Grieg Seafood has presented its results for the second quarter of 2023 (2Q2023), which turned out to be a positive quarter with achievements such as an operating EBIT of NOK 547 million (EUR 47.1 million /USD 50.6 million), a harvest volume of 22,645 tons, and improved biological control given the company's context this financial period. However, these figures are indeed lower than last year's figures.
Grieg explained that these results are mainly due to the harsh biological conditions observed in previous quarters. Although, the financial improvements are not reflected in the figures, a wide range of mitigation actions were completed to address the problems thoroughly. In this way, the company pointed out that "improved biological control, combined with the transfer of increasingly larger smolts and reduced production time in the ocean, provide the basis for improved fish welfare and performance." A reality that translates into more solid growth in the coming quarters.
The company also explained that the global Atlantic salmon harvest in 2023 is expected to be in line with that of 2022, with only a 1% increase compared to last year.
During the last quarter, Grieg Seafood harvested a record-breaking 11,536 tons in Rogaland. This exceptional achievement resulted from two crucial factors: the prices at which they sold their produce were high, and they timed the harvest perfectly.
However, there were also complications. Since the beginning of 2023, operating costs have stayed relatively stable, with some impact from harvesting and expenses related to ISA. Even so, the company has already taken measures and has started with a vaccination program for all smolts they release into the sea. They have also taken additional actions at their smolt facilities to reduce the risk of ISA in the future.
The operating profit per kilogram of fish in 2Q2023 was NOK 36.7, whereas it was NOK 48.9 in 1Q2023. This decrease was primarily because there was a smaller portion of sales, contracts that didn't have a positive impact, and the fish that were harvested had a lower average weight compared to the second quarter of 2022.
Moreover, because of the early harvest of ISA-infected fish during the first half of the year, Grieg Seafood has reduced the full-year 2023 harvest target in Rogaland from 29,000 to 27,000 tons.
In 2Q2023, Finnmark harvested 5,573 tons of fish, which is lower than the 9,843 tons harvested in 1Q2023. However, the biological control improved in the first half of the year, which is a good sign for the future.
On the other hand, farming-related expenses decreased compared to the previous quarter, mainly because less was spent on biomass maintenance. Nevertheless, the operating profit per kilogram of fish for this quarter was also lower. This was due to lower sales, a reduced average weight of harvested fish, and contracts that did not make a positive contribution.
Grieg Seafood, however, has a plan to reverse these numbers. The company explained that to compensate for this decrease in the previous harvest from Finnmark, Grieg Seafood plans no harvesting of fish in the 3Q2023 and instead focus on growing the number of fish. Despite this, the goal for the whole year 2023 is still to harvest 26,000 tons of fish.
Grieg clarified that while they are still working to understand the implications of the resource tax in Norway, they see an attractive option for Canada.
In Newfoundland during the last quarter, exceptional performance characterized freshwater and saltwater production. The combination of excellent smolt quality and favorable biological conditions resulted in optimal fish health and a remarkably high survival rate.
Thus, the Newfoundland project is going from strength to strength, and the first harvest is expected in 4Q2023. "In British Columbia, we support the Government's efforts to transition the industry towards best practices and continue a constructive dialogue, focusing on sustainable solutions," explained Andreas Kvame, CEO. So much so, the company added that projections point to a total harvest of approximately 5,000 tons for the current year.
However, Canada also faces other less positive challenges. In BC, the harvest volume was 3278 tonnes lower than the previous harvest. Seasonal challenges, including sea lice treatments and low dissolved oxygen events, affected seawater performance during the quarter. These challenges led to reduced survival rates and increased costs, resulting in negative results for BC operations during the quarter.
Grieg Seafood is one of the world's leading salmon farming companies, with a catch target of 130,000 tons in 2025. The company, headquartered in Bergen, Norway, operates fish farms in Canada, specifically in British Columbia and Newfoundland. More than 750 people work for the company in various regions, 180 of them in BC's coastal communities. Grieg Seafood BC holds a license to actively produce 23,400 tonnes of salmon annually, catering to the North American and Asian markets.
