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Norwegian fish farmer Cermaq aims to grow salmon business
August 27, 2013 / 12:47 PM / 4 years ago

Norwegian fish farmer Cermaq aims to grow salmon business

* Earnings quadruple to NOK 229 mln on record salmon prices

* Cermaq becomes salmon pure-play after fish food unit sale

* Struggles with sea lice in Chile, 15 pct of fish stock dies

By Ole Petter Skonnord

OSLO, Aug 27 (Reuters) - Norwegian fish farmer Cermaq plans to expand its salmon business to take advantage of strong European demand and record high prices after selling its fish food business and fending off a hostile bid, it said on Tuesday.

The world’s third-biggest salmon producer after Norwegian peers Marine Harvest and Leroy Seafood Group said it was interested in new salmon farming concessions being sold by the Norwegian government, as well as acquisitions.

“We could buy smaller or mid-size companies in Norway or Chile. But prices in Norway are high so we prefer to buy new concessions”, Cermaq chief financial officer Tore Valderhaug said on a news conference.

Salmon farmers are benefiting from limited supply growth and strong demand from Europe and Russia, despite record-high salmon prices of up to 45 Norwegian crowns ($7.45) per kilo - more than double the lows seen in 2011.

Cermaq, 59.2 percent owned by the Norwegian state, said its second-quarter operating profit before adjustment for the value of fish stocks leapt to 229 million crowns from 60 million in the same period last year.

However, that was below analysts’ average forecast of 262 million. Valderhaug said that while business was good in Norway and Canada, the company made a loss in Chile, in part because of losses to fish stocks there due to sea lice.

Cermaq, which fended off a $1.7 billion hostile bid by Marine Harvest earlier this year, expects to book a 2 to 2.5 billion crown gain on the sale of its Ewos fish food business, which it expects to close at the end of October, and plans to give shareholders a total dividend of 4.5 to 5.0 billion crowns.

The firm, with a market capitalisation of $1.62 billion, has also sold stakes in fish-oil maker Copeinca and industrial food maker Denofa, on which it expects to book gains of 114 million and 95 million crowns in the third quarter.

Following these divestments, Cermaq is virtually a pure-play on salmon production in Norway, Canada and Chile.

Chief executive officer Jon Hindar said the company would give more details on its new strategy following the Ewos sale at a capital markets day in Chile on Nov. 25.

Norway plans to sell 45 new salmon farming concessions this autumn, with prices set at 10 million crowns each.

The concessions are expected to yield around 50,000 tonnes of salmon, just below five percent of the capacity in Norway, which is the world’s biggest salmon producer.

Cermaq grows more than half of its production in Chile, about 25 percent in Norway, and the rest in Canada.

Its second-quarter salmon production was 28.600 tonnes, of which 15,000 tonnes from Chile. For the full year, Cermaq expects production at 145,000 tonnes, down from the 148,000 tonnes guidance given at the time of first-quarter results.

At 1220 GMT, Cermaq shares were down 0.9 percent at 105 crowns. They are up about 27 percent in the year to date.

$1 = 6.0378 Norwegian krones Editing by Geert De Clercq and Mark Potter

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