FISH-FARMING giant Marine Harvest is expecting its Scottish operations to experience a "challenging" fourth quarter in terms of profit, as biological issues and a low harvest take a toll.
The Norwegian-headquartered firm, which is the world's largest farmed salmon producer, made the prediction as it posted a jump in group profit in the third quarter.
The company said group operational profit before tax and interest grew to 912 million Norwegian crowns (£86m), up from 793m crowns in the year-ago quarter but down from 1.2 billion crowns in the prior quarter. Farming contributed 747m crowns of third-quarter underlying operational profit, up from 712m crowns in the same period a year before.
Overall earnings before interest and tax amounted to 1bn crowns compared with 836m crowns in the same quarter of last year.
The company, which has a Scottish head office in Edinburgh, added that the robust year-on-year growth came in spite of market disruption and biological challenges, with a "significant" boost from sales contracts.
Operational revenue was 6.2bn crowns, up from 4.3bn crowns in the year-earlier quarter, while cash flow from operations reached 875m crowns, up from 559m crowns in the same quarter of 2013.
CEO Alf-Helge Aarskog described the earnings as "strong," and said that as a result the board has agreed on a dividend for the period of 1.10 crowns per share. The company also highlighted its robust forward market and "solid" financial position as contributory to the decision to pay this dividend.
Turning to the company's salmon of Scottish origin, operational profit before interest and tax reached 137m crowns, down year-on-year from 227m crowns.
Marine Harvest noted that the result included exceptional mortality losses of 13m crowns, with the period's harvest volume broadly flat year-on-year at 13,740 tonnes gutted weight.
Operational profit before tax and interest per kilo for this part of the business fell to 9.95 crowns, down from 16.47 crowns per kg 12 months previously.
"The reduction in margin compared to 2013 is a result of lower prices, combined with higher costs," the company said.
Such costs included medication-related expenses growing by more than 100 per cent year-on-year because of preventive treatment for amoebic gill disease and lice treatment, plus mitigation costs.
In terms of strategy, the company said it can gradually make the most of unused capacity in Scotland as well as Canada and Chile.
Concerning Chile, Marine Harvest noted that it had entered into an agreement to purchase 40,000 tonnes of farming capacity of the former Chilean farming company Acuinova.
"The biomass included in the deal is expected to generate a harvest volume of about 15,000 tonnes gutted weight in 2015," the Oslo-based firm said.
Excluding that amount, the company said its gutted-weight harvest volume guidance for 2014 is 414,000 tonnes, and 430,000 tonnes for 2015. The figures for Scotland for the respective years are 49,500 and 63,000.
Mr Aarskog also noted that the company has a new feed factory, which started operations in June, and he said he is "proud" to say it is profitable from the first quarter of operations.
The Scottish unit of the company, which includes 46 seawater farms, said when it filed its 2013 full year accounts that it planned to open two more farms by the end of next year.
In terms of outlook, the group said this looks "very favourable" for the salmon farming industry, with the business planning to take part fully in industry consolidation.
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