August 28, 2013
Cermaq''s Q2 2013 earnings soar to US$38 million
Press release
In the second quarter of 2013, Cermaq reported its earnings before interest and taxes (EBIT) pre fair value of NOK229 million (US$38 million) compared to NOK60 million (US$19 million) in second quarter 2012, driven by a tighter salmon market and stronger prices.
The farming results in the second quarter were mixed. Mainstream in Norway and Canada delivered strong results on the back of high prices and good biological performance, while the results in Mainstream Chile were weak, but improving, due to high cost caused by sanitary challenges. Mainstream Chile benefitted from a price increase in US dollars of 46% for fresh Atlantic salmon compared to last year, but the price for frozen products, which made up more than half of the volume, was up only 9%, says Chief Executive Officer Jon Hindar.
The second quarter was a very eventful one for Cermaq in terms of strategic processes, and concluded with the sale of EWOS (owned by Cermaq and is one of the world''s largest suppliers of feed and nutrition for farmed fish) at an enterprise value of NOK6.5 billion (US$1.1 billion) in July. Following closing of the transaction Cermaq expects to pay an extraordinary dividend of NOK48-54 (US$8-9) per share. The company will review its corporate strategy and how to further develop the business from its position as the third largest global salmon farmer, and will revert to the market with an update later this year.
Cermaq''s operating revenues were NOK3,051 million (US$508 million) in second quarter 2013. Mainstream''s revenues were NOK1,124 million (US$187 million), an increase of 69% driven by both higher volume and prices. Revenues in EWOS increased by 11% to NOK2,360 million (US$393 million) as higher raw material cost lifted average selling prices even as volume declined by 4% compared to second quarter last year.
Mainstream reported earnings before interest and taxes (EBIT) pre fair value and non-recurring items of NOK169 million (US$28 million) in the quarter. Volumes sold were 28,600 tonnes, an increase of 29%. The EBIT pre fair value per kilogramme, gutted weight, was NOK5.9 (US$0.98).
While the price trend in the Americas has been positive for salmon, the biological environment in Chile continues to be challenging, in particular relating to sea lice and SRS. The situation is manageable, but Mainstream is following the situation closely, and is working with both the industry and the regulators to improve the current status, underlines Jon Hindar.
"During second quarter and into third quarter we have seen improved enforcement of regulations, better collaboration between companies, positive effects of new sea lice products, and a strong commitment to enhance the sustainability of salmon farming through the launch of Global Salmon Initiative (GSI). Cermaq gives high priority to continue its efforts in contributing to the improvement of industry conditions. Key focus areas going forward are following up of coordinated lice treatment accelerating the development of an effective SRS vaccine and continued exchange of best practices," says Jon Hindar.
EWOS sold 250,000 tonnes of fish feed in second quarter 2013, a decrease of 4% compared to second quarter 2012. Volume in Norway dropped 14% in the second quarter of 2013 from lower water temperatures, while the volume in Chile was up by 5%. EBIT pre fair value was NOK105 million (US$17.5 million). EWOS produced a good result in a market which globally dropped by 7% in volume compared to second quarter 2012, due to lower than normal sea temperatures in Norway, concludes Jon Hindar.
Mainstream expects sales volume for 2013 of 145,000 tonnes, 21% up from 2012, due to growth in Chile. Limited supply growth in combination with robust demand should continue to support a strong salmon market.