May 17, 2012
Grieg Seafood ASA has revealed operating profits of NOK5 million (US$841,000) for the first quarter of 2012 as earnings decline due to a 27% decline in salmon prices.
The harvest volume in first quarter jumped by 6,330 tonnes or 53.3% to 18,209 tonnes.
The company saw a strong underlying growth in consumption resulting in great part from amplified market activity and lower prices.
Grieg Seafood's operational EBIT before fair value adjustments of biomass was NOK0.27 (US$0.05) per kilogrammes.
The increase in supply continued into the first quarter of the year, with a 33% boom in global supply -- the highest growth ever documented -- while demand also grew at a great rate.
The drop in prices in the second half of 2011 proved a terrific stimulus to advance market penetration and a higher level of market and sale activities in both established and emerging markets. The increasing demand acquired further momentum in the first quarter of 2012.
Supply-side growth is expected to remain robust for the next six months, but to show a declining trend. Thanks to the very strong supply-side growth, prices in the first quarter have been better than originally expected.
The company anticipates a volatile market in the second and third quarter, before the market balance according to the present production forecasts should improve towards the end of the year.
Grieg Seafood is currently executing a major investment programme in smolt production based on recirculation technology -- the largest and most important initiative the firm has undertaken aimed at increasing production efficiency, the company stated.
Apart from slashing the cost of buying external smolts and transportation of smolt, the enhanced smolt quality and better control of both smolt released to sea and the smolt sizes will facilitate better biological production, adapted to different production and environmental conditions. The smolt programmed is expected to cut production costs byup to NOK2 (US$0.34) per kilogrammes.
Grieg Seafood expects a total harvest volume of 71,000 tonnes in 2012, is in line with its previous volume guidance.
