The Scottish Salmon Company PLC Q4 2012 Results
SCOTTISH SALMON COMPANY Q4 RESULTS PROVIDE FINAL BOOST TO 2012 REVENUES
Revenues achieved in the final quarter of 2012, boosted annual figures for The Scottish Salmon Company to £79.5m (2011, £90m), in what has been a challenging year. A total of £27.8m revenues were reported in Q4 (Q4 2011, £17.0m) on sales volume of 8,336 tonnes (Q4 2011, 4663 tonnes) in the quarter.
Total harvest volumes for 2012 were approaching 24,000 tonnes (2011, 23,000) with stock available for the first time from the company's Loch Roag sites in the later part of the year.
However, higher than anticipated costs on harvested fish, particularly in Q4, have had a negative impact on the year-end figures. This is primarily as a result of a biological issue caused by sub-standard feed that impacted growth, survival and stock's ability to resist expected environmental challenges.
The situation was unprecedented and this stock, lower in weight and quality and consequentially more difficult and costly to process, increased costs both at farm level and also through the harvesting and processing value chain. This situation is now the subject of legal negotiations.
Alongside the pressure on the Company's own costs, market prices remained low for the most part of 2012. This was in part due to harvesting dynamics across Europe along with high incidences of Amoebic Gill Disease across the Scottish industry which has resulted in earlier harvesting.
In 2012, the company recorded EBIT before fair value adjustment on biomass and exceptional items at £0.5m (2011, £14.4m). Exceptional items, representing £1.7m in Q4, were reported associated with performance issues related to feed.
The Company's own challenge with AGD and associated biological issues led to the loss of around 2,000 tonnes of salmon which would have been harvested in the second half of 2013. Salmon from Loch Fyne and other southern region sites, due for harvest in H2, 2013, is performing normally with no major losses due to disease and no impact of feed issues.
Despite the challenges to Q4 stock, SSC was able to fulfil its customer obligations and continues to invest in establishing strong, long term working relationships with its high-end clients. 2012 saw the company secure contracts with leading UK retailers and expand its exports to over 20 countries. The company has Freedom Foods accreditation and the Label Rouge designation has been granted for salmon which will be sold at the end of 2013 into premium market, principally in France.
Planning for the future remains the company's focus. A new seawater site at Gometra on Mull is in the process of being established, which along with the new site at Loch Torridon in the Western Highlands are planned to deliver 29,000 tonnes in 2014.
The Company is still actively seeking new sites to increase production and research and evaluation for new sites in the Western Isles continues, with the view to correcting the production imbalance which continues to put pressure on production costs, local job security and the company's ability to build its brand with reliability for customers. All this activity is supported by an extensive consultation programme with all the statutory bodies.
Stewart McLelland, CEO of The Scottish Salmon Company said:
"2012 has been a challenging year and our results, in line with company expectations, mirror wider industry trends. At all times, The Scottish Salmon Company has remained resolute in resolving these challenges while maintaining a focus on the long term, which is bringing rewards through new customer relationships and industry collaborations.
"The company continues to see growing market demand for high quality sustainably farmed Scottish salmon and is on course to develop the volume of premium salmon to 29,000 tonnes in 2014."
Notes
· The Scottish Salmon Company (SSC) is a leading producer of Scottish salmon, producing over 20,000 tonnes annually, about 20% of total Scottish salmon. It supplies leading UK retailers and sells to over 20 countries worldwide.
· The Scottish based and operated company is engaged in all stages of the value chain from smolt production to harvesting, processing, marketing and sales.
· SSC operates over 59 sites including marine farms, freshwater hatcheries, harvesting and processing facilities and offices, in two distinct areas of operation in the Hebrides and Argyll. It is currently implementing a £40m investment programme to develop its farming and supply chain infrastructure.
Investor Relations: su.cox@scottishsalmon.com