Austevoll Seafood satisfied with Q1 2012 and remains bullish on the long-term potential

Integrated fishing industry company Austevoll Seafood ASA (OSE: AUSS) is happy with the start of the year. Total fish catch and purchase of 355 000 tonnes, with around two thirds of that from Norway. Operating income was just below 3 billion NOK. Comparable increase in turnover is around 17%. Austevoll Fisk group merger into associated company Norway Pelagic (OSE: NPEL) affected comparisons. EBIT of 270 million is down from 486 million, including 50 million in shutdown costs and 33 million in impairment. Lower salmon prices affected that. Profit before tax came in at 315 million NOK (vs. 525 million). EPS excluding fair value adjustments is 0.67 NOK and reported EPS 0.86 NOK.

Anchovy catches in Peru were on lower during Q1. The new quota for Centre-NOrth was set at 2.7 million MT and the season started on May 2nd. Yields and production have been good at the start, with 25% of the company quota now caught. Jack Mackerel quota has already been caught, and Austevoll had its share of it (26,000 tonnes). Fishing season in Peru started later than last year, which will have some impact for Q2.

In Chile the company made some arrangements where it leased some licenses to get more production in its factories, particularly frozen products, to utilize economies of scale. Horse mackerel fisheries have delivered good catches in Q1 and the group already caught two thirds of its share of the total quota of 315,000 tonnes.

The lower sand eel quota affects fishmeal production volumes in Norway. Consolidated company Leroy Seafood ASA now has over 11% of Norwegian seafood export value. It is the second largest salmon producer in the world. Salmon spot price was down 34.6% on the year while harvest volumes were strong. The group is positive about salmon price outlook going forward. Equity ratio remains strong at 49%. The company is proposing a dividend of 1 NOK per share. It is scheduled to trade ex-dividend from May 25th. Austevoll Seafood expects strong markets going forward.

Presentations at 7th North Atlantic Seafood Conference

7th North Atlantic Seafood Conference has been ongoing in Oslo from 6-8th of March. The event is the largest seafood conference in the world. Several companies have released their presentations held mainly in the pareto seafood finance and investor seminar portion of the event today. The companies are listed below with a link to the presentation if available:

Marine Harvest (OSE: MHG)
Lerøy Seafood (OSE: LSG)
Cermaq (OSE: CEQ)
Aker Seafoods (OSE: AKS)

Bakkafrost (OSE: BAKKA)
Sølvtrans(OSE: STRANS)
Salmar (OSE: SALM)
Austevoll Seafood (OSE: AUSS)

Norway Pelagic (OSE: NPEL)
Morpol (OSE: MORPOL)
Norway Royal Salmon (OSE: NRS)
Fish Pool

Akva Group (OSE: AKVA)
China Haikui
Grieg Seafood (OSE: GSF)
High Liner Foods (TSE: HLF)
The Scottish Salmon Company (OSE: SSC)

In company spesific news, Cermaq reported its quarterly earnings today. Fourth quarter operating revenues were almost 3.3 billion NOK (+3%) and EBIT pre fair value 300 million (-50%). Full year numbers were still at record levels of 11.6 and 1.3 billion. Reported EPS was 8.5 NOK and the board proposes a dividend of 4.63 NOK a share. Mainstream Norway unit has already committed a sizeable portion of its 2012 salmon harvest through Fish Pool at 27 NOK/kg FCA Oslo.

Austevoll Seafood urges patience

Austevoll Seafood ASA (OSE: AUSS) had revenues of 2.6 billion NOK in Q4 2011. The net profit was fown to 75 million (EPS of 0.24 NOK) from over 600 million a year ago. Full-year sales came in at 12.1 billion, EBITDA at 2 billion and EPS 1.82 (2010: 6.03). The Board proposes a dividend cut of one third to 1 NOK a share.

Raw material volumes supplied for consumption in Chile and Peru were extremely low. The second anchoveta fishing season in Peru has now ended and was very positive. Austevoll has 7% of anchovy quota centre-north in Peru. Fourth quarter is seasonally strong in Norway. Jack mackerel global quota is down again for 2012 to 250 000 tonnes (315 000). The company sees the jack mackerel fishery recovering in Peru.

The group as a whole harvest over 500,000 tonnes of pelagic fish and over 150,000 tonnes of salmon and its 55 processing plants handle nearly 1.5 million tonnes of pelagic fish annually. It has its own worldwide wholesale network and also produces fishmeal and fish oil.

