The company’s processing segment achieved good sales of fresh fillets during the quarter, but the profitability of frozen fillet product sales remained poor. The harvesting business experienced improved demand and prices for frozen products. Fresh products from the fleet were in high demand, but prices declined from the same time last year. Prices for fillet products in the market remained under pressure.
Sales and profitability for both the fleet and the processing segment were higher than in the first quarter of 2009. But the business faces substantial seasonal fluctuations, and profits remain unsatisfactory from an annual perspective. The company is accordingly making preparations for a restructuring to achieve a stable improvement in profitability.
The fleet enjoyed good supplies of cod and saithe during the quarter. That led to efficient harvesting. Aker Seafoods harvested 34 per cent of the cod quota during the first quarter, compared with 24 per cent in the corresponding period of 2009. At the same time, quotas for 2010 are up 16 per cent from last year. Remaining quotas are at the same level as at 31 March 2009. The company is planning a sustainable and efficient harvesting, which will make the best possible use of quotas and raw materials for the next three quarters, and particularly in the second half of 2010.
– The plants in Norway enjoyed good supplies of raw material, and production increased. Good supplies of fresh raw material from the coastal fishing fleet during the quarter contributed to a further increase in the proportion of fresh products during the quarter. The challenge is that quotas are in short supply for the rest of the year in relation to the company’s processing capacity. But remaining quotas for the coastal fishing fleet are low. That will influence activity in the processing segment in the time to come, says Aker Seafoods’ CEO Liv Monica Stubholt.
Sales from the plants in France and Denmark declined. Demand was reduced, in part because of high salmon prices. High prices for salmon raw material also helped to reduce the company’s margin. In France, however, higher trout prices contributed to some improvement in the profitability of the company’s own production of this species.
Operating revenues came to NOK 780 million for the first quarter, compared with NOK 639 million in the same period of 2009. This increase stemmed mainly from increased volumes in Norway. Aker Seafoods achieved earnings before interest, taxes, depreciation and amortisation (EBITDA) of NOK 102 million for the first quarter, compared with NOK 54 million in the same period of 2009. EBITDA for the first three months of the year was the best-ever quarterly result for Aker Seafoods.
Currency hedging and asset sales made a substantial contribution to profits for the first quarter.
Aker Seafoods has larger inventories of fish, increased accounts receivable as a result of higher production, a high level of sales in the quarter and lower accounts payable. The product inventory was large for 31 March, which reflects the challenging market position for some of the company’s frozen products.
Despite the improvement in profits, Aker Seafoods needs to implement profitability measures which strengthen its market orientation and improve operations. The board and executive management are working on possible solutions for change and restructuring. An overall plan will be considered by the board before the summer.
