Lower harvesting volumes and salmon prices hit Leroy Q1 earnings

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In Q1 2018, Lerøy Seafood Group (LSG) reported revenue of NOK 5,000 million, compared with NOK 5,459 million in the same period in 2017. Operating profit before fair value adjustment related to biological assets was NOK 960 million in Q1 2018, compared with NOK 1,277 million in Q1 2017.

The decline in profit is mainly attributed to a lower harvest volume and lower prices realised for salmon and trout, according to a press release from Leroy.

“I am satisfied with the result we have achieved in the first quarter of 2018,” said CEO Henning Beltestad. “There is a strong demand for seafood and this has produced a positive development in prices in the first quarter of 2018.”

The Group’s profit before tax and fair value adjustment related to biological assets was NOK 1,018 million.

Havfisk’s total wild catch volume in Q1 2018 was 22,268 tonnes. In comparison with Q1 2017, the average price for all species increased by 11% in Q1 2018. In total, the segment reported operating profit of NOK 178 million.

“Havfisk’s new trawler, Nortind, was delivered from the shipyard in January 2018 and has had very successful operations so far,” said Henning Beltestad. “The new trawler and the increase in catch volumes and higher average prices have all resulted in a good quarter for Havfisk.”

“The processing of whitefish in Norway is a challenging business. The Group has implemented a number of measures within both production and marketing to improve earnings, but these are long-term initiatives and it will take time before significant improvements are evident”.

The Farming segment reported operating profit fair value adjustment related to biological assets of NOK 740 million after a harvest of 38,000 tonnes gutted weight of salmon and trout. EBIT/kg fell from NOK 24.2 per kg in Q1 2017 to NOK 19.7 per kg in Q1 2018, mainly attributable to the fall in prices realised.

“Lerøy Sjøtroll’s costs remain too high, but Lerøy Midt and Lerøy Aurora can report a very positive development. At the time of writing, the Group expects to see this positive development in release from stock costs continuing in 2018, with an even higher impact in the second half of the year”, said Beltestad.

The current estimate for harvest volume in 2018, including the share of LSG’s volume from associates, is 179,000 GWT.

The best estimate remains a catch volume of whitefish and shrimp in 2018 of approximately 65,000 tonnes.

The Board of Directors currently expects high earnings in Q2 2018 and 2018 as a whole.