THE Scottish business of Marine Harvest, the world’s largest fish farmer, posted record operating profit of €153.7 million (£136.5m) in 2017, up from just €41.1m the previous year.
The 275 per cent uplift is attributable to a number of factors, most notably increased volume, higher salmon prices and improvements in biological performance, resulting in fewer fatalities.
But the performance was weakened in the fourth quarter by biological challenges and costs increases, and Marine Harvest said it expects these to continue.
As a result, the Norwegian group, whose Scottish headquarters are in Fort William, said €50m of cuts would be made in spite of record group profits.
The Scottish performance made a significant contribution to the Norwegian company’s overall operating profit, representing 19 per cent of a record €792.1m. In 2016, Scotland contributed 5.7 per cent to overall profits.
The full year Scottish results include a €15.4m operating profit in the fourth quarter, down 30 per cent on the corresponding quarter of 2016 and follows an announcement by Marine Harvest last month that 34 Scottish staff were being redundant.
In spite of record profits, Marine Harvest said it was planning to cut costs across all areas of the business after operating profits fell 30 per cent to €181m in the fourth quarter.
Marine Harvest employs 1,300 staff in Scotland. A spokesman for the group said further cost savings in the Scottish business “will come from improving efficiencies”.
Lower performing sites and increased mortality were also cited by the group. “While the general fish health situation improved for our Scottish operations during the three first quarters of 2017, the biological performance has been more challenging in the fourth quarter,” said Marine Harvest. “This situation is not expected to improve significantly in the next quarter.”
It said it expected costs to remain at the current high level into the next quarter. “It is with huge concern the board has viewed the negative cost developments,” said the group.
Prices have crashed to 50 Norwegian crowns per kilo (£4.60), from 80 crowns in January 2017.
Marine Harvest’s total volume for 2017 was 370,346 tonnes. Volume for 2018 has been predicted to reach 410,000 tonnes, in line with previous forecasts.
In Scotland, volume in the quarter was up 10 per cent to 12,987 tonnes, in spite of the 30 per cent fall in profit.
Operational earnings per kilogram, a key measure of the seafood production industry, was €2.55 in Scotland, up from 91 Euro cents. In the fourth quarter this was €1.19, down from €1.83 in the fourth quarter of 2016.
Mr Aarskog said 2017 was a “great year”, but added: “I am concerned about the rising cost and the challenging biology. Hence, we have initiated a global cost savings program with a target of €50 million savings. The savings are expected to be realised in all parts of the organisation.”
Scotland’s salmon farming industry reported record exports of £600m for 2017.
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