“The second quarter of 2024 was a challenging period for Grieg Seafood and our performance and results reflect continued biological challenges," said Grieg Seafood CEO Andreas Kvame, presenting the company's results this week.
The company reported an operational EBIT loss of NOK 35 million (EUR 3.0 million / USD 3.3 million), a sharp decline compared to a profit of NOK 547 million (EUR 47.4 million / USD 50.6 million) in the same period last year.
Harvest volumes also dropped across all regions, decreasing to 15,272 tonnes from 22,645 tonnes in Q2 2023, with an operational EBIT per kilogram dropping to NOK -2.3 (EUR -0.20 / USD -0.21) from NOK 24.2.
The report shows that Rogaland underwent the biggest drop in harvest volume, producing just 2,771 tonnes, down from 11,536 tonnes in Q2 2023. However, this drop was according to plan, said Kvame.
"Earnings and farming cost in Rogaland were impacted by planned low harvest volumes. However, the underlying performance was good. Rogaland was the first region to implement our post-smolt strategy. Since implementation, we have proved that the strategy contributes to good biology and high average weight, underscoring our strong conviction that this is a key element to securing good fish health and welfare."
Kvame noted that Rogaland achieved an operational EBIT per kilogram of NOK 19.9 (EUR 1.72 / USD 1.84), driven by its post-smolt strategy that improved fish health and welfare.
Meanwhile, harvest volumes in Finnmark were also down, reaching only 3,886 tonnes, compared to 5,573 tonnes in Q2 2023, due to the impact of parasites and jellyfish. The region also faced high costs due to ongoing biological problems, leading to an operational EBIT per kilogram of NOK -3.3 (EUR -0.29 / USD -0.31).
"In Finnmark, harvest volumes remained impacted by the Spiro parasite, combined with biological challenges caused by string jellyfish. However, by the end of July, harvesting of fish previously exposed to Spiro was completed," Kvame said.
However, he said, the situation in Finnmark is improving. "Combined with measures taken to improve fish health overall, biological performance in the region is improving and costs are expected to decrease. Hence, I believe we are heading towards better times in the Finnmark region," Kvame added.
Grieg's operations in British Columbia (BC) also faced significant challenges during the quarter, compounding the ongoing uncertainty over the future of salmon farming in the region.
The region was severely impacted by environmental problems, including low dissolved oxygen levels, which resulted in increased mortality rates and reduced growth. This led to a negative operational EBIT per kilogram of NOK -4.9 (EUR -0.42 / USD -0.45) on a harvest volume of 8,615 tonnes, a significant drop from the NOK -2.5 recorded in the same quarter last year.
In addition to these challenges, Kvame remarked on the ongoing uncertainty caused by the Canadian government's decision to phase out net pen farming by 2029.
"Uncertainty remains in BC, awaiting the Government decision on transition plan for Atlantic salmon aquaculture. In the meantime, Grieg Seafood has suspended all strategic investments in the region," Kvame said. The company indicated it is in the process of identifying long-term partners to support its Canadian operations, with a conclusion to this process expected by autumn 2024.
Grieg also said it anticipates a challenging third quarter in British Columbia due to ongoing environmental conditions, with an expected operational EBIT loss in the range of NOK 230-250 million (EUR 19.9-21.7 million / USD 21.3-23.1 million).
"Looking forward, investments in operational assets and biomass are developing according to plan, I am also pleased to say the construction of our new post-smolt facilities in Rogaland, Finnmark and Newfoundland, in addition to the VAP facility at Gardermoen, are progressing well," Kvame said.
And despite the challenges, the company remains optimistic about the future, with expectations of harvesting 16,700 tonnes in Q3 2024 and targeting a total harvest volume of 78,500 tonnes for the full year.
