Extraordinary measures in Chile as a result of further outbreaks of ISA makes the fourth quarter of 2007 the most challenging for Marine Harvest so far. Despite a difficult market with low prices the other business units are performing satisfactory. In particular Marine Harvest Norway and Marine Harvest VAP Europe produce a sound margin. "Our problems lie in Chile where the industry faces severe biological challenges. As a result of the situation, Marine Harvest has decided to significantly downsize operations in region 10 in Chile. Marine Harvest acknowledges how serious the Chilean business is hit. It demands a lot of efforts to solve this, but we are confident that we will succeed", says acting President & CEO Leif Frode Onarheim.
"We are disappointed with the results for the fourth quarter of 2007. Our focus is now on building a sound operation that can restore profitability and enable us to further develop our business in the future" explains Leif Frode Onarheim and adds "On the positive side we are pleased to see that the demand for salmon is continuing to grow, even with record high volumes throughout 2007.The development so far in 2008 gives a positive outlook for our farming in Norway and the continuous positive development of our value added production. Our plan for the restructuring of our Chilean business is a plan to restore future profitability, but it will in the short term set us back both in respect of production and profits. The huge write-down of MNOK 466 in the fourth quarter must be seen in the light of the need for substantial restructuring of our operations in Chile".
Marine Harvest generated operating revenues of MNOK 3 721.5 in the fourth quarter compared to MNOK 4 477.1 for same period last year. The reduction in revenues relates mainly to a decline in market prices in all markets. The harvested volume was 100 084 tonnes (HOG) compared to 92 728 tonnes in the same period last year.
EBITDA before fair value adjustment of the biomass was negative MNOK 124.1 in the fourth quarter, down from MNOK 917.6 in the same period last year. EBIT before fair value adjustment of biomass was negative MNOK 367.7, compared to a positive result of MNOK 703.1 in the fourth quarter last year.
At the end of the fourth quarter 2007 Marine Harvest had a net interest-bearing debt of MNOK 6 480. The equity ratio was 54.1 per cent.
Business areas
Marine Harvest is divided into five business units: Marine Harvest Norway, Marine Harvest Chile, Marine
Harvest Canada, Marine Harvest Scotland and Marine Harvest VAP Europe (Value Added Products). The company also has operational units in Ireland, the Faroe Islands and Japan.
Marine Harvest Norway had operating revenues of MNOK 1 560.0 in the fourth quarter. EBIT before restructuring costs and fair value adjustment of the biomass was MNOK 181.7. A total of
52 385 tonnes (HOG) was harvested in the period, giving an EBIT/kilogram (HOG) of NOK 3.47.
Marine Harvest Chile had operating revenues of MNOK 560.1 in the fourth quarter. EBIT before restructuring costs and fair value adjustment of the biomass was negative MNOK 580.7. A total of 24 341 tonnes (HOG) was harvested in the period. The result is heavily negatively impacted by ISA and the company has expensed MNOK 466 related to the negative consequences of further outbreaks of ISA and write-down of inventory of finished goods.
Marine Harvest Canada had operating revenues of MNOK 260.7 in the fourth quarter. EBIT before restructuring costs and fair value adjustment of the biomass was MNOK 10.6. A total of 9 739 tonnes (HOG) was harvested in the period, giving an EBIT/kilogram (HOG) of NOK 1.08.
Marine Harvest UK had operating revenues of MNOK 324.7 in the fourth quarter. EBIT before restructuring costs and fair value adjustment of the biomass was MNOK 4.7. A total of 9 499 tonnes (HOG) was harvested in the period, giving an EBIT/kilogram (HOG) of NOK 0.50.
Marine Harvest VAP Europe had operating revenues of MNOK 1 218.7 in the fourth quarter. EBIT before restructuring costs was MNOK 92.5, giving an EBIT margin of 7.6% compared to 6.6% in the corresponding period last year. The company continues to show progress in its performance.
Outlook
Marine Harvest expects a harvest volume of 308 000 tonnes in 2008, of which 70 000 tonnes will be harvested in the first quarter. Low harvest volumes are expected in Chile due to the biological challenges.
As a result of the situation in Chile, Marine Harvest plans for a significant downward adjustment of the harvest and activity in region 10 in the 2008-2010 period to facilitate a return to a sustainable and profitable operation.
The largest business unit, Marine Harvest Norway and Marine Harvest's value added production should be well positioned for the future.
The global supply of Atlantic salmon is expected to grow by 1-2% in 2008, significantly lower than in 2007 mainly as a result of the challenging situation for the industry in Chile. In light of the limited supply growth, Marine Harvest expects an improved market balance for salmon both for Europe and USA in 2008.
For further information
Leif Frode Onarheim, acting President & CEO, +47 21 56 20 06
Or:
www.marineharvest.com