The new land-based facility in Finnmark is part of Grieg Seafood's post-smolt strategy to improve fish health, welfare, and sustainability.
Photo: Grieg Seafood.
"The third quarter of 2024 was a mixed bag for Grieg Seafood." So began CEO Andreas Kvame's comments on the Q3 2024 results. The company has faced another challenging quarter in which, however, it sees signs of improvement.
"While the financial performance was impacted by seasonally lower spot prices and carry costs from historic incidents, our underlying performance was good. Development was particularly good in Rogaland and Finnmark, as we are going out of Q3 with a record-high standing biomass in sea in Norway after an all-time high seawater production over the quarter," Kvame explained.
Grieg Seafood's Q3 2024 harvest volume was 17,806 tons, up 45.4% from the same period last year, when 12,245 tons were harvested. The company achieved record production in Norway, with maximum allowable biomass (MAB) fully utilized at the end of the quarter and biomass in Finnmark rebuilt following the impact caused by the Spiro parasite (Spironucleus salmonicida) in Q2 2024.
However, when it comes to revenues, the picture is not so encouraging. Operating EBIT for the quarter was NOK -175 million (EUR -14.95 million / USD -15.77 million), which is 103.4% higher than that recorded in Q3 2024, NOK -86 million (EUR -7.35 million / USD -7.75 million), with an operating EBIT/kg of NOK -9.8 (EUR -0.83 / USD -0.88) versus last year's NOK -7.0 (EUR -0.59 / USD -0.63).
By region, Farming Norway's operating EBIT was NOK 69 million (EUR 5.90 million / USD 6.22 million), while in British Columbia it was NOK -218 million (EUR -18.64 million / USD -19.67 million) due to algal blooms and low dissolved oxygen (DO).
As said, Finnmark, in Norway, experienced strong seawater production during the quarter, maximizing MAB capacity and rebuilding biomass after Spiro. However, the region still faces biological challenges, and the company had problems with sea lice during the quarter. In addition, earnings in the region were impacted by seasonally lower prices and harvesting of the last fish impacted by Spiro. On the positive side, farming costs continued to decline.
Rogaland, also in Norway, experienced strong seawater production likewise. According to Grieg Seafood Q3 2024 report it was driven by high capacity-utilization and good biology. While earnings were affected by lower prices, costs declined and are expected to remain stable in Q4. In this region, post-smolt has been a priority to improve operational efficiency and ensure biological control, successfully leading the implementation of this strategy.
In Newfoundland, Canada, there were no fish available for harvesting during the quarter, but operations continue to proceed as planned. Harvest of the second generation began in October, and the total harvest for the full year is expected to end at about 11,000 tons.
Finally, as mentioned above, in British Columbia, operations were affected by the algal bloom, which significantly reduced survival rates and impacted growth. The 2024 harvest was completed during Q3, ending at 12,500 tons. Meanwhile, Grieg's investments in BC are on hold waiting for the completion of the transition plan for the fish farming industry in the region, which is still pending decisions by the Canadian government.
Regarding expectations for Q4 and 2025, everything points to the fact that Canada will play a key role in the company's future, since, as stated in this results report, in its search for long-term partners to participate in the development of its operations in the country, the company is in dialogue with parties for both strategic partnerships and the sale of the business.
"We aim to realize the potential of sustainable growth in Canada. To maximize this value while mitigating risks, we seek long-term partners to participate in the development of our operations in this region. The process of identifying potential partners is progressing. We are in dialogue with parties for both strategic partnerships and a business sale," Grieg Seafood CEO, Andreas Kvame, said in his comments on the Q3 2024 results report.
The process, Kvame said, is taking somewhat longer than expected, so the company has set up a NOK 750 million (EUR 64.12 million / USD 67.66 million) bridge credit line to maintain financial flexibility. A little later, talking about sustainability the report gave some more clues about Grieg's plans in Canada.
"We see Eastern Canada as a strategic hub with significant growth potential, leveraging its proximity to key markets. However, due to regulatory uncertainties in British Columbia coastal waters we have temporarily reduced capacity and paused new investments to mitigate potential risks," the report read.
Following with the expectations, Grieg Seafood said it has launched an improvement program to review all aspects of its farming operations and identify areas where it can improve profitability and reduce costs. As part of that program, by the end of 2025, it aims to achieve a fixed cost reduction of NOK 150 million (EUR 12.82 million / USD 13.53 million).
"While our post-smolt strategy increases investment expenditures and smolt costs, we expect it to reduce operational expenditures and costs related to mortality, disease outbreaks, sea lice treatments and fish handling. Our experience with post-smolt in Rogaland indicates that less time in the sea reduces both the risk of and impact from biological challenges such as sea lice, winter ulcers and ISA," the report pointed out.
In terms of sales and market, Grieg expects sustained strong market prices in 2024 due to limited growth in supply combined with a continued demand outlook. Currently, its sales are primarily of fresh, gutted, and headed salmon, but it is looking to increase product value through increased market presence, partnerships, and brand development. To support this, the company has invested in a new processing facility with a capacity of 1,000 tons at Oslo Airport, Norway, that will start operations in the second half of 2025.
Finally, Grieg Seafood said that its business strategy targets three key strategic objectives for the continued development of the business: global growth - it aims for a harvest volume of 120,000-135,000 tons -; cost improvement - it wants to be a cost leader in its operating regions -; and repositioning in the value chain - evolving from a raw material supplier to a strategic partner -. All of this, it said, is supported by the development and application of increasingly sustainable cultivation practices.
