May 24, 2012

 

 

For the first quarter of this year, Morpol's total operating revenue declined at a value of EUR 119.2 million (US$150 million), due to lower processing revenues resulting from a lack of revenues from contract processing.

 

Sale volumes dropped slightly against Q1 of 2011 and external salmon farming revenues fell by 12% because of higher internal sales being eliminated at the consolidated level. Despite lower salmon raw material prices, total revenues in the segment remained stable due to a 50% rise in sales.

 

Operating EBIT for the first quarter reached EUR 9.7 million (US$12.2 million), an improvement from Q1, last year.

 

Sale volume excluding decreased in Q1 of 2012 by 3% compared to the same quarter in 2011. Sales of the principal category, cold smoked salmon, increased by 1% in volume and sales of specialty products rocketed by 42%.

 

The reduced consumer prices had a positive impact on sales for cold smoked salmon in Germany, the UK and Italy, although high prices in France led to continued market contraction. Still, France saw positive results as sale volume growth of cold smoked salmon rose by 25%.

 

Revenue in salmon farming in Q1 2012 was EUR31.6 million (US$40 million) , exactly the same as last year. Salmon prices plummeted but this was compensated by a 50% jump in volumes sold.

 

Salmon farming Operating EBIT in the first quarter 2012 was EUR2.3 million (US$2.9 million).  Salmon farming sale volumes were 7,622 tonnes.

 

"Processing delivered an Operating EBIT margin close to 9%, which is good considering the increasing raw material costs and decreasing consumer prices for our products," CEO, Jerzy Malek, commented. "Salmon farming performance was acceptable with an Operating EBIT of 7%. We remain well positioned for good performance going forward following our significant investments in processing and farming."

 

In general, demand for Morpol's main products -- cold smoked salmon and specialities -- developed positively during Q1 of 2012 and decreasing prices in most markets helped spur demand, although in France prices remain higher than in the same period in 2011.

 

Fresh salmon continues to grow strongly in all main EU markets. Sale volumes climbed by double digits, although price reductions to the consumer have been much faster and more significant than those in the smoked category.

 

Q1 of 2012 had a much better EBIT margin versus Q1 of 2011 and 2010. Raw material prices have taken a dive since Q1 of 2011 but have risen versus Q4 of 2011 and are continuing to escalate in Q2 of 2012. 

 

Increasing raw material prices, reducing end product prices and a changing product mix in Q2 will influence profitability but solid margins should be expected, as volume growth partially offsets this.