Trout downgrade dampened Lerøy’s results this quarter

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Mixed quarter for salmon farmer.

“The fourth quarter of 2018 marked the end of a good year for Lerøy Seafood Group,” wrote Lerøy CEO Henning Beltestad in a Q4 financial statement posted on Tuesday morning.

Operating profit before fair value adjustment related to biological assets was EUR 96.9 million in Q4 2018, compared with EUR 79.4 million in Q4 2017.

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“In 2018, we achieved record-high revenue and record-high harvest volumes. Our release from stock costs for salmon and trout are down on 2017 and we still have plenty of potential to improve,” Beltestad added.

In Q4 2018, Lerøy Aurora (Norway) achieved operational EBIT per kg of NOK 24.5 (EUR 2.5). Lerøy Midt and Lerøy Sjøtroll reported EBIT per kg of NOK 16.3 (EUR 1.6) and NOK 7.9 (EUR 0.8) respectively for the same period.

The farming segment reported a record-high harvest volume in Q4 2018. “We have identified a positive development in the release from stock costs, and these costs were down from Q4 2017 to Q4 2018. Moreover, prices realised are higher than in Q4 2017, although the downgrading of trout has had a significant negative impact unfortunately,” Beltestad continued.

For 2018 as a whole, the farming segment harvested a volume of 162,000 tonnes, compared with 158,000 tonnes in 2017. Release from stock costs was lower in 2018 than in 2017. Prices realised for salmon in 2018 are practically on par with 2017 prices, while prices realised for trout are down around NOK 6 (EUR 0.6) per kg. In total, EBIT/kg for the farming segment was down from NOK 18.6 (EUR 1.9) in 2017 to NOK 18.1 (EUR 1.8) in 2018.

The salmon farmer said that its contract share for salmon in Q1 2019 will be in the range from 40 to 45%. At the time of writing, contracts have been signed for 2019 for around 30% of the estimated harvest volume of salmon. Estimates for harvest volume in 2019, including the share from associates, remains around 190,000 tonnes.