As the situation regarding disease, specifically on ISA, has deteriorated significantly in the last few months Cermaq operations have had 10 new cases of ISA since the end of September. This outbreak has affected some licenses with larger fish of 2kg+ and others with fish under 500g. As a result the company has decided to cull 3 sites with smaller fish and accelerate the harvest of the sites with larger fish and sell these fish at lower than optimal sizes, with a consequential lower revenue than anticipated.
In addition, the company is eliminating a percentage of the freshwater stocks and reducing the smolt transfers in 2009. At the time of Q3 presentation, Cermaq estimated one off write off costs of NOK 20-40 million in Q4 to adjust the Atlantic stocking plans. But due to ISA and the additional culling of both fresh and seawater stocks, the exceptional write off cost in Q4 is expected to be in the region of NOK 120 million, says Cermaq.
The company also informed that the accelerated harvest of Atlantics combined with lower weights has reduced the sales volume in Q4 compared to previous guidance. Cermaq does not adjust the specific sales volume guidance for 2009 at present due to the biological conditions for production in Chile, expected sales volumes remain uncertain for 2009. It is said that the company will regularly update the market on the developments in production conditions and volumes in Chile and other operations during 2009.
Cermaq’s Q4 results will also affected by the global financial turbulence that has caused unusual and volatile fluctuations in the markets. It is told that the volatility in exchange rates coincided with a seasonally high volume period for EWOS. This has negatively impacted on the EWOS gross margin in Q4 by approximately NOK 30 million.
