Good day, and welcome to the Q3 2015 international conference call for Marine Harvest. Today's conference is being recorded. At this time, I would like to turn the conference over to Marine Harvest management. Please go ahead.
Thank you. This is Alf-Helge Aarskog. I am the Chief Executive Officer of Marine Harvest, and I will start the presentation. Together with me, when we come to financial numbers, the Chief Financial Officer is also with me on this conference call, and he will introduce himself when he starts. Let's turn on to page three, where we go on to the highlights. Operational EBIT for the quarter was at NOK 720 million. In general, good contribution from the Norwegian operation. They contributed with NOK 595 million in the quarter. Very good result by our Feed division and a good process in that operation. Our consumer products ended up approximately at the same result as last year but was hit by a one-off in regards to the startup cost at our processing facility at Rosyth in the U.K.
If you take into account that number, we actually improved in consumer products in the quarter. We are not obviously satisfied with that number, but we are working to get better every day. Strong demand in Europe and underlying demand in Asia. Challenging market condition in Americas, which we will come back to later on. Quarterly dividend, the board decided to pay out NOK 1.4 per share in light of what we see going forward here, good demand for products and limited supply. If we turn to page four and look at the key financial, we'll come back to that in more detail later on. Operational revenue ended at NOK 6.9 billion compared to NOK 6.2 billion in Q3 2014. The harvest volume ended at 105,000 or close to 106,000 ton compared to 107,000 ton in Q3 2014.
You then turn to page five, you will see how the prices developed in the different markets. In Europe, we saw good prices throughout the quarter. The opposite was the case for Americas, where we experienced very low prices in the quarter. They were down in local currency with approximately 20% on D-trim fillet in Miami. This is due to supply increase, especially from the Canadian operation, but also an inventory release that's not in the number for Chilean supply of 11,000 tons. We then turn to page six, you will see the price achievement by origin. In the Norwegian operation, we reached 105%. We were not helped as much by the contract this quarter compared to the same quarter last year. The spot price was somewhat higher. Other than that, we are satisfied with the price achievement in Norway.
In Scotland, a lower contract share contributed to a lower price achievement. It's also fair to say that the Scottish salmon is, to some extent, hit by the stronger pound compared to the Norwegian kroner and more competition from Norwegian salmon. Canadian, we are in the spot market, we achieve spot price. In Chile, we have achieved better than the reference price due to selling more product into the best-paying market, which is Brazil for the Chilean part of the story. Overall, we are fairly satisfied with the quality in all operations, maybe with the exception of Chile, that is below our target of 90% superior fish. If we turn to page seven, we can see the development from Q3 2014 to Q3 2015. We see that the feed division improved. It's really farming that is lagging behind.
If you then add up the numbers we lost in Chile, we lost NOK 120 million in this quarter in our Chilean operation. In the same quarter last year, we made NOK 101 million. If you add the Chilean number and the Canadian number into this, you explain most of the variance, then there is some FX and a little bit higher cost in the Norwegian operation. That can explain some of it. If you then go to the Norwegian operation on page eight. As already mentioned, we achieved operational EBIT at NOK 595 million, slightly lower than Q3 2014, where we had NOK 624 million. Per kilo, it was NOK 10.1 per kilo compared to NOK 9.71 per kilo in the same quarter last year.
One number to pay some time on is the exceptional item, which is basically sea lice cost in this quarter that was heavily up and especially in the mid part of Norway, NOK 2.83 against NOK 1.84 in the fourth quarter of 2013. We have implemented a new sea lice strategy in operation that has been going on and been readily implemented during both the second and third quarter. That is to try to reduce the number of mature female lice and use basically medical treatment. It's a fairly extensive strategy that we try to implement now in all farms going forward. Turn to page nine. You will see the sales contract portfolio for Marine Harvest, and we see that we had 43% contracted in Q3 2015.
In Q4, that number is closing in or close to 50%, and we have a contract policy that is between 22.5% and 50% of the volume in Norway should be sold on contract. It's less likely that we'll contract anything more in the fourth quarter. In the first quarter, the same is the case. We have a good contract coverage also in the first quarter, and we also expect good prices going forward. That is based on the supply developments we see, both for the first quarter but also for 2016 as a whole. We turn to page 10 and look at the operational EBIT per kilo per region in Norway. We see that the Region South is lagging slightly behind NOK 8.3 per kilo. It's better than last year, but still somewhat disappointing.
