Lerøy Seafood Group (LSG) reported operating profit before fair value adjustments of NOK 441 million (USD 52.3 million, EUR 43.1 million) for the fourth quarter of 2020, down 43 percent from the NOK 769 million (USD 91.2 million, EUR 75.1 million) achieved in the corresponding period of 2019.
The Bergen, Norway-based fish farming and fishing company’s revenue for the closing quarter of 2020 stood at NOK 5.2 billion (USD 616.8 million, EUR 508.1 million), which was 1 percent less than a year prior. According to LSG’s Q4 2020 report, the global COVID-19 pandemic had a negative impact on demand – resulting in lower prices for both salmonids and whitefish.
For the full-year 2020, the group’s revenue reached almost NOK 20 billion (USD 2.4 billion, EUR 2 billion), down from NOK 20.4 billion in the previous year, while its operating profit fell by NOK 849 million (USD 100.8 million, EUR 83 million) to less than NOK 1.9 billion (USD 225.5 million, EUR 185.7 million).
“Lerøy's focus is developing an efficient and sustainable value chain for seafood that meets the customers' long-term demand. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. Thanks to our robust and long-term focus on the customer, we feel that we have emerged all the stronger from a difficult year," Lerøy CEO Henning Beltestad said. "We have invested heavily in our value chain in recent years, in the form of assets, human resources and our approach to operational improvements. This is a long-term process but, as we enter 2021, we are starting to reap the results of our initiatives and we are confident that we have a strong position for the years to come."
Comprising the three Norwegian operations of Lerøy Aurora (located in Troms and Finnmark), Lerøy Midt (Nordmøre), and Trøndelag and Lerøy Sjøtroll (Vestlandet), the farming segment of the business harvested 48,349 metric tons (MT) gutted weight of salmon and trout in the last quarter, up 13 percent from 42,823 MT in Q4 2019. Its EBIT per kilo of NOK 6.10 (USD 0.72, EUR 0.60) was down on the NOK 14.00 (USD 1.66, EUR 1.37) achieved a year previously. Its Q4 operating profit for the segment before fair value adjustment related to biological assets was NOK 296 million (USD 35.1 million, EUR 28.9 million), compared with NOK 597 million (USD 70.8 million, EUR 58.4 million) a year previously.
"We have seen a positive development in our costs per [kilogram] of harvested fish in 2020, and this has been confirmed in the fourth-quarter," Beltestad said. "As we enter 2021, we expect that the initiatives and investments made in recent years will provide a substantial growth in volume, and that this will help us scale down our cost base and achieve lower costs.”
For 2020 as a whole, the company's farming division harvested a total 170,849 MT, compared with 158,178 MT in 2019. Its estimated salmon and trout harvest volume for 2021, including the share from associates, is currently 205,000 to 210,000 MT.
Meanwhile, in LSG’s wild-catch segment, Havfisk's total catch volume in the last quarter was 12,619 MT, compared with 12,949 MT in Q4 2019. Landings comprised 7,022 MT of cod, 944 MT of haddock and 2,089 MT of saithe. Compared with Q4 2019, prices for cod and haddock were down 13 percent and 17 percent, respectively, while the average price for saithe was up 5 percent.
LSG confirmed the prices realized were lower than normally experienced before the COVID-19 restrictions were introduced.
In total, the segment reported an EBIT loss of NOK 10 million (USD 1.2 million, EUR 977,000) for Q4 2020, compared with NOK 42 million (USD 5 million, EUR 4.1 million) in the same period of 2019. For the full-year 2020, the segment contributed EBIT of NOK 205 million (USD 24.3 million, EUR 20 million), compared with NOK 293 million (USD 34.8 million, EUR 28.6 million) in 2019.
"The winter cod season has just started, and we are facing a very high seasonal supply volume on a difficult market. With our experience of processing whitefish all year-round in Norway, we feel we have the capacity and strength to face this challenge," Beltestad said.
The group expects to see an increase in quotas in 2021, including a 14 percent increase for cod, 6 percent for haddock, and 16 percent for saithe north of 62 degrees. For saithe south of 62 degrees, it projects a quota reduction of 26 percent.
Final quota decisions are expected at the end of February.
Meanwhile, despite significantly lower prices realized for key species, the VAP, sales and distribution (VAPS&D) segment reported revenue in Q4 2020 that was only 1 percent lower than in the same period in 2019 at NOK 4.9 billion (USD 581.6 million, EUR 478.9 million). Operating profit before fair-value adjustment related to biological assets in Q4 2020 was NOK 176 million (USD 20.9 million, EUR 17.2 million), up from NOK 162 million (USD 19.2 million, EUR 15.8 million) in Q4 2019.
"2020 has been a difficult year during which it has been important to focus on keeping our value chain open and ensuring supplies of seafood to the end-consumer. It is our experience that we have clearly demonstrated the value of the group's long-term investments in downstream operations, and we believe that we are in a strong position to develop upon this in the years to come," Beltestad said. "The group's products are healthy and good. Production is financially, climate-related and environmentally sustainable. We continue to expect a positive underlying growth in demand in the years to come."
Photo courtesy of Lerøy Seafood Group
