NRS below consensus

The company delivered an EBIT of NOK 69.3m (Cons NOK 81.2/Nordea NOK 90m). EPS came in at a negative NOK 1.4, due to a negative IFRS adjustment (lower prices for the fish in the sea). Weighted average cost ended at NOK 28.4 per kg, which was higher than we and consensus had expected. Due to a previous ISA outbreak in Region North, causing higher mortality and low average harvesting weights, as well as accelerated harvesting at one site due to winter wounds, operational costs in the region were they had 84% of their volumes this quarter increased. They keep their volume guidance of 32k tonnes and show a slide where they confirm that the added green licenses hold a potential for NRS to increase their volumes to 45k tonnes (in our estimates this will be up running in late 2017). NIBD was down NOK 52.8m to NOK 586.6m. 

Higher costs in North – solid result in South

The very low cost in North seen in Q4 (below NOK 25 per kilo) have come up above NOK 28. Harvesting from less favorable sites including sites previously hurt by ISA is the main explanation for this also bringing EBIT margin down NOK 10(!) from Q1 2014. Looking to region South, the picture is different, lower cost owing to higher harvesting and fairly good price achievement bringing EBIT margins down by NOK 3.2 despite NOK 9.8 per kilo lower prices y/y.

Maintaining the 2015 volume guidance – reiterating long term growth perpective

The company maintains its 2015 volume guidance (32k tonnes) despite beating their Q1 harvesting forecasts by 0.9k tonnes). They also reiterate that the potential including new green licenses is 45k tonnes, this is fully included in our harvesting forecast from late 2017. NRS is a growth case and we expect overall cost level to remain well below NOK 30 as they have the main part of their operations in low cost areas in Northern Norway. Share price might react negatively today if they only focus on the Q1 result.