Highlights – third quarter 2013
• A strong market and high prices give significantly improved results.
• EBIT before fair value adjustment of biomass was NOK 76.5m in third quarter (loss of NOK 69.4m in 2012).
• Harvest volume of 13 953 tons in third quarter (15 233 in 2012).
• Strong performance in Norway with operating profit of NOK 10.8 per kg.
• Turnaround in Shetland proceeding well. Implemented measures have resulted in improved biology and cost development, but results remain weak.
• Exceptionally weak results in BC due to low underlying production and high unit costs.
• Compliance with all loan covenants as at end of third quarter 2013.
Results third quarter 2013
Group operational EBIT before fair value adjustment of biomass totalled NOK 78.8m in the second quarter, an increase on a loss of NOK 69.4m in the same period last year. The ordinary operating profit totalled NOK 76.5m in the third quarter. Increased prices were the reason behind the strongly improved results.
The salmon market was strong in the third quarter, driven by good demand and stable supply, compared with the corresponding period in 2012. The third quarter is normally characterised by seasonally falling prices as a result of an increase in harvest volumes, but this year salmon prices developed unusually strongly, with only a brief dip in prices at the end of the third quarter. This, in turn, was again replaced by increasing prices at the start of the fourth quarter. The overall increase in global supply in the third quarter of the year stood at 0.4%, while the price growth stood at more than 40% over the same period.
Grieg Seafood Finnmark has applied for 4 new green licences in in accordance with criteria as announced. A total of 10 new licences have been announced at a set price of NOK 10m.
The third quarter was again a period characterised by weak results from the two regions outside Norway, still affected by biological events in previous periods as well as abnormally high costs and lower underlying production. The results from BC were unusually weak due to the low underlying production as a result of previous biological events, which caused exceptionally high unit costs for biomass harvested in the third quarter. Underlying production volumes are expected to normalize towards the end of 2014. Results from Shetland showed an improvement on the first half-year, although still weak. Implemented measures has improved the underlying biological situation and cost level, which is expected to continue.
The Group’s total harvested volume in the third quarter was 13 953 tons, which was a reduction of 1 280 tons (-8%) compared with the same period in 2012. The harvested volume is 1 000 tons less than previously guided.
The equity ratio at the end of the third quarter stood at 41% (39%), while interest-bearing debt amounted to NOK 1 291m (NOK 1 358m). The cash flow from operations totalled NOK 129m in the third quarter alone. At the end of the third quarter the Group was in compliance with all of its loan covenants, which has originally been waived up to and including the fourth quarter of 2013.
The Group’s operational EBIT before fair value adjustments of biomass was 5.65 NOK/kg (minus 4.55 NOK/kg). Rogaland achieved an EBIT of 12.91 NOK/kg (1.90 NOK/kg), while Finnmark had an operational EBIT of 9.58 NOK/kg (minus 2.52 NOK/kg). The EBIT in Shetland reached 0.05 NOK/kg (minus 8.77 NOK/kg), while in Canada the EBIT reached minus 2.71 NOK/kg in 2013 compared to minus 8.22 NOK/kg in 2012. The Norwegian sales company, Ocean Quality, reached an EBIT of NOK 8.7m (1.1%) compared to NOK 11.0m (2.2%) in the same period in 2012.