Second largest salmon producer in the world Lerøy Seafood Group ASA (OSE: LSG) is a consolidated company where Austevoll owns 76.72% of the shares. Is also reported its earnings today. The company felt that the achieved result is positive in light of the difficult conditions. Annual turnover was 9.2 billion NOK, operating profit was 597 million and EPS 15.13 NOK a share. A dividend cut of 30% to 7 NOK a share (382 million in total) is suggested

Associated company Norway Pelagic ASA (OSE: NPEL, 43.3%) reported yesterday speaking of strong price increases and positive margins for herring products. It said fish consumption is not really affected by financial uncertainty. Estimated pro-forma annual net income taking into accounts merged operations of Austevoll Fisk AS as well as Emy fish AS and Brødr Myhre AS contribution was 4.24 billion NOK and EBITDA 215 million.

Norway Pelagic normally makes its dividend decisions towards the summer as at this point as the high activity season is drawing to a close its cash is typically tied into working capital and in wages paid. During the low processing activity season it is then recouping those tied up checkels.

Norwegian pelagic quotas for 2012 are as follows:

Mackerel: 187 000 tonnes (+2% vs 2010, Iceland & Faroe agreement lacking)
North Sea Herring: 117 000 (+112%)
Norwegian Spring Spawning Herring (NVG Herring) : 508 000 tonnes (-13%)
Blue Whiting: 125 000 (+443%)
Capelin: 270 000 (-12%, including swap with Iceland, excluding summer catch)
Horse Mackerel: 93 000 (-1%)
Sand Eel: to be agreed in May
Pout: No catches

Austevoll Seafood feels it is a strong company with an excellent position as a diversified player within the global seafood industry. It stresses the need to think long-term when taking part in this industry. It aims to grow even further within the segments where is already active.

Fishmeal price correction is over in the company’s view with prices stabilized around 1,100 USD in Peru. Hog and aqua feed industry demand from China was strong in Q4. Consumption is expected to increase further in China in 2012 as fishmeal vs. soymeal price ratio favours fishmeal at the moment. Austevoll predicts an increase of around 180,000 MT in 2012. Much of the Peruvian exports go to China.

Fish oil prices are stable with good demand. Long-term Atlantic salmon demand should benefit from lower prices but in the short-term challenges remain. Pelagic fish prices should remain firm going forward. Investors are reacting quickly and the stock has slid by 5 below 25 NOK%

FT: Orkla and Lerøy Seafood interested in Findus

Financial Times is reporting that Lion Capital is in advanced taks to sell Nordic operations of the frozen food maker Findus. FT lists Nestle, Orkla ASA (OSE: ORK) and Lerøy Seafood Group ASA (OSE: LSG) as the three most likely candidates. Already back in November FT mentioned that Lion Capital was planning such a move. Both Orkla and Lerøy Seafood finished the day in the red.

Findus is the market leader in frozen ready meals, fish and vegetables segments in Sweden, Finland and Norway. Findus brand originated in Sweden and the Nordic operations contribute a significant portion (roughly half a billion Euros per annum) into its revenues. A deal could value the operations between 700-800 million. The article, which requires registration, is available from here.

Pancreas Disease found in central Norway

Lerøy Seafood Group ASA (OSE: LSG ) notified the stock exchange last week that pancreas disease (PD) had been detected in one of the facilities of a wholly-owned subsidiary Lerøy Hydrotech AS, which farms salmon in Nordmøre region in Norway . Pancreas disease has cost Norwegian, Scottish and Irish aquaculture industry hundreds of millions in the past few years and the industry is looking to grow resistant fish population.

Lerøy Hydrotech has been actively involved in efforts to try to prevent the spreading of the disease from South to Central Norway. During a routine checkup of fishes from Kråkøya facility in the municipality of Aure, traces of PD were found in some of the fishes. Book value for the fish stock at the Kråkøya facility is 33 million NOK. Fish samples from other companies in the region have also been taken for PCR analysis.

After this event Lerøy Seafood set out to do tests on other facilities in the region and according to a stock exchange release from today, the virus was detected in one other facility. The book value of the stock of fish in that particular facility is 27 million NOK. Lerøy Seafood is in discussions with the Norwegian Food Safety Authority for closing down and slaughtering the entire biomass in the affected farms.