Grieg’s 2018 profits rise off bumper harvest, larger volumes forecast for this year

Published on
February 14, 2019

Grieg Seafood ASA achieved operational earnings before interest and taxes (EBIT) of almost NOK 1.1 billion (USD 127 million, EUR 112.5 million) before fair-value adjustment of biomass last year, up from NOK 904.4 million (USD 104.4 million, EUR 92.5 million) in 2017, with larger volumes and higher prices contributing to the rise.

The Bergen, Norway-headquartered Atlantic salmon producer harvested 74,623 metric tons (MT) of fish in 2018, an increase of 12,025 MT compared with the previous year. At the same time, its total operating income exceeded NOK 7.5 billion (USD 866 million, EUR 767.3 million), up from NOK 7 billion (USD 808.3 million, EUR 716.2 million). 

Grieg’s EBIT per kilogram was NOK 14.72 (USD 1.70, EUR 1.51), compared to NOK 14.45 (USD 1.67, EUR 1.48). While this was boosted by the large harvest volume and high spot prices, the cost related to pancreas disease (PD), HAB and gill diseases during the year had a negative impact – both in terms of high cost and price achievement. 

The total farming cost per kilogram for the group was NOK 43.10 (USD 4.98, EUR 4.41), which was NOK 0.70 (USD 0.08, EUR 0.07) above the targeted cost of NOK 42.40 (USD 4.90, EUR 4.34) for the year.

In the company’s Q4 2018 report, CEO Andreas Kvame said that with improved operations and by maintaining a strict focus on sustainable farming and on securing fish welfare, Grieg was well-prepared to execute its growth strategy, targeting 100,000 MT in 2020 with cost at or below an industry average target of NOK 37.90 (USD 4.38, EUR 3.88) per kilogram. In Norway, the target is NOK 36.00 (USD 4.16, EUR 3.68) per kilogram by this date.

To reach this goal, it will focus on reducing production time in the sea, optimal feeding, preventive sea lice measures, and use digital tools to control biology. 

The report also highlights that globally, the supply of Atlantic salmon has flattened while the underlying demand has strengthened. This has resulted in a shortage of salmon and high prices, and Grieg expects this situation to persist in the longer-term, although short-term price fluctuations may occur. 

To offset the effect of these, it has adopted a policy which aims to ensure that 20 to 50 percent of all production in the coming years is hedged against price fluctuations. It is also carrying out currency-hedging. 

Grieg expects to harvest 82,000 MT of fish in 2019, an increase of 10 percent on last year. Its projected harvest volume for Q1 2019 is 13,200 MT.

Contributing Editor reporting from London, UK

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