Grieg Seafood earned over €2 per kilo in Q2

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Better results, but still biological challenges.

Grieg Seafood Group slaughtered 18,503 tonnes of salmon in the second quarter of 2017. Combined with increased prices, this meant total operating income amounted to €215 million and an operating profit before biomass adjustments of €10.7 million.

Per kilo, EBIT amounted to €2.28 in the period, up from €2.07 per kilo in the second quarter of 2016. The average spot price is up by €0.39 per kilo, while GSF’s realized price has risen by €0.83 per kilo. The difference is mainly due to higher contract prices. Costs are up by €0.61 per kilo compared to the second quarter of 2016. Biological challengesC in Shetland have contributed strongly to this increase in feed costs, the company writes in a stock exchange announcement Thursday.

Big smolt
It is Grieg Seafood’s goal to see costs in the range of the industry average or lower. It is also a goal to increase production by ten percent per year until 2020. GSF is working continuously to streamline operations. This means increased production per plant and license, and reduced costs measured per kilo. One of the most important measures for increased production is that of larger smolt, which results in shorter production time in the sea, which reduces the biological risk. In addition, an increase in the number of smolt is essential to ensure future growth, and to reduce cost per kilo.

Their 2017 target is production of 26 million smolt, an increase of 28 percent compared with 2016. By the end of the first half of 2017, this plan is being followed. So far this year, ten million smolt have been put to sea. In order to grow through increased use per license, improved site flexibility is important. This involves ongoing work to combat restrictions placed by local authorities.

Contract percentage
Salmon prices have risen somewhat in Q2 2017. An exception is prices in the North American market, where there has been a decline throughout the quarter. The contract share for Norway was 18 percent. This ratio is expected to be 32 percent in Q3 2017. For 2017 as a whole, the contract share is estimated at 25 percent. Work is now also in progress for 2018.

It is expected that the offer of salmon will increase in Q3 2017, which may put pressure on prices. However, in the long term, there is no evidence of change in the strong market trend that has been seen in recent years. The slaughter volume for Q3 2017 is expected to be 16,500 tonnes. For 2017 as a whole, a slaughter volume of 67,000 tonnes is expected, which is down by 3,000 tonnes compared to earlier expectations. This must be seen in conjunction with the biological challenges in Shetland, the stock exchange announcement states.