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SalMar ASA: SalMar - Results for the first quarter 2016

High salmon prices produced record profits

The Atlantic salmon market tightened further in the first quarter 2016. The positive price trend experienced in recent periods continued into 2016, with spot prices ending at record high levels. Earnings in the quarter were, however, negatively affected by a high contract rate and a challenging biological situation in Central Norway. Despite this, the SalMar Group achieved a record result in the first quarter 2016.

"SalMar's good result is driven by high prices," says SalMar's CEO Leif Inge Nordhammer. "The biological situation remains challenging, but investments in treatment capacity means that we are in a better position to handle the situation than ever before. After the close of the quarter, ISA has been identified at two of SalMar's facilities in Central Norway. SalMar has already started to harvest out the fish concerned. SalMar is taking this situation very seriously, and is working closely with the relevant authorities and other parties."

SalMar generated gross operating revenues of NOK 2.0 billion during the quarter, up from NOK 1.6 billion in the corresponding period last year. The Group harvested a total of 27,300 tonnes, compared with 28,100 tonnes in the first quarter 2015. Operational EBIT came to NOK 566.5 million, up from NOK 360.8 million in the first quarter last year. In the fourth quarter 2015, Operational EBIT totalled NOK 374.3 million from a harvested volume of 38,100 tonnes.

SalMar's Central Norway segment continues to face a challenging salmon lice situation. This has contributed to high direct delousing costs. However, the additional handling of the fish causes indirect costs as a result of higher mortality and reduced growth. SalMar has invested heavily in its treatment capacity, as a result of which it is now much better equipped to deal with the situation. Moving forward, this is expected to have a positive effect.

In addition, the health status of some of the biomass has been weaker than before. Out of consideration for fish welfare, therefore, SalMar has elected to bring forward the harvesting of this portion of the biomass. This has resulted in lower harvested weights, higher costs per kg and lower prices achieved.

In April this year, ISA was identified at two of the company's sites outside Frøya (South Trøndelag). In consultation with the regulatory authorities, SalMar has initiated measures to deal with the situation. This normally involves the harvesting out of infected fish and surveillance of neighbouring sites. SalMar has already initiated the harvesting out of fish found to have the disease at the sites concerned.

The overall biological situation for SalMar's Northern Norway segment is favourable. Marine-phase production has been good, and sound underlying operations have contributed to reduced feed factors in the quarter. However, a higher than normal percentage of quality downgrades had a negative impact on prices achieved.

Although productivity at the Sales and Processing segment's harvesting and processing facilities was high in the first quarter, its results were negatively affected by the fact that around 55 per cent of the volume was sold under contract at prices well below the average spot price for the period. The contract rate in the second quarter is expected to be 50 per cent.

Based on estimates of the standing biomass, the company expects a decrease in the global supply of Atlantic salmon of 7 per cent in 2016. This corresponds to a drop in output of just over 160,000 tonnes, and testifies to the continuation of a tight market situation in the time ahead.

As a result of the tight salmon market, combined with a substantial willingness to pay for salmon, the company also expects strong results in the forthcoming quarters of 2016.

In Norway, SalMar expects to harvest around 131,000 tonnes of salmon in 2016 as a whole, while Norskott Havbruk (Scottish Seafarms) is expected to harvest 26,000 tonnes.

For further information, please contact:
CEO Leif Inge Nordhammer
Tel: + 47 916 85 250

CFO Trond Tuvstein
Tel: + 47 918 53 139

See also for more information about the company.

This information is subject to the disclosure requirements stipulated in section 5-12 of the Norwegian Securities Trading Act.

SalMar Q1 2016 report
SalMar Q1 2016 presentation


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SalMar ASA via Globenewswire


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