Scottish Sea Farms see profits rise

SCOTTISH Sea Farms reported an operating profit of NOK 24.39 per kg gutted weight in the final quarter of 2016, up from NOK 18.59 per kg in the previous quarter and from NOK 0.82 per kg in the fourth quarter of 2015.

It harvested some 5,800 tonnes of fish in the quarter, 2,300 tonnes less than in the previous quarter and 500 tonnes less than the corresponding period in 2015.

Operational EBIT for the whole of 2016 was NOK 16.90 per kg gutted weight compared to NOK 4.50 in 2015.

The biological situation was good in all the company’s operating areas, but there was a slight rise in lice numbers in Shetland.

As a result, Scottish Sea Farms ‘increased its level of salmon-lice preparedness’, and non-medicinal delousing equipment (including a Norwegian built Thermolicer machine) has been installed in the region.

The company expects to harvest around 30,000 tonnes in 2017 as a whole, compared to 28,000 tonnes in 2016.

SalMar, which along with Leroy owns Scottish Sea Farms, had a mixed year, said acting CEO Gustav Witzøe.

‘Fish farming in Northern Norway performed very well, while the results posted by fish farming in Central Norway were affected by the biological situation,’ he said.

SalMar harvested 26,500 tonnes of salmon in the quarter, 11,600 tonnes less than in the same period the year before. Operational EBIT was NOK 557.0 million, up from NOK 374.3 million in the fourth quarter 2015.

Gross operating revenues totalled just under NOK 2.5 billion in the quarter, up from approximately NOK 2.0 billion in the corresponding period in 2015.

Although the lice situation for fish farmers in Central Norway remains challenging, SalMar has invested heavily in non-medicinal delousing equipment in recent quarters.

This, combined with improved access to lumpfish, has improved the segment’s preparedness and response capacity.

The last portion of the generation transferred to the sea in the spring of 2015 was harvested out during the quarter. These fish came primarily from sites encountering biological challenges, with correspondingly high production costs.

The biological situation for fish transferred to the sea in the autumn of 2015 is better, the company reported. Costs are therefore expected to be lower in the first quarter 2017.

To optimise production of the segment’s standing biomass, SalMar has elected to push back the harvesting of some volumes from 2016 until 2017.

The biological situation for Northern Norway is less demanding, and output in the fourth quarter was good. Effective operations combined with high salmon prices have contributed to the segment’s record results. Going forward, the segment’s overall costs are expected to remain stable.

The sales and processing segment made an operating loss in the fourth quarter of 2016, largely because 60 per cent of the volume was sold under contract at prices well below the average spot price for the period.

The biological situation at the fish farms also had a negative impact on this segment’s operating efficiency.

Based on estimates of the standing biomass at the close of 2016, the global supply of Atlantic salmon is expected to grow by 2 per cent in 2017. Combined with strong consumer demand, this indicates that the salmon market will remain tight, with the outlook for continued high salmon prices and strong earnings.

For 2017 as a whole, SalMar expects to harvest 131,000 tonnes in Norway, up from 115,600 tonnes in 2016.

Picture: Scottish Sea Farms managing director Jim Gallagher

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