Rock solid earnings from Marine Harvest exceeds expectations

Aslak Berge

Higher than expected margins from Marine Harvest’s Q3 impresses the analysts.

This Monday morning, the salmon farmer presented its quarterly trading update. The company stated that it invested 204 million euros in operating income, substantially more than the 184 million euro advance that was reported yesterday.

“MHG reported a Q3 EBIT adj. of EUR 204m in its trading update released this morning, this is 9% above our estimates and 11% above consensus,” wrote Pareto’s Carl-Emil Kjølås Johannessen in an analysis before the stock market opening on Monday.

Higher harvest volume
Kjølås Johannessen pointed out that the higher than expected margins from Marine Harvest’s Norwegian, Chilean and Canadian divisions, combined with higher harvest volumes, were the main reasons behind the surprisingly good results.

“We make marginal positive changes following the report, but reiterate our TP of NOK 190 and Hold recommendation. MHG will release its full Q3 report October 31.”

Sparebank1 Markets’ salmon analyst, Tore A. Tønseth is also pleased to see today’s report from Marine Harvest.

Good margins
“MHG harvested 110kt (gw) this quarter, 2% more than outlook/SB1M, leading to an all-inclusive EBIT/kg of EUR 1.85 (NOK 17.8), 5-9% above SB1M/cons. The quarter is driven up by good margins in many of MHG’s operations and higher than expected harvest in Norway (+7%). MHG’s contract portfolio had probably also a positive impact in a quarter with relatively low salmon prices (NOK 54/kg),” Tønseth wrote in an email sent to Sparebank1 Markets’ investor clients.

“With 110kt harvest this quarter, we find it likely that MHG will reach its 380kt volume guidance for 2018,” he added.

“We expect to lift our 2018 EPS with around 2% after this report, and believe the share will react positively to this report (+2-3% rel. market),” added Tønseth.


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