Marine Harvest has “doubts” about Stornoway operation Published: 15 August, 2007 Atle Eide QUESTIONS have again been raised about the future of Stornoway-based Outer Hebrides Seafood (OHS), after owner Marine Harvest announced what appears to be a change of plan. The news came as the company revealed its second quarter results for this year, which showed a drop in operating profit compared with the same period in 2006. The company reported that it had generated gross operating revenues of NOK 3,618.3m compared to NOK 3, 843.1m (pro forma) for same period last year. The profit before fair value adjustment of the biomass was NOK 543.2m, including restructuring costs of NOK 68.4m compared to NOK 1, 007.2m (pro forma) for same period last year, down NOK 464m.In July, Marine Harvest CEO Atle Eide said that OHS would become a new stand alone company answerable directly to Marine Harvest headquarters in Norway, with plans to invest more money in the company. Four freshwater sites were transferred from Marine Harvest to OHS, as well as sea cage sites in West Loch Roag. This increased the production capacity of the new company, thus making it the largest producer and processor of salmon in the Western Isles, employing around 190 people.Mr Eide said in July: This is a specialist company which fillets and smokes 100% of its own produce. It didnt fit in with the larger Marine Harvest company and, after talks with the Scottish Executive, we decided that the best solution would be to establish Outer Hebrides Seafood as a separate company. The management of the company is well-established and there is no rush to sell it, if it will be sold at all. It will become clear in the autumn or winter what action we will take. If it becomes necessary to find other shareholders to invest in the company, then we will do so.In the companys second quarter report, the position appears to have changed radically. The report says: In the on-going discussion on sale of Pan Fish Scotland, it is also considered to transfer parts of the other operations currently held in Scotland, mainly the Outer Hebrides Seafood (former Fjord Seafood Scotland), into Pan Fish Scotland prior to sale.In another section of the report, it states: Marine Harvest is in the process of finding new owners for Pan Fish Scotland. The divestment to other investors might be carried out through a separate listing of the company. It is likely that also Outer Hebrides Seafood and some Marine Harvest sites located in the core farming area of Pan Fish Scotland will be included in the upcoming transaction. In this case, the new company, under the name Pan Fish, will have a planned production in 2007 of approximately 25,000 tons, with a potential to grow to 35,000 to 37,000 tons over some time. The entities which will form the new company have for some time been through major restructurings and substantial improvement in cost of production is expected going forward. It is the objective to conclude on new shareholders for the company during Q3/Q4.Mr Eide was unavailable for comment, but with Pan Fish operating processing facilities at Cairndow in Argyll, it raises the question if the Stornoway plant will survive. Marine Harvest had already raised the question of transport costs with the Executive, and Mr Eide revealed last month that what he regarded as excessive freight charges had prevented Marine Harvest from carrying out more substantial investment in the Western Isles plant. Last month, Marine Harvest decided not to sell Pan Fish Scotland to Norskott Havbruk, the company which owns Scottish Sea Farms, after previously revealing that it had reached agreement to sell Pan Fish Scotland for NOK 800m (around £70m). It is understood that Scottish Sea Farms wanted more in the package than Marine Harvest was prepared to sell at that stage.Pan Fish Scotland produced around 16,000 tonnes of salmon in 2006. It has 169 employees and 31 sea sites from Loch Eriboll in north-west Sutherland to Loch Fyne in Argyll, as well as a number of freshwater sites, two hatcheries and a processing facility at Cairndow on Loch Fyne. Earlier this year, Pan Fish Scotland bought Highland Fish farms for £4.1m, which gave it access to egg production and ongrowing facilities.Alan Anderson, managing director of OHS, said that contrary to local rumour he had not left the company, but said that he could add very little at this stage.Marine Harvest has until the end of the year to reach a decision, to avoid further action from the competition authorities.www.fishupdate.com is published by Special Publications. Special Publications also publish FISHupdate magazine, Fish Farmer, the Fish Industry Yearbook, the Scottish Seafood Processors Federation Diary, the Fish Farmer Handbook and a range of wallplanners.