Lerøy Seafood Group posted a record high revenue for FY 2022 – the second-straight year of record revenues for the company – but also reported its Q4 operating profit was hit by low earnings in its Wild Catch segment.
Lerøy Seafood Group posted revenue of NOK 26.6 billion (USD 2.5 billion, EUR 2.4 billion), up from NOK 23 billion (USD 2.2 billion, EUR 2 billion) posted in 2021. The company’s operating profit before fair-value adjustment reached NOK 3.19 billion (USD 307 million, EUR 291 million) – a significant increase compared to NOK 2.51 billion (USD 241 million, EUR 229 million) in 2021.
The company attributed the record revenue to high prices and strong demand for seafood.
“Seafood markets were strong in 2022. Like other industries, we also experienced cost pressure,” Lerøy CEO Henning Beltestad said.
Lerøy's positive year was partially offset by a slight downturn in operating profit in Q4 2022 compared to 2021. In 2021, the company more than doubled its operating profit, reaching NOK 902 million (USD 86 million, EUR 82 million). In Q4 2022, however, that total was NOK 800 million (USD 77 million, EUR 73 million), a result the company said could be attributed to lower earnings in its Wild Catch segment due to lower catch volumes and lower margins.
The company’s wild-catch segment posted NOK 554 million (USD 53 million, EUR 50 million) in revenue, the lowest total in its last eight quarters. That low revenue coincided with low profits, as the company lost NOK 9 million (USD 866,000, EUR 821,000) from the segment, which it said was primarily related to a reduction in fishing quotas.
Lerøy's Catch totals for the quarter consisted of 5,700 metric tons (MT) of cod, 2,700 MT of saithe, 1,400 MT of haddock, and 3,300 MT of “other,” for a total of 13,100 MT of product, significantly lower than the 17,100 MT of product caught in Q4 2021. The company caught 8,800 MT of cod in Q4 2021.
On the farming side of the business, all four of the company’s salmon farming divisions posted higher revenues, but most posted lower earnings before interest and taxes (EBIT) per kilogram in Q4 2022. Norskott Havbruk, which is 50 percent owned by Lerøy, saw the worst EBIT-per-kilogram in Q4, losing NOK 17.50 (USD 1.68 EUR 1.59) per kilogram and posting a loss of NOK 128 million (USD 12.3 million, EUR 11.6 million).
The low EBIT, the company said, was related to challenging biological issues and impacts caused by micro-jellyfish and high mortalities. The company has reduced its harvest volume expectations for Norskott Havbruk to 37,000 gross-weight-tons in 2023.
Lerøy Aurora, in contrast, saw an EBIT-per-kilogram in Q4 of NOK 19.20 (USD 1.84, EUR 1.75) and a positive EBIT of NOK 290 million (USD 27.9 million, EUR 26.4 million). The segment had a “healthy" biological performance, but was still impacted by year-over-year costs increases, Lerøy said.
The company’s value-added product, sales, and distribution (VAPS&D) segment did well in Q4 2022., with an all-time-high revenue for the quarter, reaching NOK 6.9 billion (USD 664 million, EUR 629 million), Lerøy said. It attributed the good quarter to a “significant demand uptick."
Beltestad said the company’s performance will be defined largely by the 40 percent resource tax on aquaculture operations proposed by the government of Norway.
“The other defining event of the year was the resource rent tax proposal,” he said.
The tax has already impacted Lerøy, with the company terminating license-capacity purchases and laying off workers.
“We’ve already seen this have significantly negative effects on investments in coastal regions,” Beltestad said. “This is extremely unfortunate for Norway as a seafood nation, for the industry and for everyone who works in it.”
Despite the challenges posed by the tax, Beltestad said the company has a positive outlook for the ...
Photo courtesy of Lerøy Seafood Group
