Bigger salmon harvest boosts Grieg Seafood’s third-quarter profits

Published on
November 8, 2017

Grieg Seafood Group (GSF) harvested 16,875 metric tons (MT) of salmonids in the third-quarter of this year, which was 21 percent more than in the corresponding period of 2016. Combined with higher realized prices, its aggregate operating income neared NOK 1.9 billion (USD 232.5 million, EUR 200.4 million) in the quarter, 19 percent higher than in Q3 2016.

The Norway-headquartered producer achieved operational earnings before interest and taxes (EBIT) of NOK 229.3 million (USD 28.1 million, EUR 24.2 million) before fair-value adjustment of biomass in Q3 2016, up from NOK 185.6 million (USD 22.7 million, EUR 19.6 million) in Q3 2016.

In its latest results statement, GSF said that the average salmon spot price fell by NOK 3.92 (USD 0.48, EUR 0.41) per kg, but the realized prices showed an increase of NOK 2.79 (USD 0.34, EUR 0.29) per kg due to higher contract prices. However, costs were NOK 2.50 (USD 0.31, EUR 0.26) per kg more than in Q3 2016 as a result of a lower harvest volume in Rogaland and a weak biological situation in Shetland. 

Company CEO, Andreas Kvame, highlighted that Grieg has an overall goal to increase production by minimum of 10 percent annually until 2020, and also has an ambition for production costs to be at or below the industry average. 

“We are working relentlessly to reach these targets, continuously initiating efforts throughout the entire organization to improve operations. The positive development seen in the quarter indicates that our work is paying off,” he said.

During 2017, GSF entered collaborations with other industry players to improve smolt capacity. For 2017, it plans to release 26 million smolt, which is 28 percent more than last year. By the end of Q3, some 18 million smolt had been released. 

Grieg confirmed that salmon prices were slightly down in the last quarter, and said that this was normal for this period since production, especially in Norway, increases towards the end of the third quarter and brings pressure to bear on the market prices. Demand normally picks up as the Christmas period approaches, which should see prices increase.

In North-America, the market for Atlantic salmon was stable throughout Q3.

Grieg’s harvest volume in Q4 2017 is expected to be 22,100 MT. For 2017 as a whole, it is anticipated that the harvest will be 66,000 MT, which is 1,000 MT less than previously forecast.

In 2018, the increase in the amount of smolt set out is expected to increase the total harvest volume by 17 percent to around 77,000 MT.

Contributing Editor reporting from London, UK

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