Friday, December 11, 2015

11/12/2015: Global salmon farming giant announces raft of new expansion plans

Salmon farming superpower Marine Harvest, have announced that as a result of "ongoing innovation and sustainable development" it is now neccesary to expand their operation in order to meet demand. 

Marine Harvest are now the world’s largest supplier of farmed Atlantic Salmon - satisfying one fifth of global demand.

Marine Harvest to build a new greenfield feed factory in Scotland

Marine Harvest expanded into fish feed with their first factory opening at Bjugn during 2014. The main reason was that feed is a significant part of the cost of producing salmon. The factory at Bjugn has over the past 18 months proven to be a success. Operational excellence and effective transportation and logistics have been key contributors to the good results. Today the factory covers approximately 80% of their Norwegian feed requirements.

However, Marine Harvest see that third party European feed purchases remain significant, within Scotland, Ireland and the Faroe Islands as salmon farming centers where we today are 100% supplied by external feed companies. A second feed factory is therefore in line with the strategy of being a fully integrated protein company. 

Marine Harvest supply one fifth of the world's salmon. source
After careful consideration, Scotland is viewed as the best alternative due to its ability to fully serve our internal feed requirements in a cost effective manner. The factory will be positioned to deliver feed to our operations in Scotland, Ireland and the Faroe Islands, but this may change or develop over time. In addition the range of feed types will be broadened to include starter feed for freshwater and organic feed for our Irish operations.

Accordingly, the Board of Directors of Marine Harvest ASA has approved the development of a new feed factory in Scotland. The specific location is yet to be decided. The investment is estimated to approximately GBP 80 million and will be phased over the years 2016-2018, with approximately 95% of the capital expenditure falling within 2017-2018. The investment size reflects that the product range will be broadened. The investment is expected to yield good results, with a capital return target in the range of 15%. 

The factory is expected to have a total capacity of around 170 thousand tonnes of feed, with the potential for further expansion. The investment is subject to acquiring land, obtaining relevant permissions and consents. The construction phase is planned to commence in 2017 and expected completion of the feed plant during the first half of 2018. All existing external feed supply contracts in Scotland, Ireland and the Faroe Island expire during the first half of 2018.

Existing management within Marine Harvest Fish Feed will provide support to the build-up of the new operational management.

Marine Harvest to consider expanding business activity into service vessels
There are a substantial number of vessels operating in connection with Marine Harvest today.  These vessels are for example work boats, well boats and feed boats. The biological situation in Norway and our other Farming Regions, makes well boats an integrated part of the value chain.  Vessel use in salmon farming systems is increasing in significance due to increased smolt transportation, sea lice, grading of fish, freshwater treatments and harvesting; as a consequence we see significant scope for integration in this area of our operations.

Marine Harvest sees this as an opportunity to streamline production and cut costs associated with the area. The profitability in the segment and the expected return is good, and the timing is favorable for such a new business activity. The Board of Directors has therefore requested the administration to evaluate the business area "Marine Harvest Shipping".  The business area will be supported by existing corporate group functions and will be developed gradually through organic growth. Marine Harvest will now explore in detail the options within this business segment and we will hire a COO within "Marine Harvest Shipping" in 2016.

About Marine Harvest Group
Marine Harvest Group is the world's leading seafood company and largest producer of farmed salmon, with presence in 24 countries and a total of 11 700 employees worldwide. 

The company is headquartered in Bergen, Norway, and is listed on the Oslo Stock Exchange and New York Stock Exchange (NYSE). Please see for further information.

Read more HERE.

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