With this investment in technology to replace traditional sea cages with submerged cages, the company remains ambitious and optimistic about its long-term prospects.
Photo: Lerøy Seafood Group.
Lerøy Seafood Group communicated a consolidated operating EBIT of NOK 412 million (EUR 35 million - USD 36.9 million) during today's presentation of its Q3 2024 results. In addition to lower salmon and trout prices in the quarter, the result was also impacted by sea lice challenges, which led the company to announce it is going to invest millions in submerged cages to support fish welfare.
In the Q1 2024 results report, although profits fell 15%, Lerøy Seafood Group spoke of progress in biology. Now, in Q3, the company has summarized its performance with the headline "Continued biological progress amid low salmon prices," and, if CEO Henning Beltesta said then that the fish were growing well considering the very cold sea temperatures, in this third quarter the problem in the water has been just the opposite.
"The third-quarter results reflect the impact of weaker prices for salmon and trout, coupled with historically high seawater temperatures in Northern Norway, which have intensified sea lice challenges. In the short term, this has slightly moderated growth in certain parts of our operations," he explained.
Thus, despite the good harvest results in Q2 2024, the company has revised downward its harvest forecast for the current year. "We expect the total harvest volume this year to end at 190,000 GWT (previous guidance: 193,500 GWT), including 20,000 GWT from Scottish Seafarms," Beltesta said.
Lerøy Seafood Group's CEO added that its subsidiary in Scotland has shown substantial year-on-year profit growth, underlining a strong biological performance. All in all, the operating EBIT of the company's farming segment in Q3 2024 was NOK 310 million (EUR 26.3 million - USD 27.7 million).
However, looking ahead to 2025, Lerøy is optimistic about further advances in its biological performance. "Daily, new data reinforces our belief that shielding, particularly through submerged cages, leads to a reduced need for treating the fish against sea lice," claimed CEO Henning Beltesta.
"Compared to traditional farming methods, this approach has reduced lice treatment frequency by nearly 90%, with positive impacts on survival rates, the share of superior-quality fish, and overall fish welfare," he went on to explain.
To accelerate this progress, the company announced that it plans to invest an additional NOK 350 million (EUR 29.7 million - USD 31.35 million) in submerged cages during the first half of 2025, with the aim of protecting up to 45% of its salmon stock by mid-year.
Over the past five years, the company has been exploring innovative solutions to tackle sea lice, one of the industry's most persistent challenges, and, back in August, Lerøy Seafood CEO already said he sees a future in submerged cages. "This innovative technology is showing very promising results, and we believe it will be an important growth driver for Lerøy going forward," he then stated.
Regarding the company's other segments, as anticipated in October's trading update, quota restrictions have bitten into Lerøy Seafood Group's performance this third quarter. The Wild Catch segment reported an operating EBIT of NOK -58 million (EUR -4.9 million - USD -5.1 million), a substantial decrease compared to the same quarter last year.
"The outlook for Wild Catch remains challenging due to significant quota reductions over the past few years. This has created strong headwinds for our trawling fleet, while our processing facilities along the Norwegian coast are heavily under-utilized and impacted by high raw material costs," Henning Beltestad explained.
Lerøy's CEO was instead pleased to see "the continued positive development" in the company's Value-Added Processing and Sales & Distribution segment (VAP S&D), delivering another strong quarter. Specifically, the VAP S&D segment posted operating EBIT of NOK 220 million (EUR 18.7 million - USD 19.7 million) in Q3 2024, reaching NOK 884 million (EUR 75.1 - USD 79.2) on a rolling 12-month basis.
"VAP S&D continues its positive trajectory, achieving another all-time high on a 12-month rolling basis. This growth is driven by operational improvements and greater utilization of our integrated value chain," Beltestad stated.
In conclusion, and looking ahead, Beltestad said that although low salmon and trout prices affected the market in the third quarter and even at the beginning of the fourth quarter, the company remains ambitious and optimistic about its long-term prospects.
"Our dedicated, hard work towards the 200,000 GWT harvested volume target for our Norwegian operations in 2025 continues," he said. "The best estimate as of today is a harvested volume in Norway of approximately 195,000 GWT, which with a contribution of 16,000 GWT from Scottish Seafarms gives a total expectation of approximately 211,000 GWT in 2025."
"Our continued focus on enhancing roe and smolt quality, implementing new farming technologies, and optimizing processes positions us well for long-term success," Lerøy Seafood Group's CEO continued.
Finally, Henning Beltesta said the company expects to benefit from the growing demand for an integrated value chain with a strong sustainability profile, adding that, as recent quarters have shown, there is clear potential to continue growing earnings across its European downstream operations.
