High prices drive Grieg Seafood’s profit growth, harvest forecast reduced
Grieg Seafood Group achieved operational earnings before interest and taxes (EBIT) of NOK 392.3 million (USD 50.7 million, EUR 42.2 million) before fair-value adjustment of biomass in the second-quarter of this year, up from NOK 311.7 million (USD 40.3 million, EUR 33.5 million) in the corresponding period of 2016.
The total volume of fish that the Norway-headquartered salmonid producer harvested in the last quarter totaled 18,503 metric tons (MT), an increase of 14 percent year-on-year. Combined with higher prices, this led to 21 percent increase in its total operating income of more than NOK 2 billion (USD 258.4 million, EUR 215 million).
In its Q2 results statement, GSF said that the average spot price rose by NOK 3.60 (USD 0.47, EUR 0.39) per kg, while its realized prices showed an increase of NOK 7.70 (USD 0.99, EUR 0.83) per kg and that the difference was largely due to higher contract prices. However, costs were NOK 5.70 (USD 0.74, EUR 0.61) per kg more than in Q2 2016 with the “challenging biological situation” in Shetland being a major contributor to the increase.
For the first six months of this year, GSF’s sales revenues neared NOK 3.5 billion (USD 452.2 million, EUR 376.2 million), up by NOK 500 million (USD 64.6 million, EUR 53.7 million) compared to its sales in H1 2016. The first-half harvest volume totaled 27,056 MT, down from 29,898 MT in the corresponding period of 2016.
GSF highlighted that a stated goal is to reduce its cost level to the industry average or lower. It will also be aiming to increase production by 10 percent annually through 2020. In addition, it is focused on improving operating efficiency, involving both increasing production per plant and per license, as well as reducing costs per kg.
One of the key steps it is taking is to set out bigger smolt, which will make it possible to shorten the production time in sea cages. It is therefore increasing the amount of smolt set out in 2017 by 28 percent to 26 million.
Grieg’s harvest volume in Q3 2017 is expected to be 16,500 MT. For 2017 as a whole, the harvest is expected to be 67,000 MT, which is 3,000 MT less than previously forecast, with the revision attributed to Shetland’s sea lice and algae problems.