Q4 salmon price fall hits Lerøy earnings

In Q4 2017, Lerøy Seafood Group (LSG) reported revenue of € 473 million, compared with € 510 million in the same period of 2016. The harvest volume in Q4 2017 totalled 42,000 tonnes gutted weight of salmon and trout, up 8% from the same period in 2016.

Operating profit before fair value adjustment related to biological assets was € 80.6 million in Q4 2017, compared with € 105.5 million in Q4 2016. Exclusive of earnings from the Wild Catch and Whitefish segment, this corresponds to an EBIT per kilo all-inclusive in Q4 2017 of € 1.7 compared to € 2.5 for the same period in 2016. This fall in profit is mainly attributed to a reduction in prices realised for salmon and trout in Q4 2017 when compared with Q4 2016, Lerøy said in a statement.

“Improvements in biological performance for the entire Norwegian fish farming industry in 2017 resulted in a higher harvest volume in Norway, which in turn put pressure on salmon prices towards the end of 2017. Lerøy has close links with the end market, and we continue to experience very strong demand for seafood and salmon. We are convinced that the Group and the Norwegian fish farming industry will in the long term create more value with some growth than without growth,” CEO Henning Beltestad said.

“2017 saw the proper implementation of our strategy to integrate whitefish into the Group’s well-established value chain for red fish. We are experiencing positive development in our downstream operations and we can report successful operations within fish farming. I would like to express my sincere thanks to the Group’s skilled employees. In 2017, Lerøy has taken huge steps towards a position as an integrated supplier of seafood and we believe we are uniquely well-positioned to meet our customers’ needs in the years to come.”

The Wild Catch and Whitefish segment
In October 2016, Lerøy Seafood Group obtained 100% ownership of both Havfisk (Havfisk) and Norway Seafoods Group (now Lerøy Norway Seafoods AS – LNWS). These companies comprise the Wild Catch and Whitefish segment.

Havfisk’s primary business is wild catches of whitefish. Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to more than 30% of the total quota allocated to the trawler fleet.

For 2017 as a whole, Havfisk’s total catch volume was 66,729 tonnes, up 5% from 2016.

LNWS’s primary business is processing wild-caught whitefish. The company has use of eight processing plants in Norway, five of which are leased from Havfisk.

The Farming segment
In Q4 2017, Lerøy Aurora achieved operational EBIT per kg of € 2.5. Lerøy Midt and Lerøy Sjøtroll are reporting EBIT per kg of € 1.3 and € 0.5 respectively for the same period.

“Release from stock costs in Q4 2017 are in total considerably lower than in Q3 2017,” says Beltestad. “We have achieved extremely positive developments in two regions, but continue to face challenges in the third region. There is considerable room for improvement in release from stock costs in 2018.”

The VAP, Sales & Distribution segment (VAPS&D)
The VAPS&D segment reported operating profit before fair value adjustment related to biological assets at €14.6 million.

Current estimates for harvest volume in 2018, including the share of LSG’s volume from associates, is 182,000 GWT. The best estimate for the catch volume of whitefish and shrimp in 2018 is approximately 65,000 tonnes.


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