One is that we have spent money to get rid of the sea lice. The sea lice situation in Region South is in good control. We have lower volume in this quarter in Region South, and we also have experienced some PD and some CMS mortality in this quarter. Region West, okay result, but also in Region West, we have spent money dealing with the sea lice issue, especially in the northern part of this region. Region Mid is hurt the most by sea lice, and you can see that on the result. It come down from last year to NOK 9.28 per kilo. What we have done there is that we have harvested smaller fish at the higher cost and obviously a lower price. Maybe it's not obvious, but smaller fish achieves lower price than optimal salmon around 4.7 kg- 4.8 kg gutted .
We have had to harvest fish out at 3.2 kg- 3.5 kg because the sea lice situation in this area has been severe in this quarter. Region North, good control of sea lice. We have spent money dealing with the issue, but the result is NOK 10.76 per kilo. Overall, NOK 10.11 per kilo EBIT. We then go to Scotland and look at the Scottish operation, you can see the numbers to bear in mind there is that the volume is up from 13,740 tons to 16,586 tons. The price is down, that has to do with, one, the strengthening of the pound versus the Norwegian krone and somewhat more competition against Norwegian salmon in that market. It's hard to keep the same premium as towards Norwegian fish as it was before. Other than that, some challenges in regards to biology, some algae blooms, a little bit AGD.
For the fourth quarter, we have a few sites with some sea lice issue that we need to take care of in the fourth quarter. On to page 12, the Canadian operation. Affected by low prices in the American market to a high extent. Relatively good biologically performance in this quarter, and it has been a challenging quarter with very warm temperature on the West Coast of Canada and following some issues in terms of algae blooms and the like. The numbers that's reflected in exceptional items is those kind of issues. We go on to page 13 and look at the Chilean operation, the biggest disappointment in this quarter. It's not a surprise to us, and it has been expected, I think, in the marketplace that Chile would not perform. This has absolutely the most to do with price.
The price for Chilean fish, both in Brazil and in the U.S., is at record low numbers. We have seen the price performance also in October not trending up, but in fact, slightly down from this quarter. In terms of the cost side, it's slightly down in terms of from Q2, from $4.9 per kilo to $4.6 per kilo but still at a too high level, obviously, to be able to make a profit in Chile. The biggest part of the explanation here is price. Ireland and Faroe Islands on page 14. One comment here is that we start to harvest fish in the fourth quarter in the Faroe Islands. We will harvest approximately 2,000 tons, and we expect good results from that.
Ireland is doing fairly well in the quarter and making NOK 8.1 in EBIT per kilo. We continue on to consumer products. To a certain extent already mentioned, operating revenues is up from approximately NOK 2 billion in Q3 2014 to close to NOK 2.4 billion in 2015. Operational EBIT is around the same level, but this number is directly impacted by EUR 3 million. That is a cost in regards to the startup in the U.K. We see a good growth here in elaborated product, both in Southern Europe, especially in Spain, but also in Germany. We also see a growth in France with 3% in this quarter compared to the third quarter of 2014. We turn on to page 16, and that represent the feed division in Marine Harvest.
You see that operating revenue has basically doubled since Q3 2014. Operational EBIT has more than doubled from NOK 20 million in Q3 2014 to NOK 73 million in this quarter. We are happy with the volume development in the operation. We're also happy with the productivity that we see from this factory. It's a brand-new factory. It delivers the goods. One point to bear in mind is the potential El Niño in Peru. We see increasing prices for fish oil and fish meal in this quarter. This might be an issue in 2016. In Marine Harvest, we have good coverage both for Q4 2015 and Q1 2016. Ivan, we will go on to financials, harvest volume and markets.
Thank you, Alf-Helge, good afternoon or good morning to all of you on the call. We start on page 18 and the P&L. The third quarter saw us make a turnover of NOK 6.9 billion, which is up 11% compared to the same period last year. Operational EBIT of NOK 720 million, which is down from NOK 912 million in the third quarter 2014, mainly explained by the weak results in Chile and Canada, duly commented on by Alf-Helge. Further down in the P&L, a positive fair value adjustment this quarter of NOK 359 million, which is due to higher biomass in sea, plus an increase in the salmon price at the end of the quarter. Income from associated companies, NOK 93 million this quarter. This is mainly related to our 48% ownership in Nova Sea.
They had an underlying EBIT per kilo of NOK 13.7 in the quarter, which is extremely good, on approximately 10,000 tons of gutted weight. For further details, please see in the appendices. Net financial items as high as -NOK 713 million this quarter, heavily impacted by FX fluctuations and mark-to-market valuations of, among other things, our convertible bond. Payable interest, as you will see in the net cash flow statement, was NOK 65 million. The underlying finance cost was normal also in the third quarter. Underlying earning per share, NOK 1.08. Dividend declared and paid in the quarter was NOK 1.30 as against NOK 1.40 for the fourth quarter. Harvest volumes were stable at 106,000 tons. Total operational EBIT per kilo, NOK 6.8, and return on capital employed, 12.2%. Much about the P&L. Over to the financial position or the balance sheet.
