November 20, 2007

Chile salmon industry issues modest forecast

Chile estimated an export worth US$2.4 billion of farmed salmon and trout this year, a "modest" figure compared to previous projections.

Although the 2007 growth estimates are twice Chile's overall rate, the industry's safe forecasts raised concerns among investors and industry insiders.

The expected profit of US$2.4 billion this year is roughly 9 percent more than the US$2.2 billion earned in 2007. Although the figure is relatively good for any normal industry, observers said that it is alarmingly low compared to the last two decades when the industry boasted of rich revenues.

In the past five years, export earnings range from US$973 million to more than US$2 billion, with annual growth rates of 18 percent in 2003, 25 percent in 2004, 20 percent in 2005 and 28 percent in 2006, according to Chile's salmon producers association (SalmonChile).

The decline was partly blamed on a recent drop in salmon prices - the result of worldwide supply increase.

The weak US also affected the Chilean market. The US is still Chile's most important single customer, accounting for nearly 36 percent of all salmon sales in 2006. A weak dollar made Chilean salmon more expensive for US buyers, thus less demand.

Four of the biggest salmon companies operating in Chile reduced exports as of August. Norwegian-owned Marine Harvest, the world's biggest farmed salmon company, dropped its export by 4.3 percent. Pesquera Chamachaca's exports fell by 10.9 percent. Salmones Antartica and Ventisqueros, meanwhile, saw their exports dip by 4.4 percent and 2.3 percent respectively.

The dip in figures also startled investors. Multiexport, Chile's third largest salmon exporter, dropped its stock value by a substantial 14 percent since July. Stock in Pesquera Mar de Chiloe, owned by Invermar, has fallen 12 percent so far this year. Last week, Marine Harvest saw its shares drop a startling 20 percent following a weak third quarter earnings report.