Third-quarter profits slide, farmed and fishery harvests decline for Leroy Seafood

Published on
November 8, 2018
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Leroy Seafood Group (LSG) reported operating profit before fair value adjustments of NOK 660 million (USD 79.2 million, EUR 69.3 million) for the third-quarter of this year, down from NOK 861 million (USD 103.3 million, EUR 90.4 million) in the corresponding period of 2017. 

The Norwegian fish farming and fishing company cited a decline in the harvest volume of salmon and trout as the main reason for the fall in profit. However, it added that its production in the last quarter, and to date in Q4, reflects a good biological situation.

LSG’s revenue for the last quarter reached almost NOK 4.5 billion (USD 539.9 million, EUR 472.6 million), up from NOK 4.4 billion (USD 527.9 million, EUR 462.1 million) in Q3 2017.  

For the first three quarters of 2018, its revenue totaled NOK 14.5 billion (USD 1.7 billion, EUR 1.5 billion), up three percent year-on-year, while its operating profit dropped by NOK 319 million (USD 38.3 million, EUR 33.5 million) to NOK 2.9 billion (USD 347.9 million, EUR 304.6 million). 

The company's farming segment harvested 37,227 metric tons (MT) gutted weight of salmon and trout in the last quarter, down from 46,024 MT in Q3 2018. Its EBIT per kg of NOK 15.30 (USD 1.84, EUR 1.61) was on par with last year.

Leroy CEO Henning Beltestad said that while the harvest volume was low and meant reduced earnings for the quarter, the company had capitalized on the good level of production with a significant increase in the biomass for subsequent harvesting. 

“We’ve paved the way for good earnings and a continuing positive development in release from stock costs going forward. We’re experiencing high demand for our high-quality seafood, the market is strong, and we maintain our outlook for a harvest volume in Norway of 166,000 MT this year,” he said. 

Following the acquisitions of Havfisk and Norway Seafoods in 2016, LSG is also Norway’s largest whitefish corporation. These two businesses make up LSG’s Wild Catch segment, with Norway Seafoods being renamed Leroy Norway Seafoods AS (LNWS). 

Havfisk's total catch volume in Q3 2017 was 14,282 MT, compared with 17,029 MT in Q3 2017. Landings comprised 4,714 MT of cod, 1,008 MT of haddock and 3,908 MT of saithe. Its shrimp catch increased from 165 MT in Q3 2017 to 2,703 MT in the last quarter.

Compared with Q3 2017, prices for cod were up 23 percent and prices for haddock were up 38 percent, while prices for saithe were down five percent. 

LNWS’s primary business is processing wild-caught whitefish. The company has use of 12 processing plants in Norway, five of which are leased from Havfisk. 

“There is strong demand for whitefish,” Beltestad said. “There was a lower catch volume in the third-quarter, but the average price realised for all species was up 23 percent on the same quarter [of] last year. However, conditions remain challenging for the shore-based industry. The group has implemented a large number of measures within both production and marketing to improve earnings, but these are long-term initiatives and it will take time before significant improvements are evident.” 

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

Contributing Editor reporting from London, UK

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