Morpol ASA - improving margins in processing and solid results in farming leads to increase in profitability
Oslo, 24 August 2011: Morpol ASA (OSE: MORPOL)
Morpol ASA reported a positive EBIT pre fair value for the second quarter 2011
of EUR 11.7 million. The EBIT in the corresponding quarter last year was
negative EUR 2.1 million. Salmon raw material prices dropped significantly
throughout the quarter. However, the overall average price for the quarter
remained at high levels compared to historical levels.
Revenues in processing were EUR 89.4 million compared to EUR 83.4 million prior
year. EBIT for processing in the second quarter 2011 was EUR 2.6 million,
compared to a loss of EUR 2.1 million in corresponding quarter 2010. Raw
material purchase unit prices to Morpol were lower than prior year and increased
sales prices to Morpol customers year on year resulted in higher profitability.
However, higher sales prices led to reduced demand and volumes were down 11
percent from prior year levels.
Revenues in farming in the second quarter were EUR 34.6 million. EUR 10.2
million was internal sales to the Morpol processing division for further
processing and sales. Morpol did not own farming assets in the corresponding
quarter in 2010. EBIT for farming in the second quarter 2011 was EUR 10.0
million, whereof EUR 7.7 million was generated by the UK operations Meridian
Salmon and EUR 2.3 million generated by Jøkelfjord Laks AS. EBIT/kg was EUR 1.6
for Meridian Salmon with sales volumes of 4 917 tonnes gutted fish equivalent
and EUR 1.7 for Jøkelfjord Laks with sales of 1 348 tonnes.
High operating revenues
Operating revenues in the second quarter 2011 were significantly above prior
year at EUR 113.7 million (EUR 83.4 million). The revenue increase was mainly
due to farming revenues in 2011 of EUR 34.6. The group had no farming operations
in the same period prior year. Despite volumes for the Easter season included in
the quarter, processing volumes decreased year on year, but the volume impact
was offset by increased unit sales prices.
Sales volumes decrease in the quarter
Total sales volumes excluding contract processing in the quarter were down by
11 percent compared to last year, but price increases to customers have been
executed various times in the last 12 months, consequently raising the average
unit selling price. Cold smoked salmon sales were flat year on year in the
second quarter and specialities increased by 58 percent, due to high sales in
the Easter period. However, volumes of other products and lower price by-
products reduced sharply by 13 percent and 25 percent respectively.
"Even though salmon raw material prices are dropping - they still remained high
on average in the quarter - we had a strong result from the farming operations
and expect that the second quarter will be a turning point in the results of
processing. The lower salmon prices are expected to increase processing margins
for the rest of the year", says Jerzy Malek, CEO. "Despite a reduction in demand
and lower volumes we expect sales to pick up as retail prices decrease",
In July 2011 Morpol divested its sea bass and sea bream operations in Spain
(Culmarex S.A) to Cooke Aquaculture Inc., a large global aquaculture company
headquartered in Canada for a total enterprise value of EUR 48.7 million. The
transaction will reduce Morpol's net debt by approximately EUR 40 million.
Morpol had a net interesting bearing debt of EUR 186.3 at the end of the second
quarter, a decrease of EUR 12.8 million from the first quarter 2011.
For further information, please contact:
Steven Rafferty, Chief Financial Officer,email@example.com phone
+47 97 66 41 04
John-Paul McGinley, Chief Operating Officer,firstname.lastname@example.org phone
+48 507 030 019
The Morpol Group is engaged in salmon processing as well as sale and
distribution of finished salmon products. The Morpol Group's main products are:
cold and hot smoked salmon, gravadlax, fresh salmon fillets, frozen salmon
portions, organic salmon, wild salmon and salmon specialties. The Morpol Group
also has salmon farming activities in Scotland since 2010 and Norway since
2011. The Morpol Group had revenue of approximately EUR 430 million in 2010.
Founded in 1996 in Ustka on the Baltic coast of Poland, the company employs over
3 000 people in eight countries. Morpol Group is the world leader in smoked
salmon. The company has achieved its world leading position through the
efficiency of processing activities, a constant focus on product quality and
service provided to retail and food service customers. Morpol serves customers
across Europe, Japan and the United States.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.