Solid profit from Salmar

Strong salmon prices contributed to satisfactory earnings for the SalMar Group in the first quarter 2009. While Scottish Sea Farms posted strong results in the quarter, fixed-price contracts in a market where prices are steadily rising, combined with a relatively low average weight for a proportion of the fish harvested, had a negative impact on margins in Norway, says the company in a message.

The SalMar Group generated gross operating revenues of NOK 476.2 million in the first quarter 2009, compared with NOK 348.5 million in the corresponding quarter in 2008. Operating profit before fair value adjustment of the biomass totalled NOK 82.1 million in the first quarter 2009, compared with NOK 63.5 million in the corresponding quarter in 2008. The rise in operating profit can be ascribed to a greater volume of fish harvested combined with higher salmon prices in the quarter.

"Although we performed well financially, the first quarter was a mixed picture for the SalMar Group. Volumes sold under fixed-price contracts make it difficult to benefit fully from rising salmon prices, while a lower than planned average harvested weight in central Norway resulted in a somewhat lower margin than we would have liked. On the other hand, we are glad to see that the Scottish Sea Farms had a strong quarter, and now has a better biological situation than at the same point last year," said CEO Leif Inge Nordhammer.

"The start of the second quarter has given us some biological challenges, both in central Norway (PD at Hitra) and in northern Norway (confirmed ISA on one site and suspected ISA on a second site in Troms). Nevertheless, SalMar and the other fish farmers in the affected areas are working closely together to control the situation and limit the impact. We are also implementing measures to compensate for the financial losses these outbreaks will cause us. Demand is strong in our most important markets, however, and we anticipate good prices in the time ahead."

The SalMar Group generated gross operating revenues of NOK 476.2 million in the first quarter 2009, compared with NOK 348.5 million in the corresponding quarter last year. The change is largely due to higher prices and a 15 per cent increase in the volume harvested compared with the same quarter in 2008.

The Group's consolidated operating profit before fair value adjustment of the biomass totalled NOK 82.1 million in the first quarter 2009, compared with NOK 63.5 million in the same quarter in 2008. This corresponds to an operating profit of NOK 7.76 per kg gutted weight for SalMar Central Norway, and NOK 3.56 per kg for SalMar Northern Norway.

SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farms on the Scottish mainland, the Orkneys and Shetland. The business generated gross operating revenues of NOK 185.1 million in the first quarter 2009 and made an operating profit before fair value adjustment of the biomass of NOK 32.2 million, compared with NOK 22.6 million in the corresponding quarter last year.

SalMar's key figure for profit performance under IFRS is EBIT (operating profit) before fair value adjustment of the biomass. Adjustment of the fair value of the biomass results from the requirement to value biological assets (the biomass) at fair value instead of cost price. SalMar reports EBIT before fair value adjustment of the biomass in order to show the underlying performance of its operations during the period.

The SalMar Group, including its 50 per cent stake in Norskott Havbruk AS, harvested around 15,500 tonnes gutted weight in the first quarter 2009, with 8,400 tonnes being harvested in central Norway, 4,200 tonnes in northern Norway and 2,900 tonnes in Scotland/Orkneys/Shetland.

The export price of fresh whole salmon rose during the quarter. It was more than NOK 3 higher than in the same quarter the year before. A continued relatively weak NOK against the EUR, USD and JPN in the first quarter 2009 has helped to keep the price paid to salmon farmers and exporters up. There are still strong indications that demand for salmon is not significantly affected by the current world economic environment.