Despite the income drop, Morpol CEO expressed his satisfaction with the company's performance in Q1. (Photo: Stock File/FIS)

Morpol's operating revenue falls in Q1

Morpol's consolidated operating revenue in Q1 2012 was EUR 119.2 million – a drop of EUR 7.9 million year-on-year. This was mainly due to lower processing revenues by EUR 5.5 million or 5 per cent resulting from a lack of revenues from contract processing.

Sale volumes dropped slightly against Q1 2011 and external salmon farming revenues fell by EUR 2.8 million or 12 per cent because of higher internal sales being eliminated at the consolidated level. Despite lower salmon raw material prices, total revenues in the segment remained stable due to a 50 per cent rise in sales.

Operating EBIT for the first quarter reached EUR 9.7 million, a EUR 9.6 million improvement versus Q1 last year.

Sale volume excluding decreased in Q1 2012 by 3 per cent compared to the same quarter in 2011. Sales of the principal category, cold smoked salmon, increased by 1 per cent in volume and sales of specialty products rocketed by 42 per cent.

The reduced consumer prices had a positive impact on sales for cold smoked salmon in Germany, the UK and Italy, although high prices in France led to continued market contraction. Still, France saw positive results as sale volume growth of cold smoked salmon rose by 25 per cent.

Revenue in salmon farming in Q1 2012 was EUR 31.6 million, exactly the same as last year. Salmon prices plummeted but this was compensated by a 50 per cent jump in volumes sold.

Salmon farming Operating EBIT in the first quarter 2012 was EUR 2.3 million versus EUR 8.1 million in the same period last year, or EUR 0.3/kg.  Salmon farming sale volumes were 7,622 tonnes.

"Processing delivered an Operating EBIT margin close to 9 per cent, which is good considering the increasing raw material costs and decreasing consumer prices for our products,” CEO Jerzy Malek commented. “Salmon farming performance was acceptable with an Operating EBIT of 7 per cent. We remain well positioned for good performance going forward following our significant investments in processing and farming."

In general, demand for Morpol’s main products -- cold smoked salmon and specialities -- developed positively during Q1 2012 and decreasing prices in most markets helped spur demand, although in France prices remain higher than in the same period in 2011.

Fresh salmon continues to grow strongly in all main European Union (EU) markets. Sale volumes climbed by double digits, although price reductions to the consumer have been much faster and more significant than those in the smoked category.

Q1 2012 had a much better EBIT margin versus Q1 of 2011 and 2010. Raw material prices have taken a dive since Q1 2011 but have risen versus Q4 2011 and are continuing to escalate in Q2 2012. 

Increasing raw material prices, reducing end product prices and a changing product mix in Q2 will influence profitability but solid margins should be expected, as volume growth partially offsets this.

Related article:

- Morpol reports good results despite high raw material costs

By Natalia Real
editorial@seafood.media
www.seafood.media

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