Q2 gave €101m and record earnings for Grieg Seafood

Operational EBIT at NOK 41.6 (EUR 4.3) per kilo.

In advance, high expectations were set for Grieg Seafood’s second quarter. The analyst corps estimated an EBIT of NOK 843 million (EUR 86 million). But the results report, which was released early on Tuesday morning, shows that Grieg made it significantly sharper.

Operational EBIT ended at NOK 986 million (€101 million), driven by “exceptionally high prices and good biology”. The company has accelerated harvesting to take advantage of the high prices in the quarter, according to the report.

In Norway, the group had a production cost of NOK 48.6 (€5) per kilo, down from NOK 50.7 (€5.2) in the first quarter, “despite inflationary pressure”.

“As a continuation of the positive trend in Q1, the second quarter of 2022 also turned historic. Due to the strongest market the industry has seen, coupled with solid production, I am proud to present Grieg Seafood’s best result in a single quarter ever. I want to sincerely thank all of my dedicated and hard working colleagues in both farming and sales for their efforts and achievements throughout the quarter. In line with the strategy of our integrated sales organization, we successfully expedited some harvest to capitalize on strong prices in the market,” says CEO Andreas Kvame in Grieg Seafood.

The Norwegian farming operations delivered record results during the quarter, driven by high prices and good biological performance. Results in both Rogaland and Finnmark were positively impacted by strong price realization from high average harvest weights and positive cost development.

Results in British Columbia were solid, driven by good price achievement from premium on VAP products, in addition to stable costs from harvesting of sites with good biological performance.

In Newfoundland, fish transferred to sea is performing well, with high survival and no sea lice issues. Currently, two million smolt has been transferred to sea, with harvesting commencing late 2023.

Global harvest of Atlantic salmon in 2022 is expected to decrease by one percent with all major regions seeing declining volumes. In the first half of 2022, the global harvest was down four percent compared to the first half of 2021. Consequently, harvest volume for the second half of 2022 is expected to increase by close to one percent compared to the corresponding period in 2021.

With limited supply growth in the second half of 2022, Grieg Seafood expects good market conditions going forward. However, current inflation reducing household purchasing power, might impact demand from both the HoReCa and the retail segment.

Over the last years, Grieg Seafood has been able to reduce farming costs through operational improvement initiatives. However, the general cost inflation, and higher feed prices in particular, are expected to gradually impact farming costs going forward.

Grieg Seafood cost ambition remains – being the cost leader in all regions where the company operates. To achieve this, the company executes on its strategic priorities – post smolt, preventative farming practices, digitalization, integrated operations and by utilizing existing capacity.

Grieg Seafood generally targets an annual contract share of 20-50 percent. Estimated contract share for the Norwegian operations in Q3 2022 is 37 percent and 22 percent for the full year 2022.

In the third quarter of 2022, expected harvest volume is 21,400 tonnes, distributed as follows:

  • Rogaland: 7,100 tonnes
  • Finnmark: 7,100 tonnes
  • BC: 7,200 tonnes

The company now guides for a harvest volume of 87,000 tonnes in 2022, down from the previously guided level of 90,000 tonnes. Estimated harvest volume in Finnmark has been reduced by 2,000 tonnes to 36,000 tonnes due expedited harvest to capitalize on strong market and somewhat reduced growth in sea during the quarter as a result of lower temperatures. Estimated harvest volume in BC has been reduced by 1,000 tonnes to 21,000 tonnes due to accelerated harvest of fish due to risk of early maturation. Of the total harvest volumes for 2022, Grieg Seafood expects to sell some 5-10 percent as VAP products.

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