Marine Harvest results divide analysts

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“No surprise” Marine Harvest trading update affected by Scottish harvest, Norwegian, Canadian underperformance

Marine Harvest’s fourth-quarter earnings update on Tuesday may have been “no surprise”, but analysts are divided as to what it means, with some salmon-watchers saying it points to higher net profit and others saying “sell” the stock.

“The combination of higher (harvested) volumes than expected and at the same time a better margin than estimated means net profit will therefore lie around three percent over the consensus and six percent higher than our estimate,” DNB Markets wrote in an update.

A Marine Harvest note to shareholders on Tuesday said the company was on the road to achieving an operational EBIT group-wide of about EUR 177 million in the third-quarter, up EUR 18 million over the year-ago period but down seven percent over third-quarter 2017.

Price targets
That was under brokerage Pareto Securities’ expected EUR 190 million for the third-quarter, as the company’s Canadian and Norwegian units disappointed. The result was buoyed by Chilean operations that saw a year-on-year boost.

The Marine Harvest update means Pareto will lower its price target on Marine Harvest shares to EUR 17.60, although the brokerage repeated its “buy” recommendation on the share. DNB Markets, for its part, maintained its “buy” advice with a price target of EUR 16.6 per share.

Two percent more harvested salmon and three percent better margins were “no big surprises”, said SpareBank1 analyst, Tore Tonseth. “In total, Marine Harvest’s trading update is in-line with our expectations.”

He noted that the 113,000 tonnes of harvested salmon SpareBank1 had estimated were two percent lower than the 111,000 t guided by Marine Harvest. Norway’s strong production was boosted by high realised prices and improved biology.

Bio-difficulty
Marine Harvest Scotland harvested 37 percent more than the company had once guided, but the 3,500 t of extra harvest seen in the quarter were “probably” an early cull after biological troubles and will likely reduce MHG’s volumes for 2018.

“MHG group 2018 harvest volume is then seen in the 406,000 t to 407,000 t range, down from 410,000 t,” Tonseth said, adding, “2018 estimates could be adjusted marginally down, due to lower volumes.”

“Although the salmon farming sector now is down 24 percent relatively to OSEBX (Oslo index) over the past three months, we are likely stick with our “sell” recommendation. Estimates and price expectations are still too high in our view, and as long as we see a downside in these numbers, we find too early to upgrade our recommendation.”