Nutreco will release its 1H13 results pre-market on Thursday 25 July, followed by an analyst meeting at 10am CET. We see the group’s sales growth slowing from 10.8% in FY12 to 2.6% (CSS +1.5%) in 1H13 due to significantly lower volumes at Compound Feed and Fish Feed. Our REBITA estimate (€ 91m or -12%) is in line with consensus and 1% above the guidance. The decline in Animal Nutrition’s REBITA is expected to be limited to 2% as lower results at Compound Feed and Meat & Other should be largely offset by better results at Premix & Feed Specialties. Compound Feed results were negatively impacted by adverse weather conditions in 1Q13 and Meat & Other faced tough comparables in 1H13. The Canadian activities are expected to post a flat result. Fish Feed volumes declined by 13% in 1Q13 due to exceptionally cold water conditions in Norway. This situation persisted well into 2Q13. We see Fish Feed REBITA declining by 24% (CSS -22%) in 1H13. The group’s net profits from continuing operations are expected to decline from € 62.6m in 1H12 to € 51.4m (CSS € 51.1m) in 1H13. FY13 guidance The company is expected to provide FY13 REBITA guidance on 25 July. Whereas in April management was banking on 5% growth in fish feed volumes (excluding Gisis) in FY13, they indicated on June 20 that volumes will probably be flattish as the cold water conditions in Norway persisted until the beginning of June. We forecast a 13% rise in REBITA in 2H13 to arrive at 3% growth (1% above CSS) in FY13 on a group level. Exiting Spain? Following rumours in the Spanish press, Nutreco confirmed that it is considering strategic opportunities for the Compound Feed and Meat activities in Spain and Portugal. It is not clear how close Nutreco is to selling these businesses. We arrive at a total EV of € 350-400m for the two businesses. The disposal of these businesses would be in line with the group’s strategy to focus on high-margin/value-added activities such as Fish Feed and Premix & Feed Specialties. Conclusion Nutreco’s share price reacted positively to Marine Harvest failure to take over Cermaq. We maintain our HOLD rating despite this positive news because we see some downside risk to our and consensus estimates for FY13. We are also concerned about overcapacity in the Norwegian salmon feed industry when Marine Harvest’s plant comes on stream next year. Lastly, we consider the stock to be fully valued at current valuation multiples.