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Grieg makes £1.5m loss in Q4 of ‘challenging year’

A Grieg salmon farm site. The company made an operating loss in the final quarter of a
A Grieg salmon farm site. The company made an operating loss in the final quarter of a "challenging" 2020.

Disrupted markets with low spot prices contributed to an operating loss for Grieg Seafood in the fourth quarter of last year.

The salmon farmer made EBIT of NOK -17 million (-£1.54m), compared to NOK 351m in Q4 2019, and EBIT per kg of NOK -0.8 (15.2), it revealed in its Q4 report.

Grieg harvested a total of 20,271 gutted weight tonnes in Rogaland and Finnmark in Norway and in British Columbia, Canada in Q4, around 10% less volume than in Q4 2019.

Profit and harvest figures for Grieg’s Shetland operation are not included because it is up for sale.

Sales revenue down 20%

Grieg’s 2020 harvest volume was 71,142 gwt (71,700), below guidance of 75,000 gwt (excluding Shetland) due to ISA harvest capacity challenges in Finnmark.

The company expects to harvest 80,000 tonnes (ex Shetland) this year.

Sales revenues in Q4 2020 from continuing operations amounted to NOK 1.163 billion, a decrease of 20% compared to Q4 2019 mainly due to the lower spot prices in Norway, resulting in a negative revenue contribution on EBIT of NOK 107m when comparing average realised prices in the quarter to Q4 2019.

However, earnings from British Columbia (BC) impacted EBIT positively by NOK 15m. The negative effect from lower market prices was also somewhat offset by favourable fixed price contracts in Rogaland and Finnmark.

Quality downgrades

Farming cost during the period increased compared to the same quarter last year, primarily due to biological challenges in Finnmark and to some extent because of decreased survival in Rogaland.

Grieg said that on top of a challenging salmon market in Norway, Finnmark had been negatively impacted by quality downgrades related to infectious salmon anaemia (ISA), and superior grade for the quarter ended at 77%. BC experienced a strong recovery from the challenges with harmful algae blooms (HAB) in prior quarters. However, farming cost in the fourth quarter carried high costs from previous HAB incidents.

Narrowing focus

Chief executive Andreas Kvame said: “Overall, 2020 has been a challenging year. We did not deliver on our ambitions, not only because of Covid-19 but also due to biological challenges in several regions.

“We have taken important steps to remedy the situation. We have strengthened our operational capabilities with a new and more farming oriented organisational set-up, and with a potential sale of our Shetland operations, we are narrowing our focus to Norway and Canada as strong production regions. We have also started our journey to take a stronger market position with a new and integrated sales and marketing organisation.

“As we are starting to see the light in the end of the tunnel and a post-Covid-19 world, Grieg Seafood continue the journey of improvement, with the aim of creating long-term value for all our stakeholders.”