Norwegian salmon company Morpol reported a positive EBIT pre fair value of €6.2 million for the first quarter and an operational EBIT of €7.3 million compared to €5.2 million in the same quarter of 2010.
Operating revenues also shot up to €127.1 million compared to €90.2 million in Q1 2010, mainly due to farming revenues not included in 2010 and also to better unit prices in the processing division.
At the same time, overall sale volumes in the quarter fell by 3.1 per cent year-on-year, but price increases for customers raised the average unit selling price.
While revenues were up in processing at €103.5 million versus €90.2 million year-on-year, EBIT for processing dropped to €0.3 million from €5.2 million, mostly because raw material purchase prices rose and were only somewhat offset by the increased sale prices for Morpol customers.
Farming revenues in the first quarter were €31.6 million and EBIT pre fair value stood at €8.1 million.
Salmon raw material prices remained high and impacted processing margins negatively.
In the first quarter of the year, sale volumes skidded due to the timing of Easter (three weeks later than in 2010), which has always paired to strong demand for smoked salmon. This plus a slower demand brought sales of cold smoked salmon and specialty salmon down by five and 11 per cent, respectively, while other products remained flat.
"Despite the short-term pressure on processing margins, we believe we have built a solid platform to return to higher operational margins when there is a better balance between supply and demand on the raw material side. We have continued to take market share in key areas such as France and UK, and we have a strong base to further expand," said Morpol CEO Jerzy Malek.
Morpol also acquired Norwegian salmon farming company Jøkelfjord Laks in the first quarter and its results appear in the consolidated results for Q1.
Through its subsidiary Lakeland Smolt, Morpol has invested in land and a building in Rosyth, Scotland for €4.2 million. Morpol bought the facility to establish a large-scale value-added processing plant, which will contribute to the expansion of its market strength in the UK and other regions.
At the end of the first quarter 2011, Morpol showed a net interesting bearing debt of €199.1 million compared to €72.2 million in the corresponding period of 2010. The increase is attributed to acquisitions of farming operations during the last three quarters.
FIS (www.fis.com)
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