Lower salmonid harvest, prices chip away at Lerøy Seafood’s profits

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Leroy Fish Farm

Lerøy Seafood Group (LSG) has reported operating profit before fair value adjustments of NOK 960 million (USD 119.2 million, EUR 100.3 million) for the first-quarter of this year, down 25 percent from the record NOK 1.3 billion (USD 161.4 million, EUR 135.8 million) posted for the corresponding period of 2017. 

“The decline in profit in Q1 2018 when compared with the same quarter in 2017 is mainly attributed to a lower harvest volume and lower prices realised for salmon and trout,” the Norwegian fish farming and fishing company said in its quarterly report. 

LSG’s revenue for the last quarter fell 8 percent to NOK 5 billion (USD 620.7 million, EUR 522.4 million), compared with NOK 5.5 billion (USD 682.8 million, EUR 574.7 million) in Q1 2016. Compared with Q1 2017, its slaughter volumes of salmon and trout decreased by 13 percent to 37,576 gutted weight tonnage (GWT).

Salmon earnings before interest and taxes (EBIT) fell from NOK 24.20 (USD 3, EUR 2.53) per kg in Q1 2017 to NOK 19.70  (USD 2.45, EUR 2.06) per kg in Q1 2018, mainly attributable to the fall in prices. The spot price was NOK 59.50 (USD 7.39, EUR 6.22) per kg in Q1 2018, compared with NOK 65.30 (USD 8.11, EUR 6.82) per kg in Q1 2017. 

Company CEO, Henning Beltestad, said that he was “satisfied with the result” achieved in the quarter and highlighted that a strong demand for seafood had “produced a positive development in prices” in the three-month period.

Within LSG’s Wild Catch segment, Havfisk's total catch volume in the last quarter was 22,268 metric tons (MT), compared with 20,586 MT in Q1 2017. Of the harvest volume in Q1 2018, 9,275 MT was cod, 6,545 MT was haddock and 3,686 MT was saithe. Compared with Q1 2017, prices for cod were up 12 percent, prices for haddock were up 20 percent while prices for saithe were down 1 percent. 

Havfisk’s took delivery of its new trawler Nortind in January and is already reaping the benefits with an increase in catch volumes as well as higher market prices. 

Overall, the segment reported operating profit of NOK 178 million (USD 22.1 million, EUR 18.6 million) in Q1 2018, up from NOK 158 million (USD 19.6 million, EUR 16.5 million) in the same period of last year.

LSG currently estimates a total harvest volume of 179,000 GWT salmon and trout for 2018, including LSG’s volume from associates, and a wild catch of approximately 65,000 MT. 

Its board of directors is expecting high earnings in the second-quarter and for 2018 as a whole, the company said.

Contributing Editor reporting from London, UK

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