Pan Fish ASA: 4Q results and annual results for 2004

Major improvement in operating result in 2004. Pan Fish made an operating profit before depreciation (EBITDA) of NOK 171.3 million in 2004, compared with a loss of NOK 277.8 million in 2003. In the fourth quarter 2004 the company made an operating profit before depreciation of NOK 6.6 million compared with a profit of NOK 19.0 million in the corresponding period of 2003.

 

Capital increase. 2003 and 2004 saw a major restructuring process within the company, which is now focused on the goal of becoming the most cost-effective supplier of quality salmon. To be able to attain this goal, it is critical to bring production back up to the level at which it was when reconstruction started, a level which is also commensurate with the value of the company's existing infrastructure and which will also further reduce the cost per kilo of salmon produced to the established goal. After consultation with the banks and major shareholders, the board of directors has initiated a refinancing of the company, and feels that a capital increase may realistically be undertaken during 2005.

 

"With a slimmed down organisation that is optimised for the production of high quality salmon, Pan Fish is well positioned for sustainable growth at the start of 2005 "Price increases and good sales volumes in December and into the first quarter of 2005 give grounds for optimism. Clarification of the EU's new Safeguard regulations will also create a more predictable market and will probably force Chilean producers to rein in their growth" says Pan Fish CEO Atle Eide. "Salmon from established salmon producing countries should be given preference over the Chilean salmon, because our production is subject to very strict regulations with regards to fish health and medication." Eide adds that Norway also has a considerable competitive advantage in that Norwegian producers are able to supply fresh salmon to the important EU market 365 days per year.

 

 

 

Fish farming: The company's fish farming business generated operating revenues of NOK 363.9 million in the fourth quarter, compared with NOK 675.7 million in the corresponding period the year before. Operating revenues for 2004 as a whole totalled NOK 1,920.8 million, compared with NOK 2,755.6 million in 2003. 15,778 tonnes round weight of fish were harvested in the fourth quarter 2004, compared with 21,392 tonnes round weight in the fourth quarter 2003. In 2004 as a whole 66,379 tonnes round weight of fish was harvested, compared 93,589 tonnes in 2003.

  

Revenues were lower as a result of the reduction in harvesting volumes and because Pan Fish no longer resells third-party fish. However, the company has achieved a further reduction in  production costs per kilo since the pervious quarter. When the production volume is brought back up to a level that exploits existing production capacity, the cost per kilo will fall still further. Pan Fish will ensure that any increase in production volumes will always be at a rate that is deemed prudent with regard to good fish health and biological safety on the one hand and the need to maintain a healthy market balance on the other.

 

VAP: The company's value added products (VAP) business, which comprises Pan Fish France and Vestlax Hirtshals, achieved operating revenues totalling NOK 208.3 million in the fourth 2004, compared with NOK 369.3 million in the same period the year before. Gross operating revenues for 2004 as a whole amounted to NOK 641.9 million, compared with NOK 1,023.7 million in 2003. The fall in revenues is primarily due to the fact that Norsk Sjømat is not included in the 2004 figures and that Vestlax Hirtshals did not produce satisfactory results in 2004.

 

Pan Fish France and Vestlax Hirtshals are both among the largest processing units for salmon products in Europe. The major restructuring process undertaken in 2004 has made both these businesses more robust and cost-effective, and Pan Fish expects additional cost reductions to be achieved through further streamlining and the coordination of their sales activities. 

 

Outlook: The price of Atlantic salmon in the EU market has been rising steadily since December and on into 2005, and sales volumes have been good. On 5 February 2005 the EU's Safeguard regulations came into effect. The regulations, which set quotas and minimum prices for salmon being imported into the EU from external producers, are intended to prevent the uncontrolled import and dumping of salmon. Increased Chilean production and the above-mentioned new restrictions on access to European markets will probably lead to a squeeze on prices in the American market, which has been showing signs of saturation.

 

"Pan Fish is continuing to work towards the realisation of its vision to supply the global market with quality salmon at the lowest production costs in the industry. We have accepted the challenge of implementing an extensive restructuring process in a difficult market and are now reaping the benefits in the form of much more efficient salmon production. Given that the company is secured satisfactory long-term financing, Pan Fish is well positioned for sustainable growth and is optimistic about its ability to restore the company to its position as one of the world's leading producers of Atlantic salmon," says Pan Fish CEO Atle Eide.

 

For further information, please contact: CEO Atle Eide, +47 911 52 977

 

 

 

Atle Eide

CEO Pan Fish ASA