Salmon Supply to Resume Growth After Virus Cut Stocks, Marine Harvest Says
Marine Harvest ASA, the world’s largest salmon farmer, said global supply will return to growth next year after shrinking because of a deadly virus in Chile.
The Oslo-based company expects global supply to drop 5 percent to 8 percent this year and then rebound, expanding by 8 percent to 10 percent in 2011, Chief Executive Officer Alf-Helge Aarskog said in an interview in Stavanger, Norway.
“It will bring the whole industry back on the level it was at in 2009,” Aarskog said yesterday.
Chile suffered an outbreak of Infectious Salmon Anemia two years ago and volumes have yet to recover. The global harvest was about 295,000 metric tons in gutted weight in the last quarter, 3.3 percent less than a year earlier. Chilean volumes plunged 46 percent.
Marine Harvest will produce 9,000 tons in Chile in 2010, up from a previous estimate of 5,000 tons, Aarskog said. It plans to stock 8 million smolt, or young salmon, a year through 2012 in the South American country.
“We have chosen a quite conservative strategy in Chile,” Aarskog said. “We want to make sure we can stay on a sustainable production in Chile for the next few years, not growing out of our mind.”
Marine Harvest slipped as much as 3 percent to 4.901 kroner in Oslo trading, and was at 4.91 kroner as of 11:27 a.m. local time, capping this year’s advance at 16 percent. The stock is the fourth-best performer on the OBX Index of the largest companies traded on the city’s stock exchange.
Marine Harvest, whose largest investor is Norwegian shipping billionaire John Fredriksen, plans a single global sales organization to improve coordination and customer service, Aarskog said. It has applied for farm sites in Norway and Scotland that are bigger or more favorably positioned, and is investing in capacity to grow higher-quality smolt.
“If you have good smolt in fish farming, more fish survive and that reduces costs,” he said.
Marine Harvest “will always be looking and following what is available in the market,” Aarskog said when asked about the possibility of acquisitions. There’s “ample” room for organic growth, according to the CEO, who plans to boost harvest volumes by about 5 percent a year over the next three to five years. The company aims to reduce production costs in Norway by 1.5 kroner (24 cents) a kilogram over the next three years, he said.
Aarskog, who was born in 1967, headed Norwegian exporter Leroy Seafood Group ASA before joining Marine Harvest. He took up his post on July 19. His predecessor Aase Aulie Michelet was dismissed in March.
The company benefited from “strong” demand for salmon in Europe during the global recession, Sales Director Andreas Kvame said today in an interview. He expects Europe to remain an “important” consumer, while newer markets such as Brazil and China will contribute to future growth.
“Brazil is a growing economy and is one country which will grow with salmon from Chile,” Aarskog said. “Russia has been growing and it’s also a very strong market and I hope it will continue. China, which is this year passing Japan in terms of volume, is a very interesting market for us going forward.”
The European Union will remain the “main market” for Norwegian, Scottish and Irish salmon in the next few years, Aarskog said. “But it’s very interesting to look at the market growth in new markets. Even India is a market for salmon.”