Chile: Marine Harvest to downsize region 10 operations – Fishupdate.com

Chile: Marine Harvest to downsize region 10 operations Published:  15 February, 2008

THE world’s largest salmon farming company, Marine Harvest today confirmed it is to significantly downsize operations in Chile’s region 10 due to continuing fish health issues.

Extraordinary measures in Chile as a result of further outbreaks of Infectious Salmon Anaemia (ISA) made the fourth quarter of 2007 the most challenging for Marine Harvest so far, the company said.

The company said that, while it plans to restructure its Chilean operations to restore future profitability, in the short term this will set it back both in respect of production and profits.

Despite a difficult market with low prices the other business units are performing satisfactory, a statement said. In particular, Marine Harvest Norway and Marine Harvest VAP Europe produce a sound margin.

“Our problems lie in Chile where the industry faces severe biological challenges. As a result of the situation, Marine Harvest has decided to significantly downsize operations in region 10 in Chile. Marine Harvest acknowledges how serious the Chilean business is hit. It demands a lot of efforts to solve this, but we are confident that we will succeed”, says acting President & CEO Leif Frode Onarheim.

“We are disappointed with the results for the fourth quarter of 2007. Our focus is now on building a sound operation that can restore profitability and enable us to further develop our business in the future.

“On the positive side we are pleased to see that the demand for salmon is continuing to grow, even with record high volumes throughout 2007.The development so far in 2008 gives a positive outlook for our farming in Norway and the continuous positive development of our value added production. Our plan for the restructuring of our Chilean business is a plan to restore future profitability, but it will in the short term set us back both in respect of production and profits. The huge write-down of MNOK 466 in the fourth quarter must be seen in the light of the need for substantial restructuring of our operations in Chile.”

Marine Harvest generated operating revenues of MNOK 3,721.5 in the fourth quarter, compared to MNOK 4,477.1 for same period last year. The reduction in revenue relates mainly to a decline in market prices in all markets. The harvested volume was 100,084 tonnes (HOG) compared to 92,728 tonnes in the same period last year.

EBITDA before fair value adjustment of the biomass was negative MNOK 124.1 in the fourth quarter, down from MNOK 917.6 in the same period last year. EBIT before fair value adjustment of biomass was negative MNOK 367.7, compared to a positive result of MNOK 703.1 in the fourth quarter last year.

Marine Harvest expects a harvest volume of 308,000 tonnes in 2008, of which 70,000 tonnes will be harvested in the first quarter. Low harvest volumes are expected in Chile due to the biological challenges.

As a result of the situation in Chile, Marine Harvest plans for a significant downward adjustment of the harvest and activity in region 10 in the 2008-2010 period to facilitate a return to a “sustainable and profitable” operation.

The global supply of Atlantic salmon is expected to grow by 1-2% in 2008, significantly lower than in 2007 mainly as a result of the challenging situation for the industry in Chile. In light of the limited supply growth, Marine Harvest expects an improved market balance for salmon both for Europe and USA in 2008.

Marine Harvest is divided into five business units: Marine Harvest Norway, Marine Harvest Chile, Marine Harvest Canada, Marine Harvest Scotland and Marine Harvest VAP Europe (Value Added Products). The company also has operational units in Ireland, the Faroe Islands and Japan.

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