Downgrades dampen Lerøy’s Q2 earnings

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Good growth conditions in the sea and a gradual increase in demand give hope of increased earnings to come.

On Thursday morning, Lerøy Seafood Group presented an operating profit of NOK 583 million (US$65 million) for the second quarter of the year. An operating profit of NOK 601 million (US$67 million) was expected in advance, according to analyst estimates obtained by Infront.

“In the first quarter, demand in the grocery trade was strong. This has continued in the second quarter where we have also seen a gradual improvement in demand from the HoReCa markets as a result of a reduction in restrictions related to Covid 19. Our experience is that seafood’s position in the markets is very strong,” said CEO Henning Beltestad.

During the period, 37 thousand tonnes were harvested, compared with 39 thousand tonnes in the second quarter of 2020.

Lerøy Aurora delivers an EBIT / kg of NOK 8.7 (US$0.97), Lerøy Midt of NOK 13.7 (US$1.53) and Lerøy Sjøtroll of NOK 8.3 (US$0.93). In total, EBIT / kg in the segment increased from NOK 5.5 (US$0.61) in the second quarter of 2020 to NOK 10.6 (US$1.18) in the second quarter of 2021. Compared with the same quarter last year, cost per kilo has decreased, but improved price achievement is the most important reason for higher earnings.

“As discussed in the first quarter, we at Havbruk had more downgrades in quality than normal in the second quarter. This has had a significant negative impact on earnings in the quarter, and is an obvious area for improvement with the highest priority for us,” Beltestad explained.

“The growth in the second quarter has been good, and we maintain our guiding where our Norwegian business will harvest about 192 thousand tonnes in 2021. This will mean significant growth in the last two years, where we compared 158 thousand tonnes in 2019. This growth is organic, and during the period we will be one of the companies that is growing the most in Norway. We have potential for further organic growth in the years to come,” he continued.