Lerøy Seafood Group Q2 results: “We know that we have the potential to do better”

Aslak Berge

Lower price attainment and higher withdrawal costs lower Lerøy’s aquaculture results in the second quarter.

Biomass at the turn of the year was 12 per cent above last year.

Lerøy Seafood Group presented an operating profit of EUR 74.6 million for the second quarter before value adjustments related to biological assets. This is a decline from the EUR 100 million in the same quarter last year.

Aquaculture, driven by lower price attainment and higher withdrawal costs, are the main causes of lower earnings in the quarter compared to the same period last year. Excluding earnings from Villfangst, this gave it an operating profit per kilo before biomass adjustment of NOK 19 (EUR 1.9) against NOK 23.4 (EUR 2.3) in the same period last year, Lerøy wrote in a stock exchange announcement.

“In terms of earnings, the second-quarter figures are in line with the expectations we had going into the quarter. However, we know that we have the potential to do better and that our skilled employees are doing their utmost to exploit this potential to the full,” said CEO Henning Beltestad.

Stock costs are too high
“We have made several major investments in Farming in recent years. The results of these, however, are not immediately obvious as the projects have long lead times,” explained Henning Beltestad. “Release from stock costs are too high in the second quarter, but we expect to see an improvement in the second half of the year and into 2020.”

“In Aquaculture, we have made several large investments in recent years, and with long lead times, it takes time before we see results. Withdrawal costs are too high in this quarter, but we expect improvements in the second half and on into next year. Within the whitefish, the trawl fleet is performing well, while it has been very demanding for the land industry. Here, too, we have made a number of investments that we expect to deliver lasting improvements towards 2020. Downstream of the VAPS & D segment we see the effects of last year’s investments and have a strong quarter,” added Beltestad.

The group expects to harvest 168,000 tonnes in Norway this year.

“For Lerøy Aurora, the fire in the smolt plant in the winter and an unforeseen outbreak of toxic algae have impacted the results both for the second quarter and the first half of the year,” explained Henning Beltestad. “Now that this difficult period is behind us, we are confident that we have a strong position moving forward into the second half of the year and into 2020. For our Farming segment, the results of the investments we made in smolt will gradually materialise, and we expect to gain potential in terms of both increased volume and lower costs per kilogram of fish produced,” he added.

Not satisfied
The Board of Directors and management are not satisfied with the Group’s release from stock costs in the quarter but are confident that the Group’s investments and continuous improvement measures shall result in reduced costs.

As of the end of the first half of 2019, biomass is 12 per cent higher than at the same time last year, and higher volumes, including higher average weights, are expected to result in lower withdrawal costs in the second half of 2019 compared to the first half of 2019.


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