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Cermaq ASA (OSL:CEQ) (Oslo 08.08.2008) Cermaq reports a second quarter EBIT pre fair value of NOK -8.0 million. The result reduced due to higher costs and low harvest weight in farming in Chile, and higher raw material costs in EWOS.
CEO Geir Isaksen said "Costs in Chile were high due to disease and low harvest weight; our highest priority remains improving production conditions in the region. EBIT performance in the other Mainstream companies is viewed as satisfactory. For EWOS, higher raw material costs reduced the result".
The Mainstream Group reported a second quarter EBIT pre fair value loss of NOK - 54.7 million compared to a profit of NOK 131.4 million in the second quarter 2007.
Volumes were up 10 percent, with the biggest increase in Chile. However, average farming revenues in local currency were 6 percent lower than in the second quarter 2007. The reduced average prices for Atlantics sold was due to low harvest weights. Prices in Japan for Coho and Trout were also low in the quarter although rising.
Costs per kg were higher due to higher feed costs in general, and due to fish health problems in Chile. The exceptional cost of biomass write downs was NOK 38 million in the quarter.
"The provision of NOK 38 Million reflects our aggressive measures to address the sanitary issues in Chile. Stricter regulations have been implemented and we are working to further strengthen the regulatory framework for a sound sanitary situation," said Geir Isaksen.
Mainstream Canada received better prices in the quarter due to low volumes from the industry. Mainstream Scotland saw good sales prices in the quarter, and improved costs for Atlantics, whereas Trout performance remained poor. Mainstream Norway's result was satisfactory with good biological performance compensating for rising feed costs.
The EWOS Group achieved an EBIT pre fair value of NOK 32.1 million in the second quarter 2008, compared to NOK 78.3 million in the second quarter 2007. Volumes were 7.2 percent higher in the quarter. The profit for the period reduced compared to the second quarter 2007 following sharp rises in raw material costs, particularly for fish oils and vegetable oils. "EWOS faces challenges with increasing raw material prices that have to be passed on through the value chain" concludes Geir Isaksen
Cermaq's net interest bearing debt increased by NOK 791.3 million from the end of the first quarter 2008 to NOK 2 061.7 million at the end of June. The equity ratio at the end of the second quarter was 47.2 percent, down from 59.1 percent at the end of June 2007. "Our equity ratio is very solid. The increase in debt reflects recent acquisitions, our capital investments, the dividend payment and seasonal factors" said Geir isaksen.
Cermaq's key earnings measure under IFRS is EBIT pre fair value (Operating result before unrealised fair value adjustments). Unrealised fair value adjustments are made in Cermaq's accounts to arrive at EBIT (Operating result). The adjustments for fair value relate to valuing live biomass inventory at a market value equivalent rather than cost. Cermaq reports EBIT pre fair value to clearly identify earnings on sales during the period.
Cermaq is an international group of companies with activities in fish farming, production of salmonid feed and research in aquaculture. Cermaq has operations in Norway, Scotland, Canada and Chile, the main geographic regions for salmon and trout farming. Through its EWOS subsidiary, Cermaq ranks as the world's second largest fish feed producer. The Mainstream subsidiary is the second largest salmon and trout farmer in the world. The Group had sales of over NOK 7.7 billion in 2007. At 30.06.2008 the Group has more than 3.600 employees.
Cermaq is listed on the Oslo stock exchange with ticker code CEQ.
