Morpol positive surprise
The Nordea Market Report:
The Q4 EBIT came in at NOK 1,034bn (expected NOK 991m). Farming operations in UK seem to have performed better than indicated in their trading update from January. Dividend at NOK 1.2 per share is NOK 0.3 higher than expected, bringing total 2013 to NOK 4.25 per share. We are also positively surprised by the performance from Morpol processing despite very high raw material prices. They say break even raw material price now is NOK 44 per kilo. The corresponding break-even price for the other VAP units in the group is lower and they also record a loss from these activities in the quarter. They maintain their 405k tonne volume guidance for the full year 2014, which was also expected. All in all a positive report, mainly improved farming result and a strong Morpol performance in a very challenging quarter price wise. In a neutral market; we should expect a positive share price reaction at 1-2% on this today. EBIT rounding NOK 1bn for the first time, strong processing result from Morpol
The Q4 result came in 4.3 %better than expected mainly owing to positive deviation from the UK operations. We do however consider the result from Morpol being the most impressive however, delivering a positive NOK 64m EBIT in a quarter with salmon prices ending at NOK 41 on average. The company say their break even salmon price is now NOK 44 per kilo, which is higher than we had feared. The situation in the “old processing units” in Western Europe, the situation is different; as they lost NOK 37m in the quarter on back of higher cost base. They expect these results to improve from 2H 2014 following structural changes implemented.
Positive report should support share price today
The combination of better EBIT (driven by UK and Morpol results) and dividend than expected is expected to be a positive catalyst for the share price today. The report supports out current positive view on the share and the sector and we expect a positive 1-2% market reaction from start today.