SATISFACTORY OPERATING PROFIT UNDER PREVAILING MARKET CONDITIONS
In the second quarter of 2012, Lerøy Seafood Group had a turnover of NOK 2,306 million, which is on the same level as the second quarter of 2011, when turnover was NOK 2,397 million. The Group's operating profit before fair value adjustment of biomass was NOK 137.7 million in the second quarter of 2012, compared with NOK 440.3 million in the second quarter of the previous year. The decline in operating profit before fair value adjustment of biomass is attributed to substantially lower prices achieved for the Group's main products, Atlantic salmon and salmon trout. The Group's underlying production costs have, as a result of very good growth, together with lower feed prices, seen a slight reduction in the quarter. The good growth has also materialised in record-high harvest volumes for the season. In the second quarter of 2012, realised contract prices have not substantially deviated from prevailing spot prices. The Group's share of contracts was 15%, and the current share of contracts is lower than what the Group considers normal. However, this figure must be viewed in the light of the weak price development experienced over the past quarters.
As a result of considerably lower prices and higher costs for released-from-stock products, the associated company Norskott Havbruk (owner of the Scotland-based Scottish Sea Farms Ltd) achieved lower net earnings in the second quarter of 2012 compared with the second quarter of 2011. Income from associated companies before fair value adjustment of biomass therefore saw a reduction from NOK 17.7 million in the second quarter of 2011 to NOK 7.5 million in the second quarter of 2012.
The Group's profit before tax and fair value adjustment of biomass in the second quarter of 2012 was NOK 123.4 million against NOK 439.3 million in the second quarter of 2011.
Some interesting key figures:
- 38.4 thousand tons gutted weight of salmon and salmon trout harvested (Q2 2011: 33.2)
- Turnover NOK 2,306 million (Q2 2011: 2,397)
- Operating profit before fair value adjustment of biomass NOK 137.7 million (Q2 2011: 440.3)
- EBIT/kg all inclusive NOK 3.6 (Q2 2011: 13.3)
- Profit before tax and before fair value adjustment of biomass NOK 123.4 million (Q2 2011: 439.3)
- Spot prices for whole superior salmon have seen a decrease of 24% compared with Q2 2011
- Net interest-bearing debt was NOK 2,080 million (NOK 1,528 million at 30.06.2011)
- Equity ratio 51.3%
FINANCIAL SUMMARY FIRST HALF OF 2012
In the first half of 2012, Lerøy Seafood Group had a turnover of NOK 4,470 million, representing a decline from NOK 4,622 million for the same period in 2011. With the volume growth in sales and production, the decline was reduced to only 3.3%, despite the strong drop in prices for salmon and trout. The Group's operating profit before fair value adjustment of biomass was NOK 240.8 million in the first half of 2012, compared with NOK 886.2 million in the first half of the previous year. The Group's operating margin before fair value adjustment of biomass was 5.4% in the first half of this year, compared with 19.2% in the first half of 2011.
In the first half of 2012, the Group generated an operating profit after fair value adjustment of biomass of NOK 246.2 million, against a profit of NOK 391.6 million in the first half of 2011. Fair value adjustment of biomass in accordance with IFRS is NOK 5.3 million in the first half of 2012, compared with NOK -494.5 million in the first half of 2011.
Income from associated companies totalled NOK 15.0 million in the first half of 2012, compared with NOK 36.5 million in the first half of 2011. Corresponding figures before fair value adjustment of biomass were NOK 16.4 million and NOK 46.6 million respectively. The Group's net financial items in the first half of this year amounted to NOK -44.4 million, compared with NOK -35.5 million in the first half of 2011. The Group's profit before tax and before fair value adjustment of biomass was NOK 212.8 million in the first half of 2012, compared with a corresponding figure of NOK 897.3 million in the first half of 2011.
Net earnings for the first half of this year corresponded to a profit before fair value adjustment of biomass of NOK 2.86 per share, against a corresponding figure of NOK 11.35 in the first half of 2011. The number of outstanding shares is 54,577,368. The Group's annualised return on capital employed (ROCE) before fair value adjustment of biomass was 6.8% in the first half of this year, against 26.9% in the same period of the previous year. The Group's financial position is solid, with book equity of NOK 5,677 million, corresponding to an equity ratio of 51.3%. The Group's net interest-bearing debt at the end of the first half of 2012 was NOK 2,080 million against NOK 1,528 million at the end of the first half of 2011. During the period, income tax of NOK 280 million has been paid, a dividend of NOK 382 million has been distributed, and the acquisition and consolidation of rode Beheer B.V. has increased net interest-bearing debt by NOK 110 million.
THE MARKET SITUATION/OUTLOOK
The strong growth in global supply of Atlantic salmon experienced the last couple of years, is expected to decrease during the second half of the year. The price level faced by the business over the last 12 months has contributed to a very strong development in demand. Good demand together with expectations for improved productivity in the Group's production facilities, including improved biology, provides justification for the Board's positive attitude towards the Group's development. The Board of Directors currently anticipates a stronger result for the second half of 2012 than was achieved in the first half of 2012.
Questions and comments may be addressed to the company's CEO, Henning Beltestad, or to the Group Chief Accountant, Arne Vatne.
Bergen, 22 August 2012
The Board of Directors of Lerøy Seafood Group ASA
