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CORRECTION: Marine Harvest cuts production costs
Eva Tallaksen
Published - September 08. 2010 - 13:11 GMT
Marine Harvest plans to maximize its farms’ capacity as part of efficiency measures that could cut its annual production costs in Norway by more than NOK 300 million (€38 million/$48 million) after three years.
(IntraFish previously wrote the incorrect figure of NOK 1 billion (€126.9 million/$163.6 million).
Addressing investors Tuesday, the world’s largest salmon farmer said it would cut onshore production costs in Norway NOK 0.5 (€0.06/$0.08) per kilo within the second half of 2011.
The largest reduction would be for its Norwegian offshore production, where it plans to cut costs NOK 1 (€0.13/$0.16) per kilo by mid-2013.
As part of the plan, the group says it will focus on increasing the production capacity of its sites as this offers better economies of scale, Jorgen Christensen, communications director, told IntraFish.
Once implemented, he said the measures could save the group roughly NOK 372 million (€47 million/$60 million) from 2014.
This is based on Marine Harvest’s forecast of a 5 percent annual organic growth for the next “several years.” According to this, the company could produce 247,922 metric tons of salmon in 2014, up from 204,000 metric tons this year.
Focusing on larger sites that fully exploit the maximum allowable biomass is a key way to achieve the savings, the company said.
Indeed, figures showsites with larger capacity have lower costs per kilo, Christensen said. The company shows in northern Norway, where its farms are bigger, offshore production costs in mid-2008 were nearly NOK 5 (€0.63/$0.82) per kilo lower than in the south.
“Some of the cost savings will derive from our larger production volumes, because we have quite a wide margin to use before hitting the maximum biomass allowed. We also expect to have access to better sites -- these are probably the main tenets of the cost-cutting plan,” Christensen said.
“If you look at our results, the regions that have performed the best are those with the larger sites. That’s partly due to scale and also due to the fact that these are the good sites.”
Marine Harvest may be in a better place than some of its rivals to do increase its sites capacities. According to its own calculations, the company has the potential to expand its sites’ production an average of 23 percent before reaching its total biomass allowed of 1,150 metric tons.
This compares to an average of 10 percent for the Norwegian salmon industry, Marine Harvest said.
Size is not the only thing it will focus on. Among other improvement measures for its offshore activities, the group lists plans to restructure freshwater sites, optimize vaccine costs, increase the size of equipment and improve disease prevention measures.
On land, measures include more efficient processing and filleting strategy.
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