Marine Harvest's Q1 Results: Quite Good but Not Without Problems

May 16, 2011 7:16 AM ETMarine Harvest ASA (MHG)2 Comments

It has been an interesting week for Marine Harvest ASA (OTCPK:MNHVF) (MNHVY.PK). The company announced its first quarter results on Wednesday, May 11. The stock has also declined 24.6% in the past few weeks. This is a substantial decline and one that bears investigating. In this first part of a two article series, I will analyze the company’s first quarter results; I will then discuss the reasons for the stock’s recent decline in the second part.

I will begin this analysis by looking at the company’s first quarter presentation and results. Here are the highlights from this report:

  • Operational EBIT increased 58% year over year.
  • ROACE (Return on Average Capital Employed) of 21.7% in the quarter.
  • High contract share and declining feed prices should support strong cash flow for the rest of the year.
  • Dividend of NOK 0.80 ($0.144) per share was approved at the Annual Meeting and will be distributed on May 20. The company went ex-dividend on May 10, 2011.
  • A semi-annual dividend is expected to be announced sometime in the second half of the year.

Marine Harvest had operational revenues of NOK 3,942 million ($709 million) in the first quarter. This is up substantially from the first quarter of 2010, when the company earned NOK 3,454 million ($621.525 million) in operational revenues. This also represents higher revenues than any quarter of the last year except for Q4. Marine Harvest had Q4 2010 revenues of NOK 4,612 million ($829.899 million) versus NOK 3,942 million in the first quarter of 2011. Marine Harvest had operational EBIT (earnings before interest and taxes) of NOK 963 million ($173.286 million) in Q1.

As with the revenues, this increase in EBIT was a fairly substantial increase from the Q1 2010 EBIT of NOK 608 million ($109.4 million). The Q1 2011 EBIT was also higher than

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