Lerøy Seafood Group: progress on biology but profits dropped by 15% in Q1

CEO Henning Beltestad says "our fish are growing well" as the company implements new measures to improve fish health.
Lerøy Seafood at Seafood Expo Global in Barcelona, 2023.

Lerøy Seafood at Seafood Expo Global in Barcelona, 2023.


The Lerøy Seafood Group ASA has released its financial results for the first quarter of 2024, reporting a consolidated operational EBIT of NOK 842 million (EUR 72 million / USD 78 million) - marking a drop of 15% compared with Q1 2023.

Lerøy's salmon and trout farming segment, comprised of its sites Lerøy Aurora, Lerøy Midt and Lerøy Sjøtroll, contributed NOK 576 million (EUR 49 million / USD 54 million) despite low harvest volumes, which at just over 26,000 tons stood at 8% lower than the same time last year.

Despite the lower harvest volume and drop in profits, CEO Henning Beltestad looked on the positive side: "We have had a good quarter in Farming with strong biological development," he said.

"Considering the very cold sea temperatures, our fish are growing well. It is also very pleasing to note significant improvement in biology and earnings at Scottish Seafarms," Beltestad added.

Harvest volumes down in the first quarter, but hopes for improvement following sea lice measures

In its report, Lerøy noted that the lower harvest volumes were "in line with the normal seasonal pattern". At 5,982 GWT, Lerøy Aurora achieved a similar volume to last year, however at Lerøy Sjøtroll, harvest volumes were down by more than half, reaching only 6,702 GWT, compared with 14,237 last year.

Meanwhile, Lerøy Midt significantly increased its harvest volume, reaching 13,692 GWT in comparison with last year's 8,667 GWT -- but this was counteracted by a higher-than-normal level of downgraded salmon (so-called "production fish"), which impacted prices.

Operating EBIT/kg for the value chain as a whole in Q1 2024 was NOK 43.8 for Lerøy Aurora, NOK 31.1 for Lerøy Midt and NOK 9.6 for Lerøy Sjøtroll.

In a bid to improve fish health and reduce sea lice, the Lerøy Midt division has implemented four submersible facilities, which have so far shown positive results, including low lice counts and no treatments required to date, the company said. The company expects Q2 to mirror Q1's harvest volume, but with fewer downgrades.

Overall, in 2024 Lerøy's harvest volume guidance amounts to 175,000 GWT across all three sites, with 47,000 GWT expected from Lerøy Aurora, 70,000 from Lerøy Midt and 58,000 GWT from Lerøy Sjøtroll.

Meanwhile, looking further ahead, Beltestad said,"Due to reduced license capacity at Lerøy Sjøtroll (following the traffic light system), we have chosen to adjust the harvest target for Norway in 2025 to 200,000 GWT."

Quota restrictions pose challenge for wild catch, but "good momentum" in downstream operations

The Wild Catch segment, traditionally in its high season during the first quarter, reported an operational EBIT of NOK 187 million (EUR 16 million /USD 17 million). Lerøy attributes this to good catch volumes and high cod prices. However, future challenges are anticipated due to impending quota reductions, Beltestad noted.

Downstream operations, under VAP S&D, generated an EBIT of NOK 176 million (EUR 15 million / USD 16 million) -- a surge of 83% year-on-year, driven by operational improvements and high capacity utilization across Norwegian facilities, the CEO said.

"With our fully integrated value chain, we have a favorable position with high processing capacity in Norway, which we have utilized well in the quarter. We have good momentum and have succeeded in reversing the trend in several downstream businesses," Beltestad said.

Fish welfare a strategic priority, says CEO

In line with other salmon companies, Lerøy also highlights fish health and welfare as an area of strategic concern in its report.

"At Lerøy, we are taking new steps towards achieving ambitious, strategic goals for 2025. Our implementation of shielding technology is showing promising results, with minimal need for sea lice treatments," Beltestad said.

"We are introducing better genetics and have made important process improvements in roe and smolt. The result is a more robust fish that grows better. We are also increasing the share of trout production, which historically has better biological performance, at Lerøy Sjøtroll," Beltestad added.

The measures, Beltestad emphasised, are considered not only crucial for fish welfare but also of "great importance" for the company's financial development.

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