Contracts soften 3Q blow for Lerøy
Lerøy Seafood Group on Tuesday reported its third-quarter results, including a 1.7 percent increase in turnover, to NOK 2.3 billion. However, the Norwegian company posted a 51.3 percent drop in operating profit, to NOK 206.7 million, in the third quarter of 2011.
To no surprise, Lerøy attributed the fall in operating profit to substantially lower salmon prices coupled with higher production costs. But contracts helped mitigate the drop and shield the company from the spot market.
The company’s share of contracts was 38 percent in the third quarter of 2011 and will total around 35 to 40 percent for all of 2011. “Committed contract prices for the fourth quarter of 2011 are higher than prevailing spot prices,” said Lerøy. “This indicates that the group can expect to achieve higher realized prices than current spot prices also in the fourth quarter.”
Lerøy harvested 36,000 metric tons of salmon and steelhead trout (gutted weight) in the third quarter of 2011, up 5,000 metric tons from the same period last year.
The company said it’s bracing for a “considerably poorer result” in the fourth quarter but remains cautiously optimistic about the future.
“A higher growth in the global supply of Atlantic salmon in the next few years compared with the last two years is expected,” said Lerøy. “Development in demand is good, and lower prices provide grounds for optimism as to continued positive development in demand. Good demand together with expectations for improved productivity in the group’s production facilities, including improved biology, provides justification for the board’s positive attitude to the group’s development.”
Austevoll Seafood, which holds a majority stake in Lerøy, also published its third-quarter results on Tuesday.