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Article Excerpt
ASE AULIE MICHELET, CEO, MARINE HARVEST ASA: Good morning and welcome to this third quarter presentation by Marine Harvest. My name is Ase Aulie Michelet, the Chief Executive Officer. And with me today I have Jorgen Andersen, Chief Financial Officer of Marine Harvest, and Henrik Heiberg, VP Finance and Treasury.
I will first take you through the highlights for the quarter, before going into further details on our operations in Chile and Norway, in addition to discuss the impact of the global financial situation. And then Jorgen will take you through the numbers in more detail, before I summarize and open up for questions.
The third quarter was another challenging quarter for Marine Harvest, where we on October 9 announced that we had approved the new business plan for Chile. And at the same time, we announced that we would write down all goodwill and some licenses in Chile. Consequently, our financial EBIT ended at minus NOK1.343b in the quarter. Biomass and one-off adjusted, our operational EBIT ended at NOK103m.
On the positive side, we had another strong cash generating quarter with NOK428m in cash from -- cash flow from operations.
On the different business units, I would like to highlight Norway, our major profit center that had an average quarter when taking into account that a lot of the harvesting was done in Chile region. Other regions performed well and I'll come back to the details afterwards.
In Chile, I will go into more detail on our actions later, but state that we're following the new business plan, have an ambition of reaching breakeven in 2009.
An addition highlight, Scotland delivering strong results as a result of the turnaround process that had gone on for a while.
This slide is the same reporting format as we have delivered during the last few quarters. Under Norway, you can see that we delivered an operational EBIT per kilo of NOK3.58. Scotland, very good number of NOK6.22 per kilogram. And Canada somewhat weaker, with NOK3.75, mainly due to some diseases, [kidua], and also some algae bloom during the quarter.
Our operation Value Added Products in Europe has delivered an operating revenue of NOK816m, with an operational EBIT margin of 4.8% which we're very happy with. We think they did a great job during the quarter. Strong quarter for VAP.
And then, on the right-hand side you can see Chile, which delivered an operational EBIT of minus NOK166m.
Now, I'll go into more details around the biological status. Okay. Chile, biological status; it's now -- it's of course a very challenging place to be at the moment, with the virus situation, the ISA situation in Chile. As you can see on these slides, the Marine Harvest Group has had a total of 22 sites confirmed with ISA from the start, when we reported in Q3 2007, and all through to November 11 this year. That means that we have approximately had [our] share compared to the sites we have had in Chile.
And if you look at the graph, you would see that in the beginning it looks pretty obvious that it looks like Marine Harvest, at least we reported and we were heavily involved from the beginning. And you can see that we had most of the outbreaks. And then you can see now that, actually, the situation in Chile is pretty bad, with the Q3 reporting 32 confirmed sites. Meanwhile, we were reporting four. And if you look at the last, to the right there, you can see that until November 11 Chile reported 22 outbreaks and we at Marine Harvest have five of those.
It is -- from our point of view, we think that we can see a trend where actually the situation in Chile is pretty bad and all regions have their ISA outbreak. We think, though, that we can see that it somewhat looks like it's started to stabilize for Marine Harvest. But this is early days and of course we'll follow very, very carefully.
So, Marine Harvest currently operates 25 sites, three active sites confirmed with ISA and five active sites suspected of the Sernapesca lists. So, if you look at the pie chart, you will see that we have, say, around 45% which are now -- of our biomass which is now in the category of either confirmed or suspected. Quite big fish, though, in the sea in these places, which we are then harvesting out.
So, Chile, what have we done since last quarter, since Q2? We've continued our very, very strong efforts in Chile to reorganize our whole organization. We have reduced the number of layers for two reasons, both in order to reduce costs, of course, but also to get very deeply involved and get good control of everything we're doing. We're optimizing all support functions, putting them together, working much closer, and also using our global system in a better way to support the Chileans with all their initiatives.
So, in conclusion, I can say that we're leaning the operation and we're trying to use this opportunity to get a very good and solid organization that actually can follow the development and turn around this Company in the absolutely best way. Cost reductions in overhead and business unit management as well, all the way from the top and further down through the organization.
Current headcount in Chile is approximately 2,600 people. That means that we since December 2007 have reduced actually from 4,800. That is, of course, a terribly difficult job, very, very sad job too, because we had to reduce and people are actually laid off. Of course, this is because we want to build a new organization which is strong, which we then in the later times can build up again.
Continued rapid harvesting of fish from sites confirmed with ISA. That is extremely important that we get the fish out if we do have problems and before there actually are signs of ISA, so that we still can use them, and so that we're also not spreading it to other sites any more than necessary.
And of course, smolt release must be backed with a very, very careful consideration and risk management process around it, so that we try with our best efforts and as little as possible to put the smolt in the right place with as little risk as at all possible. So about 13m smolt released year to date, which compared to a huge number last year of 39m.
I want to take this opportunity to say that in a very challenging situation our team in Chile is doing a very good job, with forceful and necessary action.
As we have communicated before, we now have a new business plan for Chile. We have an ambition of operational EBIT breakeven in 2009. And we will harvest -- we said we will harvest around in the range of 40,000 tonnes in 2009 and 2010. Smolt release decisions, as I said on the last slide, though of course it's based here also on risk evaluation. And we expect at this point in time to release about 15m smolt in 2009. And then, thereafter, we hope to be able to increase again with around 10% yearly.
So we will continue all our tough measures and we will also use this time to reorganize...
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