Mainstream Chile reports negative results in second quarter
According to the quarterly report recently published by Cermaq ASA, Mainstream Chile reported an EBIT pre fair value loss of NOK 24.3 million (US$ 4 million) in Q2 2012 which compares negatively to the profit of NOK 33.1 million (US$ 5.45 million) obtained in the same period of the previous year.
EBIT pre fair value per kilogram, gutted weight, was negative NOK 4.7 (positive NOK 8.0). Lower achieved sales price and increased cost for all species, partly offset by higher volume, were the main reasons for the reduction in profit.
Volumes and prices Volumes sold were 5.2 thousand tonnes in the quarter, an increase of 27 percent, or 1.1 thousand tonnes, compared to second quarter 2011. The main impact relates to increased sales of Atlantics. Sales of Coho and trout were fairly stable.
Average achieved price per kilogram for the combined fresh and frozen Atlantic was US$ 4.69, a reduction of 35 percent compared to the same period last year and 2 percent lower than prior quarter. Achieved average price for Coho and trout per kilogram dropped 12 percent and 17 percent, respectively, compared to second quarter 2011, while achieved average price for both species against first quarter 2012 were largely unchanged.
Operations The biological performance in Mainstream Chile is generally good, but some increased SRS and seasonally higher sea lice levels on certain sites have been experienced. Harvest of large fish during the winter season is expected to result in a reduced sea lice level going forward. Mortality is experienced at an acceptable, but somewhat higher level reflecting the increased biomass. The production cost for Atlantic and Coho increased around 15 percent in second quarter 2012 compared to the same quarter last year. Trout production cost was fairly stable.
Against prior quarter, production cost for Atlantic and trout was around 10 percent higher and a 6 percent increase for Coho.
The increase for Atlantics is mainly due to harvesting out two sites with slow growth and high feed conversion ratio. Internal analysis suggests that the challenges on these sites are due to quality problems with third party supplies. Mainstream Chile is currently in discussions with the supplier to mitigate the issue.
In Mainstream Chile, production cost may vary substantially between quarters based on the large volume fluctuations during the year. As most of the Coho and trout will be harvested in the second half of 2012, production cost should decrease compared to the second quarter. The biological performance of the current Atlantic sites is also favourable and expected to further reduce production cost in second half of 2012.