Compared to the second quarter, it's somewhat up, but compared to year-end, more or less the same. We saw a seasonal build-up of working capital in the third quarter. Beyond that, no significant changes in the various items. The equity ratio down from 50.9% in the second quarter to now 47.5%, mainly explained by FX fluctuations, i.e., the weakening of the Norwegian krone. That being said, Marine Harvest cash flow is predominantly euros. Our financing is also in euros. This is in Norwegian krone terms, that's the equity ratio. We flip to page 20 and the cash flow statement. We started the quarter with a net interest-bearing debt of NOK 7.7 billion. We closed the quarter at NOK 8.7 billion. NOK 600 million of the change is due to the weakening of the Norwegian krone ref, the item at the bottom of the table.
We made an operational EBITDA of approximately NOK 1 billion in the quarter. Tied up working capital in a seasonal build-up of biomass. Net cash flow from operation was approximately NOK 0.6 billion. Net CapEx for the quarter, NOK 0.4 billion. Dividend distribution was NOK 0.6 billion, which corresponds to NOK 1.30 per share. We move on to page 21 and the cash flow guidance. We have revised our net working capital forecast for 2015, mainly due to FX. It's up from NOK 900 million to NOK 1.3 billion. In terms of capital expenditures, still the same, NOK 1.9 billion. We would also like to take the opportunity to remind the audience of the Acuinova acquisitions we made at the end of the fourth quarter is not completely financed because it takes some time to transfer assets in Chile, more precisely licenses.
The last part of the acquisition, which amounts to $18.5 million, is supposed to be paid in the fourth quarter. Interest expenditures revised from NOK 270 million - NOK 300 million due to FX. Tax payables revised down from NOK 650 million -NOK 600 million. The quarter dividend declared by the board is NOK 1.40, duly commented on by Alf- Helge. If you turn to page 22, we have the overview of financing. No changes since last time. I think we just move directly on to page 23 and the supply development for the quarter, i.e., the third quarter. It was in line with the previous guidance, quite stable. Apart from that, I would just add that in terms of understanding the Chilean numbers here, the audience must bear in mind that the frozen storage in Chile was taken down by 11,000 tons in the third quarter.
Consequently, the increase in volumes from Chile was not negative. It was actually somewhat up in the third quarter. We go to page 24 and the overview of the prices in the various markets. If you start with Europe, the price measured both in Norwegian krone and euro was good in the third quarter, the price has continued to develop well so far into the fourth quarter. In Americas, the prices were really poor. Measured in local currency, i.e., U.S. dollar, it was down approximately 20%. The market in Americas in the third quarter was challenging. Unfortunately, the prices for the Chilean salmon have dropped somewhat into the fourth quarter. For the Canadian salmon, we have seen a slight increase, not a significant increase. That being said, normally, the prices in Americas go up when we see price increases in Europe.
Hopefully, we will see the same pattern this time if the prices turns out to be as high as the forward market suggests. In addition, we have the Lent season in Americas coming up, which is supposed to help. We also see a good supply situation for Americas next year. We also have seen that retail prices in Americas have gone substantially down in the third quarter, which normally sparks the demand. There's no secret that 2015 has been a very challenging year for our American operations. Although we hope that we are bottoming out now and that we see a light in the tunnel next time we speak again. I think it's right to say that we don't know. The market in Americas has really been disappointing this year. We are humble in terms of projecting the future.
It's not very easy to say when this really turns. At some point it will. When, it's very hard to say. With that, I think we go to page 25 and the demand. The demand in EU or Europe was very good in the third quarter. In terms of Russia, they are still negatively impacted by the trading barriers. That being said, they are still consuming over 100,000 tons on an annual basis. Atlantic salmon is sold to the Russian market also after the sanctions we saw introduced last year. Unfortunately, much of the salmon is frozen. The consumption is okay, taking into account the trading barriers the industry is facing in Russia. Americas, I already commented on. The consumption in the U.S. is high, unfortunately at very big prices. In Brazil, also adjusted for prices, the demand is good.
