Soft Grieg Seafood earnings in Q4

press release

Profit declines on lower market prices, volumes and a fourth-quarter impairment for PD-affected fish in Norway, but a Norwegian smolt pact could cut costs, lift volumes 

Bergen-based Grieg Seafood harvested a lower-than-expected 18,667 tonnes of salmon in Q4 2017, an 11 percent decline over Q4 2016 after a paper transfer of 3,000 t to 2018.

Grieg Seafood’s total operating income in Q4 2017 amounted to EUR 178.7 million, down 16 percent over the corresponding period in 2016.  During the period, the Group’s total operating costs increased by EUR 0.5 per kilogram, and the Group’s EBIT (operating profit) before fair value adjustment of biomass was EUR 15.6 million.

Company EBIT per kg amounted to EUR 0.84 for the quarter, a statement said.

Management said its goal is to increase production by a minimum 10 percent per year up until 2020 while keeping production costs ” on level with or lower than the industry average”. Increasing smolt capacity and releasing larger smolt are expected to lower costs.

Norway smolt pact
As part of this initiative, Grieg Seafood has entered into cooperation agreements with Norway Royal Salmon (NRS) and Bremnes Seashore, to increase the companies’ smolt capacity in counties Finnmark and Rogaland. Grieg’s own hatcheries in Norway will be expanded by several separate lines.

“Together, this will disperse the biological risk related to smolt production between several onshore facilities,” the company said, adding that it has started an internal costs review that’ll run to 2020.

“Secure access to smolt is critical to ensure future growth. Releasing larger smolt means shorter sea production time, thus contributing to reduced biological risk and increased survival. Another pivotal point in the growth strategy, is increased utilisation of the company’s licences.”

Salmon prices declined somewhat in Q4 2017, but the company said the drop meant more supply of salmon to the market. “The lower market prices are expected to stimulate market activity which in turn will lead to increased demand over the year. This may have a positive effect on the salmon prices through 2018.”

The Group’s total share of fixed price contracts in Norway in Q4 was 21 percent, although already in Q1, 2018, the share of fixed-price has been reached an estimated 46 percent. For 2018 as a whole, these contracts are estimated to be about 22 percent.

GSF expects to harvest about 8,900 t over the first three months of 2018, and for the year as a whole, about 80 000 t are expected to be processed, a 28- percent hike over 2017 .


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