Nutreco earnings to fall on sinking salmon prices, paltry poultry - THE NETHERLANDS - Nutreco Holding NV is expected to meet its own guidance for a lower operating result and net profit due to lower than forecast salmon prices and disappointing trading conditions in poultry, analysts said.

Estimates for EBITA, excluding a EUR20 million book gain on the sale of Nutreco's pork processing unit, range from EUR90.2-103.9 million, down from EUR117.8 million, with earnings per share before goodwill and exceptional items forecast at EUR1.39-1.71. That compares to EUR1.91 per share in 2003.

Fortis analyst Maarten Bakker no negative surprises are likely after the company said in October that results will be poor.

Bakker forecasts second-half sales at Nutreco's Aquaculture division down 2.1 pct to EUR618 million as a result of flat salmon farming sales and an expected 3.4 percent drop in fish feed sales.

The analyst will be looking for the company to comment on the progress made integrating its and Stolt Nielsen's fish farming operations.

Nutreco's Agriculture division will provide the main disappointments, he added, as its pork and poultry processing operations will have suffered from the retail price war in the Netherlands.

Also, higher poultry feed prices resulted in higher production costs, putting pressure on margins, the analyst said.

Agriculture sales are seen rising 3 percent to EUR1.352 billion, with headline EBITA falling 30.6 percent to 28 million. Excluding EUR15.4 million of one-off income from last year's figure, this equates to an EBITA drop of 49.6 pct at the division, Bakker said.

Looking ahead, Nutreco aims to make its Feed activities the main focus, with fish farming becoming a stand-alone unit.

'Pork has already been sold and we expect Poultry Benelux to be divested at some stage as well. We think spinning off fish farming is a good step, but the volatile salmon prices will continue to have a large impact on Nutreco's profits,' said Stroeve analyst Karel Zoete.

F van Lanschot analyst Paul Hofman noted that salmon prices have recovered since the company's last profit warning in October, with poultry prices in Spain having a good final quarter.

While Dutch poultry prices have recovered somewhat, markets remain challenging, Hofman added, expecting salmon prices to recover further in 2005 due to declining supply and growing demand.

Source: eFeedLink - 17th February 2005