Volatile salmon prices hit Lerøy’s earnings

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Costs levels high for salmon farmer.

Lerøy Seafood Group’s latest Q4 results posted on the Oslo Stock Exchange saw its revenues down from the year before to EUR 516 million from EUR 526 million.

Operating profit was EUR 75 million in Q4 2019, compared with NOK 94 million in Q4 2018. Exclusive of earnings from the Wild Catch segment, this corresponds to an EBIT per kilo of EUR 1.7 compared to EUR 1.8 for the same period in 2018.

“The fourth quarter saw extremely volatile prices for Atlantic salmon, but the underlying development during the quarter and the profit figures have in the main been as expected,” said CEO Henning Beltestad.

“Looking back on 2019 as a whole, we experienced several unforeseen incidents in the Farming segment that had a negative impact on the harvest volume and, as a result, our cost levels (…) At the start of 2020, we are confident that Lerøy has a sound position for profitable growth in the years to come,” he added.

Amongst those “unforeseen incidents” include a fire at its smolt facility and outbreak of toxic algae.

The company wrote that its Board of Directors “is not satisfied with the performance reported by Farming in 2019” but feels “increasingly confident that the initiatives taken and the investments made will provide positive development in the form of increased volume and improved competitiveness in the years to come”.

Looking ahead for 2020 and the following years, Beltestad said that he expected the company’s investments in smolt to gradually become evident with an increase in volume, “which will also help provide a reduction in the Group’s costs per produced kilo of red fish”.