Leroy’s harvest volume reduced and weaker farming growth than expected

Leroy location. Photo: Leroy
Leroy location. Photo: Leroy

According to Lerøy Seafood Group's Q3 2022, Earnings in the VAP, Sales & Distribution segment have been negatively impacted by the extreme development in salmon prices. In addition, the harvest volume is in line with Q3 2021, and inflationary pressure in the economy is affecting cost developments.

"Growth in the Farming segment has been slightly weaker than expected through the third quarter and at the start of the fourth. The outlook for harvest volume has been reduced by 5,000 GWT for 2022," explained CEO Henning Beltestad.

On the other hand, operating profit before fair value adjustment related to biological assets was NOK 831 million for Q3 2022, up 44% compared with the same period of 2021.

Besides, strong demand for seafood, including a substantial increase in prices realized for the Group's main products, is the key reason for improvement compared to Q3 21.

Moreover, the Farming segment delivered improved results in the quarter compared to the corresponding quarter last year. Salmon prices have fallen significantly since the second quarter but are still higher than last year.

Results for the Wild Catch segment improved compared with Q3 2021, driven by high prices and higher catch volumes. But, higher bunkering charges are affecting cost developments.

Finally, the report indicates that the total salmon and trout harvest volume for 2023 is estimated at 202,000 GWT (including Lerøy's share in Scottish Sea Farms). Earnings gradually improved through the quarter, and a further margin improvement is expected in Q4.

Resource rent tax proposal brings increased uncertainty

Lerøy sees significant weaknesses in the the Norwegian government proposed. It reveals a lack of insight into the industry's complex value chain.

Open processes guarantee predictability, stability, trust, and, not least, knowledge and understanding of the industry affected. So, the proposal lacks adequate insight into the industry's dynamic, represents a breach of trust, and is causing great uncertainty.

"The consequences are extremely serious for Lerøy and our employees. We expect the implementation of the proposal to be delayed to allow time for a thorough consultative process. Followed by discussion and broad compromise in the Storting," noted Beltestad.

About Lerøy Seafood Group ASA

Lerøy Seafood Group ASA is a global seafood corporation with its head office in Bergen. The Group's almost 6,000 employees process between 350,000 and 400,000 tonnes of seafood every year. Via its value chain, corresponding to around 5 million meals every day.

The Group has a vertically integrated value chain for redfish and whitefish, as well as significant activities using third-party products. The target for return on capital employed (ROCE) is 18%.

The Group has set several targets within sustainability, including cutting greenhouse gas emissions by 46% by 2030. The Group's activities generate significant ripple effects in Norway. The Lerøy Group has 3,500 employees across 60 municipalities in Norway.

In 2021, it purchased goods and services worth around NOK 13 billion a year from our 4,500 suppliers. These are spread across almost 300 municipalities along the coast, in the interior, and in eastern Norway. This translates to a total employment effect of 13,000 persons.

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