See cost of production of 35 million in Mid-Norway – iLaks

Nordea-analyst Kolbjørn Giskeødegård doesn’t impress by today’s Psalms-result.

"the Q3 report shows an EBIT of NOK 576m. This is 15% lower than consensus, but in line with our own estimates. The total margins fell thus under the 20 million in the quarter because of the high the contract share and high costs. Volume guidance for 2016 is reduced by 6% (8k tons) to 118k tons and for 2017 guides the 128k tonnes, 8k tonnes lower than we had estimated. Oppdrettskostnad in Mid-Norway is estimated to be around 35 nok per kg in the quarter, which is 5 million higher than in the North of Norway. Contract share in the quarter are higher than expected (49%), and for Q4 guides the 55% because of low production (high the contract share). For 2017 they say that 30% of their planned harvesting is under contract, and we do not expect that they will increase this significantly," writes Giskeødegård in a kundeoppdatering in good time before børsåpning Wednesday.

Read also: Psalms earned close to 20 million kiloet in challenging quarter

He has salgsanbefaling on SalMar’s shares, and does not hide it. Kursmålet is set at 210 million. Giskeødegård believe today’s report overall is negative because of 1) lower than expected EBIT, 2) the high the contract share, and 3) disappointing low 2017 volume guidance.

Weak
Also analysekonkurrent Tore A. Tønseth in Sparebank1 Markets concede that the Psalms-the report was weak – taking into account forhåndsforventningene.

"SalMar lose markedsforventningene in the day, but the underlying results are not so far from our forecasts and compared with LSGs third quarter results are surprisingly strong, given approximately the same geographic exposure," writes Prize in a note.

He brands themselves, as Giskeødegård, that the Psalms have better operation in Northern Norway than in central Norway.

"Maybe no surprise, but the region North had the best results this quarter, with 29,1/kg, while in the Middle of Norway struggled with higher costs and ended up with the op. EBIT of 23,4/kg."

Close kursmålet
Prize expects to make a marginal, but negative changes in estimates after this report.

"At the current share price is SalMar relatively close to the kursmålet (290 million – red. anm.), but forward prices for 2017 has increased further since the last update. We will consider our recommendation and come up with a patch", he writes further.