Biological challenges have plagued Bergen, Norway-based Grieg Seafood’s Norwegian salmon-farming sites for a few quarters, but those issues have begun to ease, according to the group’s Q2 2023 results, published 25 August.
In Q1 2023, Grieg’s Rogaland, Norway, site was hit by infectious salmon anemia (ISA), while its Finnmark site identified the presence of the Spiro parasite (Spironucleus salmonicida). Both sites also found winter ulcers among their stock, yet the company still harvested more fish than planned from its Norwegian operations overall.
Grieg CEO Andreas Kvame said the biological challenges remained a problem in Q2, particularly in Finnmark, but that a range of mitigating actions were employed to address the issues had improved the situation.
The group’s Q2 operational earnings before interest and taxes (EBIT) of NOK 547 (USD 51.6 million, EUR 47.5 million) were down from NOK 986 million (USD 93 million, EUR 85.6 million) compared to the corresponding period of last year, while its total harvest volume slipped 4 percent from 23,672 metric tons (MT) in Q2 2022 to 22,645 MT. This resulted in an operational EBIT per kilogram of NOK 24.20 (USD 2.28, EUR 2.10), a steep decline from NOK 41.60 (USD 3.92, EUR 3.61) a year previously.
Marginal increases to the global supply of Atlantic salmon led to high market prices in the second quarter, contributing to Grieg’s quarterly revenue of NOK 2.37 billion (USD 223.5 million, EUR 205.7 million), according to Kvame.
Grieg’s Q2 2023 harvest volume in Rogaland totaled 11,536 MT, up 130 percent year over year, while in Finnmark, Grieg harvested 5,573 MT, down 43 percent. The company’s farming operations in British Columbia, Canada, accounted for 5,537 MT of production in the quarter, down 37 percent. Grieg’s Farming costs for the quarter amounted to NOK 66.90 (USD 6.31, EUR 5.81) per kilogram, compared to NOK 48.60 (USD 4.58, EUR 4.22) in Q2 2022 and NOK 61.50 (USD 5.80, EUR 5.33) in Q1 2023.
Grieg’s pre-tax losses for the quarter totaled NOK 4 million (USD 377,139, EUR 347,207), compared to profits of NOK 864 million (USD 81.5 million, EUR 75 million) in Q2 2022 and NOK 573 million (USD 54 million, EUR 49.7 million) in Q1 2023. It paid a much higher NOK 558 million (USD 52.6 million, EUR 48.4 million) in taxes due to the implementation of Norway’s resource rent tax scheme.
“While we are still working to understand the [full] implications of the resource tax in Norway, we see opportunities in Canada,” Kvame said. “Our Newfoundland greenfield project is developing according to plan, with the first harvest expected in Q4 2023. In British Columbia, we support the government's efforts to transition the industry into better practices, and we continue a constructive dialogue, focusing on sustainable solutions.”
Grieg Seafood purchased Grieg Newfoundland in February 2020, a greenfield project with exclusive rights for salmon farming in Placentia Bay. The company has since steadily acquired the permits required to commence farming salmon in the bay, and is working to gradually develop a full suite of salmon-farming operations in the area. In July 2023, it plans to resume construction of its post-smolt recirculating aquaculture system (RAS) facility in Marystown Industrial Park in Newfoundland.
Grieg contributed close to 4 percent of global Atlantic salmon supply in the quarter, and its main export markets from Norway were Europe (comprising 82 percent of its volume), Asia (14 percent), and North America (4 percent).
Approximately 62 percent of its B.C. salmon went to U.S. buyers, 35 percent remained in Canada, and the other 3 percent went to Asia.
During the quarter, the company sold 3 percent of its Norwegian-origin salmon and 2 percent of its harvested salmon in B.C. as value-added products.
Grieg harvested 38,003 MT of salmon in H1 2023, down from 40,588 MT in Q2 2022. Its Norwegian operations contributed 85 percent of the harvest volume, while B.C. accounted for 15 percent. Kvame said Grieg’s B.C. operations didn’t harvest in Q1 2023 as the company prioritized biomass growth.
Grieg’s sales revenue in H1 2023 totaled NOK 3.9 billion (USD 367.7 million, EUR 338.5 million), up NOK 100 million (USD 9.4 million, EUR 8.7 million) year over year. Sales revenue from its farming regions amounted to more than NOK 3.4 billion (USD 320.6 million, EUR 295.1 million). Its H1 price achievement was NOK 90.60 (USD 8.54, EUR 7.86) per kilogram, compared to NOK 85 (USD 8.01, EUR 7.38) in H1 2022.
Kvame said contracts for some of Grieg’s Norwegian volume negatively impacted this year’s price achievement, while the increase in sales revenue was mainly due to strong market prices experienced throughout the first half of the year.
Kvame said Grieg’s expected harvest volume for Q3 2023 is 10,500 MT, with 4,500 MT estimated to come from Rogaland and 6,000 MT from B.C. There’s no planned harvest for Finnmark in the quarter, as the region’s operations aim to prioritize biomass growth.
For the full year 2023, Grieg’s guidance is a total harvest volume of 78,000 MT, down from a previous estimate of 80,000 MT. Of this new total, Rogaland is likely to contribute 27,000 MT, Finnmark 26,000 MT, B.C. 20,000 MT, and Newfoundland 5,000 MT.
In Newfoundland, where the company’s first harvest is slated for Q4 2023, both freshwater and seawater production was solid during the last quarter. Improved smolt quality and favorable biological conditions resulted in high survival rates, signaling bigger things ahead for the Eastern Canadian operations, Kvame said.
Kvame said improved biological control, combined with the transfer of increasingly larger smolt and reduced production time in the ocean, are the building blocks for improved fish welfare and performance, resulting in anticipated stronger growth for the company in the coming quarters.
Photo courtesy of Grieg Seafood
