Tax implementation costs sting Leroy for $160 million

Editorial staff

Leroy suffers 10 percent decline in harvest volumes as tax bites.

Norway’s controversial salmon tax has already cost Norwegian seafood powerhouse Leroy Seafood Group some NOK 1.7 billion ($160 million) in implementation costs, according to the company’s Q2 results released earlier this month.

In spite of these headwinds, the company still posted an EBITDA of NOK 1.3 billion ($122 million) in Q2, marking a 5 percent increase on the previous year.

Revenues also rose by 17 percent to NOK 7.7 billion ($723 million), which the company credited strong prices and a weak Norwegian krone for.

The new 25 percent tax on salmon production was introduced by the Norwegian parliament in May, backdated to the start of 2023.

Implementation costs

In 2023, Leroy Seafood Group’s tax costs will be composed of two parts: an initial one-off implementation cost and ongoing tax for the period, according to the company’s Q2 report.

Leroy estimates the upfront cost of this retroactive tax at NOK 1.7 billion ($160 million). The division between immediate and deferred tax, and its cash effect, is yet to be calculated and will be determined by the year-end fish stock costs.

The salmon farming giant’s intricate value chain spans everything from roe production to sales. The new 25 percent tax targets only the sea phase, excluding the rest of the value chain.

The calculation necessitated by the tax demands assessments of the value generated at each stage of production. Until these are complete, Leroy says it cannot offer accurate sea-phase earnings estimates.

Leroy adjusted its 2023 harvest projection to 181,500 metric tons, down from an initial 193,500 metric tons.

In Q2, the company harvested 29,659 metric tons, representing a 10 percent decline year-on-year. Farming revenue totalled NOK 2.8 billion ($263 million).


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