Lerøy Seafood Group (LSG) has reported operating profit before fair value adjustments of NOK 774 million (USD 86.4 million, EUR 77.8 million) for the second-quarter of this year, representing a decrease of 23 percent from the NOK 1 billion (USD 111.6 million, EUR 100.6 million) achieved in the corresponding period of 2018.
The Norwegian fish farming and fishing company cited lower earnings from its salmon and trout farming operations – largely brought by lower realized prices – as the main reason for the decline.
Comprising the three Norwegian farming regions: Lerøy Aurora located in Troms and Finnmark, Lerøy Midt located in Nordmøre/Trøndelag, and Lerøy Sjøtroll located in Hordaland, LGS’s Farming segment’s operating profit before fair value adjustment related to biological assets was NOK 595 million (USD 66.4 million, EUR 59.8 million) in Q2 2019, compared with NOK 833 million (USD 93 million, EUR 83.8 million) in Q2 2018. Some 37,100 metric tons (MT) gutted weight of salmonids were harvested, down from 37,800 MT in Q2 2018.
The segment’s EBIT-per-kilogram was down from NOK 22 (USD 2.46, EUR 2.21) in Q2 2018 to NOK 16.10 (USD 1.80, EUR 1.62) in Q2 2019.
According to the group’s results statement, the average price for salmon in the three-month period was NOK 62.10 (USD 6.93, EUR 6.25) per kilogram, representing a fall in price of NOK 6.40 (USD 0.71, EUR 0.64) when compared with Q2 2018.
At the end of the first half of 2019, its biomass in the sea was 12 percent higher than at the same time last year, and LSG expects that the higher volume, including higher average weight, will produce lower release from stock costs in the second-half of the year.
It currently estimates a total harvest volume of 183,000 GWT salmon and trout for 2019, including its volumes from associates.
Within LSG’s Wild Catch segment, Havfisk's whitefish landings in the last quarter totaled 15,860 MT, compared with 18,190 MT in Q2 2018. This catch included 3,009 MT of cod, 928 MT of haddock and 2,250 MT of saithe.
Compared with Q2 2018, prices for cod increased 7 percent, while the prices for haddock and saithe for saithe were up 4 percent and 24 percent respectively.
LSG’s Q2 2019 results statement highlighted that the high raw material prices in the quarter generated satisfactory earnings for the trawler fleet, but these presented challenges for its processing subsidiary Lerøy Norway Seafoods (LNWS).
In total, the segment contributed EBIT of NOK 40 million (USD 4.5 million, EUR 4 million) in the quarter, compared with NOK 116 million (USD 13 million, EUR 11.7 million) in Q2 2018, when the interim result was affected positively by the sale of a vessel, generating an accounting gain of NOK 35 million (USD 3.9 million, EUR 3.5 million).
The group has implemented a number of measures within both production and marketing to improve earnings for onshore operations, including the start-up of fish processing at its factory in Stamsund. But it stressed that these are long-term initiatives and significant improvements are not expected until 2020.
Overall, LSG’s revenue for the last quarter increased by 6 percent to more than NOK 5.3 billion (USD 591.8 million, EUR 533.2 million).
For the first-half of 2019, its revenue increased slightly to almost NOK 10.1 billion (USD 1.1 billion, EUR 1 billion), while its operating profit for the six months fell by NOK 495 million (USD 55.3 million, EUR 49.9 million) to less than NOK 1.5 billion (USD 167.5 million, EUR 150.9 million).
Image courtesy of Lerøy Seafood Group.
