Strong quarterly result from NRS
Today, Norway Royal Salmon (NRS) reports another strong quarterly result. Operational EBIT for the third quarter of 2013 came in at MNOK 48.4, compared with MNOK 2.2 in the same quarter of 2012. So far this year NRS has achieved an operational EBIT of MNOK 164.6, compared with MNOK 21.9 in the same period last year. NRS continues to experience a strong salmon market driven by good demand.
Operating revenues totalled MNOK 549 in the quarter, compared with MNOK 412 in the same quarter of 2012. The increase in both results and revenues is attributable to higher prices. EBIT per kg for the farming business amounted to NOK 11.91 in the quarter compared with NOK -0.36 in the same quarter last year. EBIT per kg for the sales business was NOK 1.12 in the quarter, compared with NOK 1.81 in the same quarter last year. The realized price on fixed-price contracts was lower than the market price and reduced operational EBIT per kg by NOK 1.38 in the quarter. This resulted in a net contribution from sales of NOK -0.27 per kg. The profit before tax was MNOK 96 in the quarter, an increase of MNOK 74 from the same period last year.
Operational cash flow for the quarter was MNOK 46.2, compared with MNOK -42.2 in the same quarter of 2012. The positive operating cash flow has contributed to the Group's net interest-bearing debt being reduced by MNOK 34 to MNOK 444 at the end of the third quarter of 2013. Equity rose by MNOK 27 in the quarter to MNOK 757, which corresponds to an equity ratio of 39.5 per cent.
Region North
Region North posted an operational EBIT of MNOK 51.2 in the quarter, compared with MNOK 2.7 in the corresponding quarter last year. Operational EBIT per kg gutted weight from farming was NOK 12.31 in the quarter, compared with NOK -0.68 in the corresponding quarter last year. Production cost improved from the second quarter of 2013.
Region South
Region South posted an operational EBIT of MNOK 2.0 in the quarter, compared with MNOK 3.5 in the corresponding quarter last year. Operational EBIT per kg gutted weight from farming was NOK 6.60 in the quarter, compared with NOK 0.07 in the corresponding quarter last year. Achieved sales price was low because the fish was harvested in September, which was the period with the lowest prices in third quarter. The production cost has improved from the second quarter of 2013, but is not on a satisfactory level. Higher feed conversion ratios for harvested fish pulls the costs in the wrong direction.
4,574 tonnes gutted weight was harvested during the quarter, an increase of 8 per cent compared with the same quarter last year. 4,254 tonnes of the total volume was harvested in Region North and 320 tonnes in Region South.
A total of 13,341 tonnes was traded during the quarter; an increase of 1 per cent compared with the same quarter last year. At the same time the total exports of salmon from Norway was 3 per cent lower. NRS has therefore increased its market share in the quarter. The sales business achieved an operational EBIT of MNOK 5.1 before losses on fixed price contracts of MNOK 6.3 in the quarter.
Estimated volume for 2013 is reduced from 30,000 tonnes to 27,000 tonnes. At the end of the quarter, the group had nearly full utilization of MAB. This provides a sound basis for successful utilisation of production capacity and increased harvest volumes ahead. Estimated harvest volume for 2014 is 30,000 tonnes, which is an increase of 11 per cent from 2013.
Future market prospects are deemed to be positive as salmon prices have increased from the third quarter last year despite global supply being on the same level as last year. Harvest volumes from Norway in the fourth quarter of 2013 are expected to be slightly higher than the previous year's volumes; this also reflects the volumes globally. At the same time there are signals that the growth in supply from Chile will slow down in 2014, while some growth is expected from Norway. Globally, a marginal growth is expected in 2014, which has had a positive effect on price expectations for 2014.
