Grieg Seafood sees huge potential in Newfoundland but needs money if the region is to develop at pace.

Grieg seeks partners to fund investment in Canada

Extra tax in Norway and inflation force salmon farmer to search for funds

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Norway and Canada salmon farmer Grieg Seafood has revealed that it is seeking long-term partners to invest with it to allow it to develop its business in Canada at pace.

Grieg has exclusive rights to farm in Placentia Bay in Newfoundland, where it has seen encouraging results and growth from its first crop which it began to harvest in October.

“Biological control has been strong, with high survival, good fish health and welfare, good growth, good product quality and no sea lice issues. We look forward to taking the next steps in Newfoundland,” said chief executive Andreas Kvame in a press release accompanying Grieg’s third quarter results.

65,000-tonne potential

Grieg plans to eventually produce up to 45,000 tonnes of fish per year in Placentia Bay. It has also been awarded rights to develop the Bays West aquaculture area, west of Placentia Bay, with a potential to produce an additional 20,000 tonnes of salmon.

The company has 14 licences in Newfoundland and Labrador (NL) and has applied for more.  Each licence has an allowance of one million fish at first stocking, increasing to two million fish in subsequent stockings. Five sites are stocked with fish. Grieg expects to harvest 5,000 tonnes of salmon in NL this year, with the ambition to increase to 15,000 tonnes in 2026.

Kvame said: “We aim to realise the Canadian potential. However, developing the Canadian operations require substantial investments at a time when the resource tax (Norway’s 25% extra tax on salmon farmers) and overall inflation require greater capital discipline. As such, we are seeking long-term partners to invest with us, allowing us to develop our business in Canada at pace.”

NOK -86m operating loss

Grieg Seafood made an operating loss of NOK -86 million (£6.3m/CAD 10.7m) in Q3 due to biological problems and a decision to harvest fewer fish to build biomass. In the same period last year, Grieg made an operating profit of NOK 145m.

Grieg harvested 12,245 gutted weight tonnes in the third quarter this year (Q3 2022: 22,923 gwt) which gave an operational EBIT per kilo of NOK -7.0 (NOK 6.3).

Q3 2023 results by region

Rogaland (Norway):  Harvest of 4,783 gwt (Q3 2022: 6,841 gwt), and operating profit of NOK 3.1m (NOK 432.9m).

Finnmark (Norway): Harvest of  1,354 gwt (8,174 gwt) and operating loss of NOK -36.7m (NOK 114.5m).

British Columbia (Canada): Harvest of  6,108 gwt (7,908 gwt), and operating loss of  NOK -19.5m (NOK -40.6m).

Newfoundland (Canada): Operating loss of NOK -21.2m (NOK -24.1m). The company didn't begin its first harvest until Q4 2023.

“The operational performance was impacted by a mixture of different biological challenges, including Spiro (the parasite Spironucleus salmonicida) in Finnmark, harvesting at low weights due to previous ISA (infectious salmon anaemia) outbreaks in Rogaland and seasonal biological issues in British Columbia. Unfortunately, these events reduced our price achievement and earnings,” said chief executive Andreas Kvame.

“I am not satisfied with the results. We are turning every stone in the regions to get back on track. Mitigating measures have been implemented, such as vaccination programs against ISA and winter ulcers as well as a UV filter to prevent Spiro from entering our smolt facility. Due to the long production cycle of the salmon, it takes some time before we see the effect of the measures. I am encouraged that the underlying biology in Rogaland is good. In Finnmark, the generation of fish transferred to the ocean during 2023 has not been impacted by Spiro and is performing well.”

A tough quarter

Kvame said that in addition to short-term measures to improve biology, Grieg Seafood was also taking steps towards sustainable growth in the medium to long term.

“We are investing NOK 1.1 billion in a 3,000-tonne post-smolt expansion in Finnmark, to advance biological control, fish health and welfare and sustainability.”

He concluded: “While it has been a tough quarter, a lot of good work has been done to get back in shape. I want to thank all of my hard-working colleagues for their efforts.”