Marine Harvest girds for lowest profit since 2009
The Oslo-based company, whose biggest shareholder is shipping tycoon John Fredriksen, is expected to report third-quarter net income of 308.3 million kroner (US$ 55.4 million) on Oct 27, according to the mean estimate of 10 analysts surveyed by Bloomberg.
That would be its lowest earnings since a 66.1 million-kroner second-quarter loss in 2009.
Salmon supplies from the biggest producers, Norway and smaller rival Chile, are exceeding demand, pushing spot prices for the fish down about 43% since April to the lowest monthly average in four years, curbing salmon farmers’ revenue.
“It will be a tough third quarter for everyone,” said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which oversees US$ 74 billion. “We are pretty cautious on the salmon industry at the moment.”
Prices are likely to stay low the rest of 2011 and 2012 as global supply growth is expected to rise 250,000 tonnes in the next 18 months, according to Nordea Markets, which sees prices at 31 kroner per kg this year and 24 kroner for next year.
The total supply was 1.44 million tonnes last year Record salmon harvests from Norway and Chile, rebounding from an infectious anemia virus that ravaged its fish farms, have hurt earnings industry-wide, analysts say. Spot prices, at almost 43 kroner in April, fell to a monthly average of 24.22 kroner last month, said Fish Pool, an exchange for fish and seafood derivative contracts.
“It’s pretty difficult at the moment as Chilean supply is coming on stream – combined with an environment where the demand side is also weakening,” Furnes said. “That’s really having a big impact on pricing.”
Nordea Markets analyst Kolbjoern Giskeoedegaard says SalMar ASA, Grieg Seafood ASA and Norway Royal Salmon ASA will be worst impacted by the price collapse while Marine Harvest, Cermaq ASA, Leroey Seafood Group ASA and Bakkafrost P/F will fare better due to fixed contract prices and diversifying into fish meal and feed.
Grieg Seafood is expected to report a net loss of 6.98 million kroner. SalMar, the fourth-largest salmon producer, may report a 16% drop in earnings. Cermaq, the third-biggest producer of the fish, will report net income of about 239 million kroner, down from 469.7 million kroner a year earlier.
Lerøy, the second-largest producer, may report a 34% decline while Bakkafrost, a fillet specialist, is set to report about a 25% increase, helped by being a low-cost salmon farmer.
