February 21, 2013

Morpol's Q4 2012 operating revenue rises to US$216 million

During the fourth quarter 2012, Morpol's consolidated operating revenue amounted to EUR163.1 million (US$216 million), which was higher by EUR12.8 million (US$17 million) in comparison to operating revenue generated in the same period last year.

Operating EBIT for the quarter amounted to EUR6.2 million (US$8.2 million) (3.8% margin), which was EUR7.3 million (US$9.7 million) lower versus the same period last year.

The group's net interest bearing debt (NIBD) was EUR187.2 million (US$248 million) at the end of fourth quarter 2012 (EUR14.5 million or US$19.2 million increase compared to year end). The equity ratio was 39.7% at quarter end compared to 38.8% at the quarter end prior year.

Operating revenue in processing segment in fourth quarter 2012 was EUR144.4 million (US$191.6 million) compared to EUR129.1 million (US$171 million) prior year. Higher operating revenue from sale of finished goods results from a significant increase in volumes. Volumes excluding contract processing were higher in comparison to fourth quarter 2011 by 21.3%. There was a strong, double digit sales volume growth in almost all product categories.

Operating EBIT for processing in fourth quarter 2012 was EUR3.3 million (US$4.4 million) vs. EUR19.2 million (US$25.5 million) in the previous year. The operating EBIT margin in third quarter 2012 decreased to 2.3% compared to 14.8% prior year. The deteriorated profitability was primarily caused by an increase of salmon raw material price, higher marketing expenses resulting from sales volume increase, write-down of cobia and pompano inventories in the amount of EUR3.6 million (US$4.8 million) and the additional write-down of trade receivables in the amount of EUR0.9 million (US$1.2 million).

Operating revenue in salmon farming in fourth quarter 2012 was EUR41.2 million (US$55 million) and was higher by EUR4.5 million (US$6 million) in comparison to fourth quarter 2011, despite lower volumes sold. Decrease of volumes sold by 7.0% was out weighted by a sales price increase. Market prices for salmon increased in fourth quarter 2012 with an average NOS price from Norway at approximately NOK26 (US$4.6) per kilogramme (15.4% increase in comparison to fourth quarter 2011), up by approximately NOK1 (US$0.18) per kilogramme from third quarter 2012. The prices peaked above NOK30 (US$5.35) per kilogramme in the high volume weeks immediately before Christmas.

Salmon farming operating EBIT for the quarter amounted to EUR5.1 million (US$6.8 million) and was EUR8.0 million (US$10.6 million) higher than in the same period last year. Operating EBIT margin amounted to 12.4% in fourth quarter 2012. The farming operation in the UK - Meridian Salmon Group - generated an operating EBIT of EUR3.1 million (US$4.1 million). Sales volume in the quarter was 5,201 tonnes gutted fish equivalent returning an EBIT/kilogramme of EUR0.6 (US$0.8) per kilogramme.

"Morpol is very well placed for future profitable growth", CEO Jerzy Malek says. "Although the market will be challenging during 2013, the eventual integration with Marine Harvest will bring additional knowledge and competence to the group and should result in further efficiency improvements in Morpol."

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 495 million in 2011.