Grieg Seafood Group (GSF) achieved operational earnings before interest and taxes (EBIT) of NOK 308.9 million (USD 34.5 million, EUR 31.1 million) before fair-value adjustment of biomass in the second quarter of this year, down from NOK 426.3 million (USD 47.7 million, EUR 42.9 million) in the corresponding period of 2018.
These earnings equated to an EBIT per kilogram of NOK 14.17 (USD 1.58, EUR 1.43), down 25 percent year-on-year.
In its second quarter report, the Bergen, Norway-headquartered salmonid producer harvested 21,802 metric tons (MT) of gutted weight salmon in the quarter, which was 766 MT below Q2 2018’s record 22,568 MT. Regionally, Rogaland provided the most fish with 8,500 MT, followed by Finnmark (5,400 MT), Canada’s British Columbia (4,600 MT), and Shetland (3,300 MT).
“Grieg Seafood continued to experience strong growth and biological improvements in Rogaland and Finnmark during the second quarter,” Grieg CEO Andreas Kvame said. “With a steady focus on our operational priorities, we have increased biological control with preventative efforts and obtained a more efficient utilization of our licenses.”
In its results statement, GSF said the average price realized by the group was NOK 6.10 (USD 0.68, EUR 0.61) per kilogram lower than in in Q2 2018, and that this was mainly driven by a lower average market price. But it added that the price reduction was offset by the higher prices achieved by the larger fish harvested at Rogaland. Consequently, its sales revenues for the last quarter fell 3 percent to NOK 2.2 billion (USD 246 million, EUR 221.6 million).
Farming costs increased during the last three-month period. This was largely due to sea lice and algal bloom challenges in Shetland and British Columbia.
“While we still have some challenges related to gill disease and algae in Shetland, the biological condition is improving. We continue to work systematically to increase our smolt robustness in Shetland, and survival on smolt stocked to sea so far this year is increasing,” Kvame said.
Notably, the company said it had launched a “strategic assessment” of its operations on the Isle of Skye to “foster greater synergies with its farming areas in Shetland.”
“We see that the synergy between our farming areas on Shetland and Skye (is) low," Kvame said. "This is a process of exploration and we cannot guarantee that it will result in any specific outcome. We value our 21 talented people in Skye and understand that this situation creates a level of uncertainty for them. We do not expect that this process will lead to the loss of any jobs."
Kvame said the company was also struggling with biological challenges in its British Columbia farms.
“Algae, plankton and low oxygen levels have impacted production negatively during the quarter. This shows the importance of monitoring and use of [an] aeration system to minimize impact,” Kvame said. “We are still in the early stages in executing on our priorities and we expect continued growth and operational improvements going forward.”
For the first six months of this year, GSF’s sales revenues reached almost NOK 3.9 billion (USD 436.1 million, EUR 392.8 million), up from less than NOK 3.8 billion (USD 424.9 million, EUR 382.7 million) in H1 2018. While the average spot price for the period was down by NOK 2.20 (USD 0.25, EUR 0.22) per kg, it said the higher volume – up 2,602 MT year-on-year to 36,603 MT “contributed positively.”
Grieg’s harvest volume in Q3 2019 is expected to be 20,200 MT. For 2019 as a whole, the harvest forecast is 82,00 MT, which would represent an increase of 10 percent on last year.
GSF has the ambition to reach an annual harvest volume of 100,000 MT by 2020. It is also aiming to achieve production costs at or below the industry average, and is targeting NOK 37.90 (USD 4.24, EUR 3.82) per kilogram by 2020. In Norway, the target cost is NOK 36.00 (USD 4.02, EUR 3.63) per kilogram.
Photo courtesy of Grieg Seafood
