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SalMar lowers costs, posts strong earnings in Q3

The company reported good biological performance in all regions.

Norwegian salmon company SalMar reported strong results in the third quarter thanks to improved costs over the period and strong prices.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter was NOK 1 billion (€104.6 million/$118.6 million), A 17.5 increase from the NOK 903.5 million (€94.5 million/$107.1 million) reported a year earlier.

Operational revenues increased nearly 4 percent, to NOK 2.8 billion (€292.9 million/$332 million), while harvests increased 6.2 percent, reaching 36,100 metric tons in the quarter.

During the period, the company reported earnings before interest and taxes (EBIT) per kilo of salmon of NOK 26.03 (€2.70/$3.10), up from the NOK 23.60 (€2.50/$2.80)/kg reported a year earlier.

In Central Norway, the company reported a 46.1 percent jump in sales, reaching NOK 1.9 billion (€198.8 million/$225.3 million), on a 41.8 percent increase in harvests, which reached 32,900 metric tons. EBIT per kilo in the region increased 25 percent to NOK 26.45 (€2.80/$3.10)/kg.

In northern Norway, sales fell 71 percent to NOK 175 million (€18.3 million/$20.7 million), on a decrease in harvests of 70 percent, to 3,200 metric tons. EBIT per kilo in the region fell 40.7 percent to NOK 16.18 (€1.7/$1.9)/kg over the period.

“This reduction in harvested volume was planned,” the company said.

“Due to investments in new maximum allowable biomass (MAB) capacity, combined with lower growth rates, harvesting plans have been altered to optimize MAB utilization and the volume potential of the fish held at the segment’s sea farms.”

The decrease in revenues in Northern Norway is attributable to the lower volume of fish harvested, while the higher cost of the harvested biomass is explained by the lower volumes, closure and start-up costs, and fixed running costs.

Based on estimates of the standing biomass at the close of the third quarter 2018, SalMar expects global supply of Atlantic salmon in 2018 to rise between 4 percent and 5 percent in 2019.

“Combined with expectations of strong demand, this indicates a balanced salmon market, with the outlook for continued favorable earnings,” the company said.

SalMar maintains its target to harvest 143,000 metric tons of salmon in Norway in 2018: 100,000 metric tons in Central Norway and 43,000 metric tons in Northern Norway.

SalMar-owned Scottish Seafarms is expected to harvest 26,000 metric tons, while Icelandic Arnarlax is expected to harvest a total of 6,100 metric tons this year.

In 2019, SalMar expects to harvest 145,000 metric tons in Norway.

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