Despite a major supply shock, Marine Harvest (OSE: MHG) was able to deliver a relatively decent result in the fourth quarter of 2011. This is evident from an update after the end of Q4 2011, which the company released this morning. It shows that Q4 operational EBIT was approximately 390 million NOK on 1.03 billion sales. The stock is up some 3% on these numbers, which were better than expected.
This result level is seen as unlikely to last though as during the fourth quarter the company had a big number of its contracts set earlier at prices far higher than the current market price and those contracts are now coming to an end. Salmon spot prices have recovered somewhat but are still way below levels of last summer. Industry supply has been expected to grow by nearly 10% in 2012. Marine Harvest has around a quarter of the total market share and should other large players follow suit in reducing smolt stocking, the impact could be smaller than expected.
The company has been pushing through restructuring of operations in Canada. The measures to protect cash flow don’t stop there; CAPEX plan was already reduced by some 200 million NOK for 2011 in connection with Q3 report and next year’s investments are expected to be on a low level. A cost reduction plan will be implemented across the entire group.
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