Norway Royal Salmon in red

Norway Royal Salmon (NRS) posted EBIT before fair-value adjustments of NOK 9.1 million in the third quarter 2011, compared with NOK 23.8 million in the corresponding quarter last year. The reduction in EBIT is mainly due to lower salmon prices than in the corresponding period last year.  

NRS's operating revenue in the third quarter of 2011 was NOK 471.7 million compared with NOK 497.7 in the same quarter in 2010. The reduction in revenues is due to the sharp fall in the price of salmon during the third quarter as a result of increased global supply.

At the close of the quarter equity totalled NOK 515 million, which corresponds to an equity ratio of 34.4 per cent. Net interest bearing debt at the close of the third quarter totalled NOK 544 million.

With effect from the third quarter of 2011, the bank covenants of the Group have been improved. NRS is satisfied with the changes in covenants, which reflects the good relations between NRS and its bank.

Fish Farming

Farming experienced good operational performance and good biological status in the quarter. Farming posted EBIT before fair-value adjustments of NOK 4.6 million in the third quarter 2011, compared with NOK 20.1 million in the corresponding quarter last year. EBIT per kg gutted weight (before fair-value adjustments) was NOK 0.73 in the third quarter 2011, compared with NOK 10.75 in the corresponding quarter last year.

A record high volume of 6,304 tons gutted weight was harvested during the quarter, compared with 1,868 tons in the same quarter last year. Farming expects to harvest an estimated 19,000 tons in 2011 compared with 10,677 tons last year. The Group's production capacity is almost 30,000 tons gutted weight annually.

NRS has consequently a substantial unutilized production capacity which we are aiming to expoit. Given the volume of smolt released and today's biomass, the company is on schedule with regard to the coming years' planned harvesting volumes and capacity utilisation.

Sales

Sales posted EBIT before fair-value adjustments of NOK 7.4 million in the third quarter 2011, compared with NOK 7.2 million in the same quarter last year. EBIT per kg before fair-value adjustments came to NOK 0.53 in the third quarter 2011, compared with NOK 0.60 in the corresponding quarter last year. A total of 13,862 tons of farmed fish was traded during the quarter, an increase of 17 per cent compared with the same quarter last year.

The Group has after the end of the third quarter entered into an agreement of selling all its shares in Larssen Seafood, corresponding to 48 per cent of the shares, to Kvarøy Fiskeoppdrett AS for a total of NOK 24.1 million. The transaction is conditional to due diligence, and the transaction date is expected to be by the end of November 2011. The sale is not included in the accounts for the third quarter 2011. NRS sharpens its focus on the three areas where it has production today; Finnmark, Senja and outside Haugesund, and Larssen Seafood is not located in any of these areas.

NRS is considering the long-term prospects for the Group and the industry as good despite the fact that salmon prices are now at a low level compared with recent years. However, NRS expect the balance between supply and demand and the salmon's position as a healthy and competitive food product will lead the salmon prices to stabilize over time at a level that will provide further profit.