ECONOMY

Nireus sees strong growth in sector

Greek aquaculture company Nireus expects demand in the sector to remain strong as the company considers further expansion abroad, said Chief Executive Aristidis Belles. In an interview with Kathimerini English Edition, Belles said fish farmers are becoming more organized, helping to boost productivity as the sector becomes one of the strongest in the country. Fish products occupy second place in Greece’s list of exports and are soon likely to become the country’s No 1 export product. With the reporting season for full year 2007 earnings about to commence for Greece’s listed companies, Nireus’s CEO said he expects earnings after taxes and minority interests last year to have increased 34 percent on sales growth of 31 percent. Aquaculture activities in Greece have shown strong growth in recent years. How do you see the sector evolving in the short- to medium-term? This is true. Fish farming is growing rapidly, not only in Greece but in the Mediterranean basin in general. It is estimated that 220,000 tons of sea bass and sea bream were produced in 2007 and this is double the production level of 2001. Greece accounts for the highest proportion, representing half of this production. We believe that the sector will continue to grow dynamically in the coming years because demand for fish is continuously rising, while aquaculture enterprises, through consolidation, are becoming more organized and achieving productivity gains. Did the company meet its projected financial targets for 2007? Last year we achieved a significant rise in all our numbers that exceeded our performance in 2006. For 2007, we expect sales to rise by 31 percent, earnings before interest, depreciation, tax and amoritization (EBIDTA) to grow by 39 percent and earnings after taxes and minority interests to increase by 34 percent. At the same time, we have expanded our operations through acquisitions and investment in our facilities. It is true, however, that 2007 was not the best year for sea bream farming as prices were lower than in 2006. This has affected our sales since sea bream accounts for a significant part of the Nireus product mix. However, because our group is vertically integrated, our revenues from all branches cumulatively are contributing to growth and profitability. How do you see prices for your products shaping in 2008? It should be kept in mind, based on my previous remarks, that Nireus has a broad sales mix which implies that pricing is shaped by a large basket of products. We expect that, with the exception of sea bream, prices will at least remain at the same levels or rise moderately. Sea bream is expected to remain at 2007 levels. Following recent international expansion, what ranks among the company’s top goals for this year? The company will continue to broaden its production internationally, close to big market centers as this strategic goal is useful and rewarding, promotes our product chain and improves profitability. In general, Nireus will expand its international presence with new markets and new products. At the same time, we aim at incorporating the companies in which Nireus currently participates as this enhances our value and further rationalizes our activities. In addition, cost rationalization continues to be one of our objectives and this is being achieved through constant efforts to reduce our production cycle and create more efficient production clusters. Can we expect more buyouts? Which country might you be looking at? The aquaculture sector in Greece is currently quite concentrated, with eight companies controlling almost 80 percent of total production. One cannot exclude further consolidation in the future, although we have to be careful in terms of valuations. At the same time, Nireus is also operating beyond Greece and we could not exclude such moves in the future. However, having said that, I must say that we are currently working to effectively consolidate what we already have and further increase productivity and profitability. Each new move in Greece and abroad has to be rational and also take into account our financial structure, which should not be overburdened by borrowed funds. How is your expansion program in Turkey and Spain moving along? In Turkey we are already active, producing 15 million pieces of juveniles and 1,000 tons of fish. We will increase juvenile production to reach 25 million pieces. In the future, we will expand in the production of market size fish and move into fish feed, although this will be achieved more gradually to avoid overproduction in sea bream. We have to take into account that Turkey is in a transitional stage, as its authorities are restructuring the regulatory framework in fish farming. At the same time, the sector there is evolving very dynamically. In Spain, we already have a pre-growing unit with a production of 10 million pieces of 10 gram size juveniles that will double next year. We also want to move on and implement a vertically integrated growth scenario in the coming years. There are a number of environmental concerns about fish farming. What steps is the company taking to help protect the ecosystem while also ensuring sustainable growth? The environmental issues related to fish farming are very important and consumers are rightly very sensitive on this issue. We too are equally sensitive. Therefore, I would like to say that it is important to inform consumers that policies to protect the ecosystem are in place in companies like Nireus and other well-structured, capital-intensive companies which are becoming the vast majority in fish farming, in conjunction also with the strict regulatory framework. The cages are now in deep waters and not close to the coast. In each cage, the number of fish depends on the size of the cage combined with the depth of the water. Nireus also implements a system of divers and electronic screens which warn the feeders to stop feeding when the fish are sufficiently fed. In addition, Nireus is working toward total quality and has department of 10 scientists dealing with these issues. And, there is also regular sea and seabed organic residual control. One can appreciate that Nireus is taking all necessary steps to protect the ecosystem. [email protected]