The Scottish Salmon Company PLC releases Q3 2012 Results
HIGHLIGHTS
· Revenues of £18.4m (Q3 2012: £21.5m) achieved on harvest volumes of 4,531 tonnes (6,607 tonnes)
· EBIT before Biomass Fair Value Adjustment was a loss of £1.3m (profit of £0.1m in Q3 2012) with results impacted by the higher cost of stock that were affected by Amoebic Gill Disease (AGD) during 2012
· Q3 results in line with expectations. Year to date EBIT before Biomass Fair Value Adjustment was £4.3m (2012: nil) on similar year to date volumes
Most recent figures, released today, reflect forecasts of lower revenues in the last quarter (July to September 2013) as well as an improving performance over the year to date, compared to the Group's performance in 2012.
Historically, Q3 is characterised by low volumes with corresponding higher costs and the results are, as such, in line with expectations. Cost of production was higher in Q3 than in Q2 as salmon was harvested salmon from its smaller, more remote sites, where stock was affected by last year's incidence of Amoebic Gill Disease (AGD). Market prices, however, have remained strong and contracts renegotiated in June secured improved revenues, which partially offset the increased costs in the quarter.
Compared with year to date 2012, performance shows improvement and the Group remains on target to achieve its 21,000 tonnes harvest volume guidance for 2013 and with new sites secured and improved harvesting methods the company continues to build its position in order to capitalise on a market where global supply growth is envisaged to be limited.
Revenues in the quarter were £18.4m (2012: £21.5m) and £60.9m for the year to date (2012: £51.7m), giving an EBIT before Biomass Fair Value Adjustment of -£1.3m loss (2012: profit of £0.1m). Year to date EBIT before Biomass Fair Value Adjustment is £4.3m compared with £nil in 2012, achieved on similar volumes for the year to date.
The volume harvested in the quarter at 4,531 tonnes was lower than in Q3 2012 (6,607 tonnes), with loss of volume efficiencies having a negative impact on the unit cost of processing and harvesting. The lower volumes were in part due to the current production imbalance, but also as a consequence of last year's industry wide challenge with Amoebic Gill Disease (AGD). The increased costs associated with this AGD-challenged generation of £0.60p/kg will continue into Q4 when harvesting of this stock will be completed.
During Q3 progress was made towards balancing production cycles, bringing the Group closer to its strategic goals of greater efficiency by reducing the peaks and troughs of harvested volumes experienced over recent years. As previously reported, the Group was granted planning permission for a new salmon farm at Reibinish on Harris, which will be stocked during 2015 providing an additional 2,000 tonnes of consent. The new site, together with the leasing of a new well boat to improve harvesting logistics, will ensure that going forward, the Company will be in an improved position to focus on reducing cost, shortening time to market and delivering consistent high quality Scottish salmon to customers.
Commenting on the results, Craig Anderson, Managing Director of the Scottish Salmon Company Ltd, said:
"The global outlook for salmon remains positive. There continues to be strong demand and the expectation is that prices will remain firm. Analysts continue to forecast strong demand for fresh salmon boosting price expectations over the next couple of years. Reports continue to show increased consumption with the global traded price for salmon anticipated to remain firm."
"As a niche salmon producer, we are concentrating on reducing costs to market, while focussing on its strengths of provenance and sustainability."
The Company's volume target for 2014 is 27,000 tonnes and for 2015 is 24,000 tonnes.
The Scottish Salmon Company
The Scottish Salmon Company PLC, through its UK subsidiary Scottish Salmon Company Ltd, is the leading independent producer of Scottish salmon, providing superior salmon to both local and international markets. The Scottish based and operated company is a fully-integrated seafood company, built around the provenance, taste, freshness, sustainability and health benefits of its salmon.
The Company is engaged in all stages of the value chain from smolt production to harvesting, processing and sales. Operating from over 40 sites on the Hebrides and West Coast of Scotland, the company currently employs over 350 staff. The Scottish Salmon Company currently produces about 24,000 tonnes of Scottish salmon annually, accounting for about 20% of Scottish production.
Further information
www.scottishsalmon.com
Investor relations: Su.cox@scottishsalmon.com