Lerøy Seafood Group blamed a drop in year-on-year Q4 earnings on a 25% fall in spot prices caused by an increase in supply. Photo: LSG

Lerøy harvests more fish but earns less

Lerøy Seafood Group (LSG), which has a 50% stake in Scottish Sea Farms, has reported higher harvests but lower revenue and operating profits for the fourth quarter of 2017 as a result of a 25% fall in spot prices.

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Revenue for Q4 2017 fell by 7% to NOK 4,567 million (£417.7m) compared to NOK 4,924m in Q4 2016, and operating profit fell by 24% to NOK 777m (£71m).

Harvested volumes of salmon and trout in Q4 2017 were 42,280 tonnes gutted weight, an 8% increase on the 39,143 tonnes harvested in Q4 2016.

For 2017 as a whole, volumes, revenues and operating profit all increased. LSG harvested 157,768 tonnes of fish, up from 150,182 tonnes in 2016. Revenues rose to NOK 18,624m (£17m) from NOK 17,269m in 2016, and operating profit increased to NOK 3,717m (£340m) from NOK 2,843m in 2016.

In its Q4 2017 report, LSG said lower profits were largely the price of the success by the Norwegian salmon industry in increasing production for the first time since 2012 and consequently pushing spot prices down.

It said: “Throughout 2017, the Norwegian fish farming industry has shown a positive development when it comes to biological performance. Improvements in production resulted in higher harvest volumes, which in turn put some pressure on the spot price for salmon. The spot price for salmon, measured according to the NSI benchmark, was NOK 65.8 per kg in Q4 2016, compared with NOK 49.3 per kg in Q4 2017.”

LSG reported successful operations in its North and Central Norway regions, but excessive costs in the Western (Sjøtroll) region. LSG stated: “As previously reported, Lerøy Sjøtroll suffered a difficult and acute situation at some of its localities in the last part of Q3 2017. The resulting high operating expenses and loss of biomass resulting in a lower harvest volume than expected have also had an impact on costs for Q4 2017. The release from stock costs for Lerøy Sjøtroll in Q4 2017 are somewhat lower than in Q3 2017, but remain much higher than the level considered normal by the Group.

“Despite a disappointing third and fourth quarter, we currently expect a substantial fall in release from stock costs in Lerøy Sjøtroll in 2018, although the release from stock costs will remain higher than corresponding costs in other regions for the Group.”

The Q4 2017 results from Scottish Sea Farms (SSF) were described as satisfactory, with good biological performance on the majority of sites harvested in the quarter.

Harvest volumes for SSF were 7,212 tonnes in Q4 2017, up from 5,759 tonnes in the same period in 2016, and 30,996 tonnes for 2017 as a whole, up from 28,043 tonnes in 2016.