Marine Harvest (OSE: MHG) released its final Q4 2011 numbers this morning. The company had updated on the results in January so there weren’t any major surprises. The final numbers were somewhat better than the 390 million approximation given back then as the company managed to eke an operational EBIT of just above 400 million. The 60% decline compared to last year was far less than what could have been without favourable sales contracts entered into last year.
Fourth quarter operational revenues were 4.25 billion NOK, which was around 8% decline as harvest volumes increased by 16% to topple 100 000 tons. Net earnings in the period were 100 million and the quarter was operating cash-flow negative of about the same magnitude.
For 2012 those have come to an end and the low spot prices will start to bite even more. The company expects the 20% supply shock to continue to pressure the salmon spot prices and has thus taken measures to preserve financial strength. The supply shock is mainly related to the Chilean industry coming back after years of biological issues. Harvest volume is estimated to be around 360 000 tonnes as the company continues to try to expand the Atlantic salmon market.
The company has managed to renegotiate and increase its existing financial facilities. The agreements contain covenants on solvency. The company is soundly above those at the moment with an equity ratio of 47.6%. There is also a return on borrowed capital demand as NIBD/EBITDA ratio shall be below 3.50x up to Q2 2012 and decline further in ensuing years. For 2012 the company’s ability to pay dividends will thus be limited. The stock gained almost 8% today, erasing some of the losses incurred heading into the report.
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