The Scottish Salmon Company PLC Q1 2013 Results
The Scottish Salmon Company (SSC) is in a strong position for the year ahead, following a positive first quarter for 2013.
Q1 revenues show a significant year-on-year increase, (2013, £18.7m; 2012, £12.7m) driven in part by higher traded and contracted salmon prices, up by £0.24/Kg and an increase in volume harvested, 5,092 tonnes compared with 3,688 tonnes.
With around 80% of total volume currently contracted due to lower volumes, the company is also set to capitalise on the continuing uplift of traded prices, as seen in Q1, with half of these agreements due for renewal at the end of H1 2013 and into next year.
A reduction in processing costs as a result of the temporary downscaling of SSC's operations at Stornoway, improved logistics, farming synergies and reducing mortalities have all contributed to a profitable start to the year with EBIT before fair value adjustment at £1.8m (2012, -£0.5m).
In March, SSC was awarded Label Rouge accreditation which will see first harvests in the second half of this year and the company will also begin to supply a London-based sushi restaurant chain from May 2013. The Scottish Salmon Company was chosen as the main supplier because of the provenance, freshness and quality of its produce.
Beyond this, the underlying challenges faced by the Company continue to be addressed. SSC's strategic investment plan to establish new or extend existing sites continues with a decision on an application for a new farm site on Loch Striven to be given in May and further applications for sites will be submitted in the coming months.
There has been a reduction in biological challenges, with currently no new cases of Amoebic Gill Disease (AGD) detected, as year on year environmental conditions have improved.
The Autumn 2012 generation input is performing to normal parameters, as are the majority of the current crop of fish being harvested. Spring input 2012, which were most affected by AGD, have returned to a normal biological profile by the end of the quarter. This crop experienced elevated losses in January but returned to normal biological profiles in February. These fish will be harvested in the second half of the year and due to increased treatment costs and low volumes will result in increased costs, forecasted at around £0.50 -£0.60/Kg.
An increase in the losses of smolt put to sea this spring, which as yet cannot be explained by biological or environmental factors. This is now the subject of an ongoing investigation by both the Company and the third party smolt supplier. It is expected that this will have an impact on 2014 harvesting volumes by approximately 2,000 tonnes. Guidance for 2014 is currently at 27,000 tonnes.
Stewart McLelland, CEO at The Scottish Salmon Company said:
"The company has delivered strong Q1 results, providing a very positive start to the year. We are encouraged by good biological performance and improvements across our salmon stock, which has been endorsed most recently with the Label Rouge accreditation.
"We continue to build strong partnership arrangements with customers in both the UK and in Europe based on high quality produce, sustainability and the integrity of the supply chain."
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 59 sites including marine farms, freshwater hatcheries, harvesting and processing facilities and offices, in three distinct areas of operation in the Highlands and Hebrides and Argyll. It is currently implementing a £40m investment programme to develop its farming and supply chain infrastructure.