Grieg Seafood on Wednesday attributed a 27 percent decline in salmon prices to a NOK 127 million fall in its first-quarter operating profit.
Despite a challenging market, the Norwegian company managed to post a first-quarter operating profit (before fair value adjustment of biomass) of NOK 5 million. Grieg’s earnings (before fair value adjustment of biomass) totaled NOK 4.9 million, compared to NOK 131.6 million in the same period in 2011.
Grieg harvested 18,209 metric tons of salmon in the first quarter of 2012 — that’s a 53 percent increase from the same period in 2011 and 3,100 metric tons more than its projection. Still, Grieg maintains that it expects to harvest 71,000 metric tons of salmon this year.
Looking forward, Grieg — like many of its competitors — is confident that demand for salmon will continue to grow as prices decline. “The decline in prices in the second half of 2011 has been a great stimulus to greater market penetration and a higher level of market and sales activities, in both established and emerging markets. The increasing demand acquired further momentum in the first quarter,” said the company. “Combined with consumer trends with a focus on healthy food and new eating trends such as sushi, there is every indication that the global market for salmon will remain strong.”
However, Grieg is calling for a “volatile market” in the months ahead before evening out by year’s end: “Supply-side growth is expected to remain strong for the next six months, but with a declining trend. Prices in the first quarter have been better than expected, given the very strong supply-side growth. A volatile market must be expected in the second and third quarter, before the market balance according to the present production forecasts should improve toward the end of 2012.”
