Bergen, Norway-headquartered Grieg Seafood ASA experienced a difficult Q4 2023, with weak biological performance at the company’s operations in the Finnmark region of Norway particularly affecting year-end output.
In the salmon producer’s Q4 2023 report Grieg CEO Andreas Kvame confirmed that the Spironucleus salmonicida parasite, winter ulcers, and jellyfish have impacted survival rates and operational efficiency in Finnmark, leading to reduced volumes, increased handling costs, and lower selling prices. Kvame also emphasized he’s not satisfied with the results and that measures have been taken to address the challenges both in the short and medium terms.
The Spironucleus parasite alone is estimated to have caused a total loss of NOK 900 million (USD 86.1 million, EUR 79.3 million) to the company since it was first detected in 2022 at Grieg’s Finnmark freshwater facility.
Kvame said that thanks to preventive measures implemented soon after the parasite’s detection, all fish transferred to ocean farms in 2023 were free of the parasite, and the company expects related negative impacts to cease after it has harvested the last fish groups from the 2022 generation in the second quarter of this year.
“We are also turning every stone to mitigate winter ulcers, including new vaccines and probiotic treatments to strengthen fish health,” Kvame wrote. “There are some indications of positive vaccine effects, but we need more time to know for sure. Preliminary results will be available this coming summer.”
The full impacts of Grieg’s endeavors will take time to come to fruition, though, due to the long production cycle, meaning that challenging biological conditions will most likely continue affecting results in Finnmark in Q1 2024, he added.
“Expanding our post-smolt strategy is key to improving biology, fish health, and welfare in all of our regions,” Kvame said. “We see strong biological improvements from post-smolt in Rogaland, where we have pioneered this production method since 2019.
Grieg has also seen reduced mortality in the ocean phase with its large post-smolt groups, as well as significantly improved sea lice control without the use of treatments.
In the fourth quarter of 2023, the company also started building a post-smolt unit at its freshwater facility in Finnmark, with the expectation to see “similar biological improvements.” This facility will add 3,000 metric tons (MT) of post-smolt to the region from 2026 or 2027 onward.
Additionally, Grieg logged the first successful harvest at its Newfoundland (NL) operations, with a volume of 3,184 MT. This included a superior share of 97 percent and secured a “favorable reception” from the North American market. The realized price was NOK 74 (USD 7.08, EUR 6.52) per kilogram.
However, that harvest was some 1,800 MT below guidance, with some volume postponed to 2024 due to weather conditions and positive market expectations for this year.
In Q4 2023, the company’s operational EBIT was a loss of NOK 67 million (USD 6.4 million, EUR 5.9 million), compared with gains of NOK 156 million (USD 14.9 million, EUR 13.8 million) in the corresponding period of 2022. Its total harvest volume was 21,767 MT, which stayed relatively stagnant to the 21,186 MT harvested in the same period of 2022. The big difference year over year, though, was in operational EBIT-per-kilo, reaching a loss of NOK 3.10 (USD 0.30, EUR 0.27) for each kilogram of salmon in Q4 2023 – down from earning NOK 7.40 (USD 0.71, EUR 0.65) in Q4 2022.
Grieg’s total expected harvest volume for the first quarter of 2024 is 17,500 MT, with Rogaland producing around 7,000 MT, Finnmark at 5,000 MT, NL at 5,000 MT, and British Columbia (BC) at 500 MT.
For the full year 2024, Grieg has set a guided harvest volume of 81,000 MT. Of this, Rogaland is projected to supply 28,000 MT, Finnmark 27,000 MT, BC 15,000 MT, and NL 11,000 MT.
Elsewhere, Grieg has announced it is setting up a new value-added processing plant at Oslo Airport City, Gardermoen, Norway.
The facility will process salmon from Grieg’s operations in both the north and south of Norway, with the company explaining the investment is part of its strategy to increase value creation and process more of its own fish.
“Grieg Seafood aims to take one step closer to the customer and the market. With this tailor-made facility, we will make high-quality products from our fish with the most modern equipment available. In addition, we will be able to cut significant amounts of carbon emissions from the transportation of our products to the world,” Grieg CCO Erik Holvik said in a statement.
The NOK 130 million (USD 12.4 million, EUR 11.5 million) new factory, which is expected to initiate operations in the summer of 2025, will have an annual processing capacity of 10,000 to 12,000 MT head-on gutted equivalent, with an option of increasing the capacity to 20,000 MT if needed at a later stage. The facility will also generate 60 new jobs.
Grieg is aiming to process 25 percent of its global production volume in house by 2026.
