The Scottish Salmon Company Results Q1 2012 Published: 29 May, 2012
The Scottish Salmon Company (SSC) achieved revenues of £12.7m (Q1 2011, £25.4m) in the first quarter of 2012, on sales of 3,688 (Q1 2011, 5,954) tonnes of salmon.
In line with the Companys expectations, the figures for Q1 reflect both the wider trends in the current marketplace as well as SSCs anticipated position as it invests in new and existing sites.
From January to March 2012, performance was affected by increased supply as higher volumes of salmon came on to the global market, forcing prices down. While SSC is protected to a degree by strong long term contractual relationships with customers, the variation in the companys own harvested volumes has led to shorter term arrangements, which similarly affect the average sales price.
The relatively low volumes harvested by SSC in this period are a natural consequence of current production cycles and affected the unit cost of processing with the loss of volume efficiencies. While this will continue into Q2, production levels are planned to increase in the second half of the year.
Trading over the first quarter saw a loss of £461k (EBIT before fair value adjustment on biomass*).
Against this backdrop, however, SSC has maintained high standards of fish quality and continues to drive forward plans to grow production volumes and ensure consistent supply both through the year and year-on-year.
Good progress is being made with the strategy, including attaining Freedom Foods accreditation throughout company sites. The IMTA initiative, to introduce secondary crops such as seaweed and mussels for a greater natural environmental balance, has now been extended to a second site.
Planning permission was also granted for a new farming facility in Loch Torridon, which will deliver 2,500 3,000 tonnes of additional production. The development is part of the companys five-year, £40m growth strategy, which aims to increase production levels to around 40,000 tonnes annually.
Stewart McLelland, CEO at The Scottish Salmon Company said: Our environmental innovations and high quality product are helping to secure strong customer relationships both on the domestic and export markets. While plans to both balance and increase production were boosted significantly by consent for new farming facilities at Loch Torridon and also the harvesting station at Arnish.
It is our expectation that 2012 will continue to be a challenging year for the salmon market, however, we remain focused on the long term and look to build our business around the principles of environmental excellence, innovation and sustainability and remain confident in our growth plans to produce 40,000 tonnes a year.
*EBIT before fair value adjustment for biomass is the profit/loss figure for the trading during the quarter reported and therefore is a fair reflection of performance.