October 31, 2018 / 12:39 PM / 14 days ago

Marine Harvest sees demand and disease boosting salmon prices

OSLO (Reuters) - Fish diseases and strong demand are likely to limit salmon supplies and support prices into 2019, the world’s biggest fish farmer Marine Harvest (MHG.OL) said on Wednesday, as it reported a record quarterly profit.

FILE PHOTO: Pieces of salmon are seen on a market in Nice, France October 28, 2018. REUTERS/Eric Gaillard/File Photo

The Norwegian company, which has production in Chile, Scotland, Ireland, the Faroe Islands, Iceland and Canada as well as Norway, said it now expected global salmon supplies to rise 4-5 percent this year against 5-7 percent previously.

It sees supplies next year increasing 1-6 percent.

“Our growth numbers for the industry are a little bit lower than Kontali’s (a leading Norwegian researcher). Why? We are looking at the biological issues we are facing, so we expect modest growth in Norway,” chief financial officer Ivan Vindheim said at the third-quarter results presentation.

Sea lice levels have risen in Norway in the second half of this year, leading to earlier harvesting, lower weight of the fish and higher mortality rate.

Marine Harvest now expects Norway, which produces about half of the world’s salmon, to increase output by 4-5 percent this year, down from 6-9 percent previously.

For next year, it sees Norwegian output in a range of down 1 percent to up 3 percent.

In contrast, production at the world’s second biggest salmon producer Chile is recovering at a double digit percentage rate, and that is expected to continue in 2019, Marine Harvest added.

As demand is strong, Vindheim said he expected a shortage of fish in 2019. Europe is by far the biggest market for Norwegian salmon, although China, Brazil and the United States had the fastest growth rates at above 10 percent in the third quarter.

Marine Harvest’s operating profit rose to 207 million euros ($235 million) in the quarter from 194 million in the same period last year, above its preliminary guidance of 204 million euros.

“There is strong consumption and good demand in all markets, if you have good products it shows people are willing to pay for good products,” chief executive officer Alf-Helge Aarskog said.

The average market price for salmon was 5.72 euros per kilo in Norway in the third quarter. The 12-month forward price on Nasdaq is currently 6.8 euros per kilo.

At 1145 GMT, Marine Harvest’s shares were up 1.8 percent at 205.1 Norwegian crowns.

($1 = 0.8821 euros)

Reporting by Ole Petter Skonnord; Editing by Mark Potter

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