The Shetland problem area, in addition to Rogaland, reduced the company’s second quarter results.
This was far down from the consensus estimate of EUR 3.7 million to a final figure of EUR 0.3 million in EBIT for the second quarter. This gave an EBIT/kg of cormorants EUR 0.01. Not much for the growth case Grieg Seafood.
Sparebank1 Markets’ analyst Christopher Robin Vinter is not particularly impressed with today’s report, which he clearly states in a note to his customers:
- Rogaland: despite management guiding for higher costs in the quarter, we did not expect costs to jump to NOK 47/kg. Price achievement was also negative NOK 1.2 in the quarter, leading to an EBIT/kg of NOK8.9 vs our estimate of NOK 13/kg. The company guides costs down in 2H as harvest volumes will increase. Says that underlying biology remain strong and that average smolt size now is 550g. Little impact on 2021 estimates.
- Finnmark: EBIT/kg above our estimate, driven by better price achievement but slightly higher costs. Reduced full year harvest guidance from 38kt to 33kt as growth in seawater has been lower than expected, due to low temperatures this winter. Estimates in 2021 to come down due to volume.
- Shetland: Jump in costs to estimated NOK73/kg (EUR 6.95). Not the development we wanted to see. Sees costs flat next quarter, but improvement long term. Harvest volume guidance reduced by 2kt for 2020 as sea lice treatment has impacted growth. Estimates to come down due to higher costs.
- Canada BC: This quarter’s bright spot. Costs and price achievement in line with expectations, but harvest volume slightly below. Volume guidance for 2020 was increased by 2kt.
Vinter suggested a reduction in the 2021 estimates between five and ten per-cent after today’s financial report.
Before the presentation, Vinter had a Buy recommendation with a price target of NOK 135.
Grieg Seafood’s stock price falls 6.4 per-cent in early trading at the Oslo Stock Exchange.