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Frozen Foods International News
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| Sustainable Fish Farming, Sustainable Profits |
Marine Harvest ASA, Oslo, Norway, is in the business of farming
fish. But the point of that business is farming capital over the
long term, and thus sustainably making money for its investors.
That was the message from Jergen K. Anderssen, chief financial
officer of the company, at the Annual Seafood Conference in Oslo
June 10, sponsored by RS Platou Markets, an international
investment bank and subsidiary of ship and offshore brokerage
company RS Platou Group.
It starts with good current and future cash flow, Anderssen said,
and goes on to include adequate financial coverage of CAPEX,
biomass capital requirements and financial commitments, keeping
debt under control (i.e. within target), and being financially
well prepared for the inherent risks of this industry (i.e. price
variations and disease) by having sufficient reserves and
flexibility.
Lack of discipline when it comes to supply growth will have
negative market impact and biological impact, he warned, citing
the situation in Chile as what Garrett Hardin called the "tragedy
of the commons" -- a situation in which multiple individuals,
acting independently, and solely and rationally consulting their
own self-interest, will ultimately deplete a shared limited
resource even when it is clear that it is not in anyone's
long-term interest for this to happen.
More consolidation in the industry is needed, Anderssen said.
That will be a benefit both for the industry and the market. As
for Marine Harvest itself, it remains committed to sound planning
and budgets and sustainability. Its dividend level shall reflect
the present and future cash generation potential of the company.
Marine Harvest will target a net interest-bearing debt/equity
ratio ofless than 0.5 X. When target level is met, at least 75%
of the annual free cash flow after operational and financial
commitments will be distributed as dividends.
The critical factors medium term are price levels and robust
demand, he said, but there is a risk of demand destruction.
Growth must be disciplined in terms of the timing and speed of
the build up of the Chilean industry. This facilitates
sustainability -- a precondition for creating long-term
competitive and attractive financial results
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| 14-Jun-10 |
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