging market the coming quarters.
Marine Harvest reported operational revenue and other income of NOK 3,636 million (£414 million) in the third quarter of 2011 (NOK 3,632 million in Q3 2010). Harvest volumes were 83,076 tonnes compared to 64,034 tonnes in the third quarter of 2010.
CEO of Marine Harvest ASA, Alf-Helge Aarskog said: “Global supply increased by 19 percent in the third quarter, leading to a steep decline in spot prices in all key markets. Our strong contract portfolio reduced the impact on our margins this quarter. Marine Harvest Scotland delivered strong results also in this quarter, and VAP Europe improved their margins from previous quarters.”
Marine Harvest Norway achieved an operational EBIT per kilo of NOK 5.92 (13.52 in Q3 2010) in the third quarter, while in Scotland and Canada reported operational EBIT per kilo was NOK 10.40 and NOK -7.44 respectively (10.93 and 2.74 in Q3 2010). Marine Harvest VAP Europe reported an operational EBIT margin of 3.7% (2.2%) in the third quarter of 2011, while Marine Harvest Chile achieved an operational EBIT per kg of NOK 5.79 (18.01).
Marine Harvest expects to harvest a volume of 338,000 tonnes in 2011, of which 99,000 tonnes is expected to be harvested in the fourth quarter.
Alf-Helge Aarskog continued: “We expect a continued strong increase in global supply for the rest of 2011 and in 2012. A strong contract portfolio will reduce the impact of low spot prices also in the fourth quarter. While the demand stimulus from low prices can have a positive impact on spot prices the coming quarters, we must be prepared for a challenging market also in 2012.
“We will reduce smolt stocking in 2011 and 2012 by 11.3 million smolt in total, reduce planned capex in 2012 by NOK 600 million to approximately NOK 400 million and have initiated a group wide cost-programme to preserve our financial strength. We remain committed to exploit consolidation opportunities that may arise as a result of the challenging market conditions.”
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