Strong figures for salmon farming

Spot prices rose from NOK 61,67 (EUR 6,38) in week 8 to NOK 67,15 (EUR 6,97) last week, which are boosted by lower Norwegian harvest volumes. The International Salmon Exchange Fishpool reported contract prices (Nasdaq) at NOK 58.00/kg (EUR 6,00/kg) for Q2 and NOK 55.09/kg (EUR 5,67/kg) for H2 2018 in the forward market.

Harvest volumes expected to grow

In Norway, feed sales are reported down by about 10% y-o-y over the past four weeks, with YTD sales down 6% y-o-y, as colder seawater temperatures are impacting production and harvest volumes, according to Handelsbanken. But Norwegian harvest volumes are also expected to increase into H2, as the harvest of the 2017 generation is set to intensify (currently harvesting mainly on the 2016 generation, consisting of only 1% higher biomass y-o-y). Global supply growth of 5-6% for 2018, and 4-5% for 2019 is predicted.

Leroy Group: Top pick in the salmon sector

Leroy reported better than expected Q4 EBIT of NOK 777mio, driven by better farming margins. The group announced a dividend of NOK 1.5 per share, but Leroy’s strong cash flow and balance sheet provide sufficient room for higher dividends ahead. Leroy raised its harvest volume for 2018 to 182,000 tonnes (180,500 in 2017). The company is experiencing a strong demand for its products and anticipates a global supply growth of 5% in 2018.

Bakkafrost: Strong outlook for farming operations

According to Handelsbanken, harvest volumes are expected to increase from 51,000t in 2018 to about 70,000t in 2021. The salmon farming company reported a better than expected EBIT of DDK 331m in Q4, 53-55% above consensus and estimates of Handelsbanken, driven by fishmeal, oil and feed (FOF) and farming margins.

How to participate in the growth of the seafood industry

The Solactive Nordic Seafood and Fishing Performance-Index, calculated and distributed by Solactive AG, tracks the performance of a portfolio of Scandinavian stocks operating along the value chain of seafood production. The Index is published in Norwegian krone. It tracks an interesting sector as global per capita fish consumption rose above 20 kilograms a year. Seafood demand is sensitive to increases in income, and thus this economic trend, combined with population growth rates, will be the major determinants of growing future trade flows and rising fish consumption, according to the Food and Agriculture Organization of the United Nations. By investing in the Solactive Nordic Seafood and Fishing Performance-Index, one can easily participate in the growing seafood sector done with a single transaction, thereby gaining a broad diversification. The composition of the basket is transparent at any time.

The future share performance will depend on various corporate-, industry- and economic factors. Investors should consider the risks before taking any investment decisions. The performance of the underlying might differ from investors’ expectations and lead to a potential capital loss.

This information does not constitute a financial analysis, but product advertisement. Thus it does not meet the legal requirements to ensure the impartiality of financial analysis and is not subject to trade prohibition before the publication of a financial analysis.

For detailed information, particularly regarding the structure and the risks associated with an investment in the derivative financial instruments, prospective investors should read the Base Prospectus, which is available together with the Final Terms and any supplement to the Base Prospectus in electronic form on the issuer’s website: http://certificates.vontobel.com. Additionally, the Base Prospectus, any supplements to the Base Prospectus and the Final Terms are available in printed form, free of charge, at the registered office of the issuer: Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany.

Investors should consider the applicable selling restrictions.

Companies of the Vontobel group may directly or indirectly pay commissions in varying amounts to third parties (e.g. brokers) in connection with the public offer and the distribution of the derivative financial instruments. Further information is available upon request from your distribution partner.

Without permission, this product advertisement may not be reproduced or redistributed.