SSF plans £35m facility

Scottish Sea Farms has announced plans to invest £35 million in a new freshwater facility this year.

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The news was included in parent company SalMar’s Q4 report, which also reveals that SSF’s operations in Shetland suffered from gill issues, algae, and sea lice; while their sites on Orkney and Mainland Scotland fared better, in part thanks to the deployment of wrasse as cleaner fish.

Overall, however, biological issues led to a policy of accelerated harvesting in the quarter which had a negative impact on affecting harvest weight, prices achieved and cost per kilo and these continuing challenging conditions have caused the subsidiary to revise its harvest forecast for 2016 at 26,000 tonnes, down from 27,000 in 2015.

Harvested volumes for SSF were 6,300 tonnes, up from 5,500 tonnes in Q4 2015; profits before tax were fell to NOK 22 million (£1.79m), down from NOK 80m (£6.52m) in the corresponding quarter of 2015; and EBIIT per kilo fell to NOK 0.82 (£0.07), from NOK 5.34 (£0.43).

Norwegian operations

"Our operational challenges persisted in the fourth quarter, and costs associated with biological situation had a negative impact on earnings and operational efficiency," says SalMar CEO Leif Inge Nordhammer. "Favourable price developments measured in NOK contributed to a satisfactory result for the year as a whole, and the board is proposing a dividend of NOK 10 per share for 2015."

SalMar generated gross operating revenues of NOK 2.04 billion in the fourth quarter 2015, marginally up from the same period the year before. The Group harvested a total of 38,100 tonnes, 3,600 tonnes less than in the same period in 2014. Operational EBIT totalled NOK 374.3 million, down from NOK 508.7 million in the fourth quarter 2014.

The performance of SalMar's Central Norway and Rauma segments continues to be affected by biological challenges. This is reflected in the high cost of keeping the level of salmon lice below regulatory thresholds. To control the level of lice, SalMar has on its own initiative elected to harvest fish earlier than planned. This resulted in a lower average weight, higher production costs per kilo and lower prices achieved.

The Northern Norway segment's underlying operations performed well during the quarter, with good growth and a high weight at harvest. The biological situation is satisfactory, it is therefore expected that the cost of the harvested biomass will stay at more or less the same level in the coming quarter.

The Sales and Processing segment made an operating loss in the fourth quarter. This is largely due to the fact that 50 per cent of the volume harvested was sold under contract at prices lower than the average spot price in the period. The biological situation experienced in the fish farming segments also has a negative impact on this segment's operational efficiency.

Based on estimates for the standing biomass, the company expects the global supply of Atlantic salmon to fall by 3 per cent in 2016 to 2.23 million tonnes. This is 80,000 tonnes less than in 2015.

For 2016 as a whole, SalMar expects to harvest a total of 133,000 tonnes in Norway, down from 136,400 tonnes in 2015.

The board is proposing a dividend payment of NOK 10.00 per share for 2015.