Lower harvest hits Lerøy profits

Norwegian salmon and trout farmer Lerøy Seafood Group (LSG) – which owns half of Scottish Sea Farms - has reported a lower harvest volume and operating profit for the first quarter of 2019 compared to the same period last year.

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The company harvested 32,317 tonnes of salmon and trout in Norway in Q1, a 14% drop compared with the 37,576 tonnes harvested in Q1 2018.

Operating profit (EBIT) before fair value adjustment related to biological assets was NOK 691 million (Q1 2018: 960m), and pre-tax profit (PTP) and fair value adjustment related to biological assets was NOK 748m (Q1 2018: 1,018m).

LSG pointed out that accounting changes regarding lease costs means EBIT is not directly comparable to previous quarters.

Lower operating profit

Income from associate companies, including Scottish Sea Farms (SSF), was NOK 73m, compared with NOK 87m in Q1 2018. SSF’s contribution dropped from NOK 76.3m in Q1 2018 to NOK 24.6m in the first three months of this year due to lower harvesting as a result of the stocking cycle.

“As reported after the fourth quarter, the harvest volume from farming [in Norway] was down from Q1 2018, and this is the most significant factor behind the lower operating profit for the quarter when compared with Q1 2018,” reported LSG.

Challenges with reproductive maturity in trout grown by one of the company’s three Norwegian farming sectors - Lerøy Sjøtroll - had a major impact on prices realised for the fish, which were NOK 9 per kg lower than prices realised for salmon.

Fire pushes up costs

A fire in a smolt facility at Lerøy Aurora in Q1 2019 that resulted in the loss of 2.6 million smolts also pushed up release-from-stock costs.

“The work on rebuilding the facility is well under way, and the lost smolt to be released this year have now been replaced,” reported LSG.

“The fire, in combination with the limited harvest volume, are substantial factors in the higher release-from-stock costs when compared with Q1 2018. The fire will also affect costs in Q2 2019.

“As a result of the delayed release of smolt and depending on the market, the Group may reduce its harvest volume in 2019 in order to allow for growth in 2020. At the time of writing, the Group expects Lerøy Aurora to report higher than normal costs in Q2 2019. Lerøy Aurora plans to harvest approximately 36,000 gutted weight tonnes in 2019.”

The planned harvest volume for the Group in Q2 2019 is also 36,000 tonnes.