August 23, 2012

 

Morpol's operating revenue for Q2 suffers slight drop

 

 

Morpol's consolidated operating revenue reaches EUR 113.0 million (US141.8 million) for the second quarter of 2012 - a slight decline of EUR0.7 million (US$879,200) on-year.

 

Operating EBIT amounted to EUR6.2 million (US$7.8 million), which was EUR2.4 million (US$3.01 million) lower.

 

Sales volume rose by 20% overall versus Q2 2011 as a different product mix positively impacted the average sales price. Sales of the principal category, cold smoked salmon, dropped by 1.6% in volume but sales of specialty products had strong growth with a 37.1% increase.

 

Processing generated an operating EBIT of EUR5.7 million (US$7.1 million) in Q2 2012 versus EUR2.4 million (US$3.01 million) on-year. The operating EBIT margin jumped to 6.3% compared to 2.7%.

 

Revenue in salmon farming in Q2 2012 was EUR 37.1 million (US$47 million) up from EUR34.6 million (US$43.5 million) in same period last year. The 27% drop in market prices for salmon was compensated by a 24% climb in volumes sold.

 

Sales volumes were 6,740 tonnes gutted fish with an EBIT per kilogramme of EUR0.3 (US$0.38).

 

"We are heading in the right direction," Morpol CEO, Jerzy Malek stated. "A demand surge for smoked salmon and Morpol's strategy of diversifying our product portfolio will ensure continued growth for the company."

 

Gross profit in Q2 2012 amounted to EUR 21.9 million (US$26 million), EUR 0.8 million (US$1 million) lower than in Q2 2011. Gross profit in the processing segment improved by EUR5.3 million (US$6.7 million), despite only EUR1.0 million (US$1.3 million) increase in operating revenue, mainly due to a drop in cost of sales as a result of reduced salmon raw material purchase prices.

 

In Q2 2012, gross profit in the farming segment amounted to EUR 5.8 million (US$7.3 million).

 

The group had a net profit of EUR 9.9 million (US$12.4 million) in Q2 2012 while  the lower operating EBIT was positively offset by unrealised fair value adjustment on biomass measured at fair value and lower financial costs.

 

Raw material prices have plummeted since Q2 2011 but increased versus Q1 and this is stimulating demand.

 

Increasing raw material prices, lower end product prices, particularly for Morpol's principal product categories and a changing product mix in Q3 2012 will impact profitability. Still, the company said, solid margins should be expected during Q3 as volume growth partially compensates.

 

Demand will continue to be tested during the third quarter as global salmon supply is expected to grow by approximately 13% compared to last year, but supply growth is slowing and will continue to slow.

 

Farming salmon prices have remained fairly strong.

 

"We expect prices to remain at today's levels in the short term, increasing in the medium term. However, we believe the current economic turmoil, especially within EU, has resulted in increased price elasticity," Morpol added.