Bergen, Norway-headquartered Lerøy Seafood Group exceeded NOK 30 billion (USD 2.8 billion, EUR 2.6 billion) in income for the first time in its history in 2023, but other factors made it a challenging year filled with learning experiences, according to the company's CEO, Henning Beltestad.
In the group’s recently published annual report, Beltestad said the past year gave Lerøy “new and better insights” about technology and handling big sets of data.
Lerøy’s Wild Catch segment particularly struggled last year due to lower quotas for all of its main species, including a 15 percent cut in cod quota. These lower quotas led to higher prices, which affected land-based operations, while its aquaculture operations were hit by fish health and welfare challenges.
Lerøy’s other segments, including its downstream Value Added Processing, Sales, and Distribution (VAPS&D) segment, have been subject to extremely volatile raw material prices, exchange rates, and price increases for other input factors. These challenges have led Lerøy to brainstorm innovative solutions across segments to ensure 2024 and results beyond it lead to a turnaround.
Flexible catching is one such strategy and enabled Lerøy to record its highest-ever catch volume in 2023. The company also made efficiency improvements at its facilities, culminating in “significant investments” in new technology that are “already of massive importance” in dealing with some of the Farming segment’s major issues.
“Lerøy is committed to ensuring sustainable aquaculture and will continue to roll out these technologies in the near future. The aim is for 35 percent of the salmon to be placed in submerged or semi-closed cages by 2024,” Beltestad said.
The past two years have seen lower harvests than what Lerøy believes is possible, Beltestad said, so the company aims to reduce risk at every step of the production chain to increase biosecurity and fish welfare and, ultimately, to improve results.
Lerøy has also determined that its smolt production has room for improvement, with a number of initiatives already implemented, such as increased cooling capacity at smolt facilities to comply with updated production protocols.
Additionally, the company has been seeking sea lice solutions that will require the deployment of more site-specific technologies. In 2024, Lerøy will introduce 12 new installations, comprising 10 submerged and two semi-closed systems, and by the end of the year, around one-third of Lerøy’s salmon should be raised in “shielding” installations, including half of the fish in Lerøy Midt and around one-third in Lerøy Sjøtroll.
This should significantly reduce the number of sea lice treatments in 2024, with a further reduction to follow in 2025, when more of the fish in these installations reach harvestable size, Lerøy said.
Beltestad said Lerøy said it was focused on reducing challenges related to seasonality in its Wild Catch segment. Beltestad said investments in land-based processing facilities and the development of products with less seasonality have led to good results, and for 2024, the company's intention is to implement this strategy at Lerøy Havfisk and for the supplier to utilize and take advantage of frozen fish as year-round raw material at its facilities.
Having completed renovation at its Båtsfjord factory in February 2024, with the introduction of new production technology and automation, another improvement strategy sees Lerøy investing more than NOK 150 million (USD 13.9 million, EUR 12.8 million) in a new facility in Kjøllefjord, which will enable the location to become a year-round producer of seafood.
For its VAPS&D segment, Lerøy said it hopes improve the weakest performers at its numerous factories and operations through follow-up analysis, improved product profitability calculations, and evaluation of product lines, products, and factories.
“The core objective of the projects is to increase the competitiveness of our integrated value chain, including sustainability, so that our customers succeed. Satisfied customers will drive demand, and we have unutilized capacity at several of our factories,” Beltestad said. “Increased capacity utilization, with the right product portfolio utilizing optimal raw materials, has substantial potential to increase profitability.”
Lerøy’s revenues increased 16 percent in 2023 to reach NOK 30.9 billion (USD 2.9 billion, EUR 2.6 billion). Its operational EBIT for the year slipped slightly to NOK 3.3 billion (USD 305.1 million, EUR 282.5 million). Within that, Wild Catch’s operational EBIT decreased to NOK 278 million (USD 25.7 million, EUR 23.8 million), and Farming’s operational EBIT fell to NOK 2.6 billion (USD 240.3 million, EUR 222.6 million). However, there was significant improvement in VAPS&D’s operational EBIT, which totaled NOK 643 million (USD 59.4 million, EUR 55.1 million).
Lerøy said it expects this year’s salmon harvest to continue to be affected by 2023’s lower-than-expected production but has set its targets for 2025 to include a volume of 205,000 GWT, an EBIT for VAPS&D of NOK 1.25 billion (USD 115.6 million, EUR 107.1 million), and an EBIT for Wild Catch of NOK 500 million (USD 46.2 million, EUR 42.8 million).
Longer-term goals also include a 46 percent reduction in greenhouse gas emissions by 2030.
Short term, Lerøy is dealing with the escape of around 14,000 salmon from its Reitholmen farm in Fillfjorden, Hitra municipality, Norway. The salmon averaged 7.3 kilograms. In October 2023, bacterial kidney disease and pancreas disease were found at the farm.