The consumption is up 24% in the quarter, and that market continues to develop very well. In terms of China and Hong Kong, impacted by stricter trading barriers this quarter, unfortunately. In addition, we also have had shortage of large salmon, which is very important in the Asian market. Japan has developed positively compared to the last quarter due to a build-down of inventory. In terms of South Korea Taiwan as high as 24% increase, which is impressive. South Korea and Taiwan are very important markets for Marine Harvest . We have a significant sales organization there. We are in particular happy with the development for that market or those two markets. Much about demand and global volume by market. We turn to page 26 and the industry supply outlook.
In terms of the fourth quarter of 2015, the numbers are pretty much the same as what we guided on last time. I will not go into the details on this call. In terms of 2016 on a global basis, quite stable YoY. We haven't presented the 2017 figures yet, but as far as we can see, based upon the market intelligence or supply intelligence we have, 2017 is also looking favorable from a price point of view. If we go over to our internal supply numbers or harvesting volumes for next year. In total, we are increasing from 425,000 tons - 440,000 tons. In Norway, we are up from 257,000 tons - 265,000 tons. In Chile, we are down from 64,000 tons - 56,000 tons. Bear in mind that we reduced the stockings previously this year. Some of this reduction is related to that.
The total effect you will see next year. I would say around 50,000 tons as an estimate for 2017 for Chile. I.e., down from 67,000 tons last year to 50,000 tons. This was a measure in order to meet the market challenges we see for the Chile industry. Biology is also a factor into the equation. In terms of 2015 volume numbers, we have reduced it from 430,000 tons- 425,000 tons. Chile accounts for 3,000 tons, whereas Canada accounts for 2,000 tons.
With that, I would like to leave the word to Alf- Helge again, and he can walk us through the outlook.
Thank you, Ivan. Just on the outlook, what we see is a market balance that's expected to remain tight into 2016, which is what we guide on so far. Future prices of NASDAQ have increased to NOK 44 per kilo for the next 12 months. I think that's a record high for being a prediction for the next year in October. It is certainly a robust consumer demand in Europe and a good underlying demand in Asian markets, which both are positive for the future. We still see continued weak American price achievement in Q4 2015, and that has already been mentioned upon slightly dropping Chilean prices into Q4 2015, but a slight improvement in the Canadian fish so far in Q4 2015.
Just underline the quarterly dividend of this quarter at NOK 1.4 Per share that the board decided to pay out on the basis of good prospect for the future. With that, I would like to end the call and turn this over to the conference holder and open up for questions.
Thank you. If you would like to ask a question at this time, please press star followed by digit one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We have a first question that comes from Mr. Fredrik Ivarsson from Kepler Cheuvreux. Please go ahead. Your line is now open.
Yeah, hi guys. A couple of questions from me. Sea lice costs are obviously up almost 40% from last quarter. Can you just give us some color behind the drivers behind this, i.e., how much is described by higher sea lice levels and how much is described by the more expensive treatment costs?
Yes. For the Norwegian volumes in Region Mid, it is to a certain extent described by higher sea lice pressure in this region. It has been an issue over the summer, and we have been able to handle it by treating more, but also by harvesting out fish. When we harvest out fish early, that does not directly affect the sea lice treatment cost, but has a consequence on price achievement and cost for the product. In other regions in Norway, the sea lice situation in Region South is better this year compared to last year. We have spent some to get in that position, but we are in a good position there going forward. In the Region West in Norway, the sea lice situation is okay all the way up to the northern part of this region, which is border with Region Mid.
In Region North, the sea lice cost here is mostly explained by staying in control, which we have been able to do. Still, we see that our operation there are working.
A follow-up on those costs in Norway. Do you see the current cost levels being close to a peak? How should we think about this going forward?
In terms of sea lice cost specifically, it's hard to predict, but usually we see high sea lice cost in Q3, partly in Q4, and then a reduction in Q1 and Q2 because of the winter. For next year, I think and hope that we will be better prepared and have better solutions and a better strategy in place. Most certainly this is not only up to Marine Harvest because it's also that we can hopefully get all other companies to follow the same plan and reduce this as we go forward.
Right. The last question on the feed division. Can we expect the sold volumes in Q4 to be similar to Q3, or how should we think about those?
Q3 is usually the highest volume quarter for fish feed. I think if you follow this, you will see that there is a slight drop in volumes in Q4 because of lower temperature in the ocean gradually lowered in October, November, and December. A slight reduction in volume in Q4 is to be expected.
That is quarter-on-quarter, not year-on-year, right?
That is quarter- on- quarter.
Okay. That's all from me. Thank you.
Thank you.
As a reminder, to ask a question, please press star followed by the digit one. We have no further questions.
Okay. Thank you very much to all of you for following this conference call. We will be around in February to do the same again. Thank you and goodbye.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.