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Marine Harvest

 

Company overview – Marine Harvest ASA (OSE: MHG), formerly known as Pan Fish ASA is the world’s largest producer of Atlantic salmon. In addition to Salmon, the company stocks halibut and white fish. Its product repertoire includes whole gutted fish, fillets, cutlets, steaks, portions, loins, and other value-added seafood products like coated, smoked and pre-processed produce, ready-to-eat meals and finger food.

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The company has been at the forefront of developments in the aquaculture industry. It is one of the largest seafood companies in the world with a market share of 25-30% of the global salmon and trout market. Marine Harvest reported harvest volumes of 377,000 tones (GWE) in the third quarter of 20171.

 

Instituted in 1965 and headquartered in Bergen, Norway; the company currently employs 12 717 people and is represented through sales offices in 24 countries across the world. Its primary regions of operations include Canada, Norway, Scotland, the Faroe Islands, Ireland, and Chile. The Company operates hatcheries, processes and packages fish, as well as sells and markets the products. Marine Harvest operates about 100 seawater sites along the Norwegian coast. These are further supplemented with 28 freshwater sites, two broodstock plants (in Bjugn and Askøy), two hatcheries (in Øygarden and Rørvik) and four processing plants in (Eggesbønes, Herøy and Ryfisk and Ulvan).

 

Trusted in all major salmon farming regions in the world, Marine Harvest claims to supply healthy, delicious and sustainably farmed salmon and processed seafood to more than 70 markets worldwide.

 

As of YE 2017, Marine Harvest had a market capitalization of $6.8B and a strong position on the salmon market. The group has banked on several mergers and acquisitions over the years to augment organic growth.

 

Some of these acquisitions have proved contentious. The 2012 acquisition of Morpol, a value-added salmon product company was red-flagged by the European Commission for a breach of European merger control regulations. The company has now been fined EUR 20 Million by the EU General Court with a final non-appealable judgment expected to be made at the end of 2018.

 The company also recently announced plans to purchase Northern Harvest, a leading East Coast Canadian salmon company. The acquisition is expected to add to Marine Harvest’s production and operational capabilities –  Northern Harvest has its own broodstock, smolt/hatchery, farming sites and processing operations. The deal is being put in place through a share purchase agreement at an acquisition price of CAD 315 million.

 

Marine Harvest is listed on the Oslo Stock Exchange (OSE) where it is a constituent of the benchmark OBX Index. Trading on the US OTC market, its shares averaged a range of $120.33-$163.12 in 2017.

 

Source: Bloomberg L.P.

 

Objections to fish farming in British Colombia, Canada by the indigenous peoples threaten to pose a grim risk to reputation for the company. Since August this year, members of the First Nations have occupied several Marine Harvest’s fish farms operating out of indigenous territory. A legal quagmire, the situation has created a dilemma for Marine Harvest, the Canadian government and leaders of the indigenous nations.

 

Demand for aquatic food is set to grow over the years. But there remain several impediments to sustainable growth for the company; many of these tying to operative drivers for the aquaculture industry and macroeconomic trends for the salmon market. Poorly managed fish farms and an increased use of antibiotics are fostering a high frequency of disease, particularly sea lice. Climate change poses an ominous threat to sustainable production and vulnerable aquatic ecosystems. Globally, salmon markets remain relatively immature, due to a limited product range and, in some cases, a lack of knowledge about how to prepare the fish. Without a continuous process to develop new, innovative products Marine harvest will find it hard to maintain its lead in the salmon industry.

 

In its annual reports, the company has also cited environmental and biodiversity impact, fish health, escape prevention, medicine use and feed policies as additional levers for sustainable operational success and long-term profitability.

References –

 

1.      https://en.wikipedia.org/wiki/Marine_Harvest

2.      http://www.fis.com/fis/companies/details.asp?l=e=67022

3.      https://www.bloomberg.com/quote/MHG:NO

4.      http://salmonbusiness.com/marine-harvest-buys-northern-harvest/

5.      https://www.undercurrentnews.com/2017/10/26/commission-confirms-it-will-fine-marine-harvest-e20m-over-morpol-acquisition/

6.      http://marineharvest.com/about/news-and-media/news_new2/marine-harvest-osemhg-judgment-of-the-general-court-eu/

7.      https://www.seafoodsource.com/news/aquaculture/protestors-refuse-to-leave-marine-harvest-farm

8.       

1 http://marineharvest.com/globalassets/investors/handbook/salmon-industry-handbook-2017.pdf