Winter wounds and lower prices lowered first-quarter results.
Lerøy Seafood Group (LSG) presented its results for the first quarter of the year on Thursday morning. The group posted a revenue of EUR 487 million, compared with EUR 524 million in the same period in 2020. Operating profit before fair value adjustments related to biological assets was EUR 45 million in the first quarter of 2021, compared to EUR 81 million in the first quarter of 2020.
The analysts expected an operating profit of EUR 47 million.
“The trend in 2020, with a higher share of seafood sold through the retail channel, has continued in 2021. Price realisation in the quarter is below the corresponding quarter in 2020, but in our view the underlying demand for
seafood is strong,” stated CEO Henning Beltestad in an Oslo Stock Exchange announcement.
In the period, 42,000 tonnes of salmon and trout have been harvested compared to 39,000 tonnes in the first quarter of 2020. The group maintained its expectation that harvested volume in 2021, including associated companies, will be between 205,000-210,000 tonnes.
In the first quarter of 2021, Lerøy Aurora delivered an EBIT/kg of EUR 0.1, Lerøy Midt at EUR 0.8 and Lerøy Sjøtroll at EUR 0.6. In total, EBIT/kg in the segment is down from EUR 1.4 in the first quarter of 2020 to EUR 0.6 in the first quarter of 2021. Compared to the same quarter last year, costs per kilo are around the same as
in Q1 2020, with the fall in prices realised the underlying factor behind the lower earnings.
“We have had challenges with winter wounds in Lerøy Aurora in the first quarter and the start of second quarter. This has negative implications for price realisation in this quarter, and will also impact price realisation in
second quarter,” stated CEO Beltestad.
“For 2021 our expectation is that recent years efforts and investments within Farming creates the basis for significant growth in harvest volume, and with scaling of the cost base, lower costs per kilo produced, he continues,” he added.
In addition to the development of existing farming operations, the group is accumulating knowledge and/or competencies within both land-based and offshore salmon production.
“The group’s substantial investments in post-smolt facilities have not only increased the Group’s annual harvest volume by means of improved utilisation of existing assets, but also provided significant competencies related to RAS technology. This is in the main the same technology used in full-scale land-based production of salmon. The Group is now negotiating for a possible further development of a new RAS facility in the region of Vestland. The plans are initially to develop the facility in three stages. The first and second stages represent further increases in the Group’s post-smolt production. The final stage will also provide facilities for post-smolt production, but may be used for salmon production up to harvest size,” stated the report.
“The newly acquired industrial site, including the links to the Group’s farming operations in West Norway, could potentially improve interaction between sea and land. If applicable, the lessons learned may alternatively be exploited at some point in the future to realise land-based projects in other regions. The development will take place in stages, but initial estimates indicate that the first stages will represent estimated costs of around NOK 1 billion (EUR 100 million .ed). The development is projected to provide an annual increase in production in the sea of 8,000-10,000 GWT. Construction work is scheduled for completion in 2023”.