Lerøy CEO Henning Beltestad - 'we have a robust business model with significant potential'

Lerøy upbeat about future after Q2 profits soar

Norwegian salmon farmer Lerøy reported improved earnings in the second quarter of 2021 compared to the same period last year, based on higher prices and improved productivity in its white fish segment.

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The company, which owns 50% of Scottish Sea Farms, saw revenue rise to NOK 5,304m (£430,000), compared to NOK 4,712 m in Q2 2020.

Group operating profit before fair value adjustment related to biological assets was up 92.4%, from NOK 583m (NOK 303m).

Operating profit for the farming segment before fair value adjustment related to biological assets was NOK 388m in Q2 2021, up almost 80% compared to NOK 216m in Q2 2020.

A total of 37,000 tonnes was harvested during the quarter, compared to 39,000 tonnes in Q2 2020.

Salmon farming investments will bring further growth

EBIT per kg was up from NOK 5.5 in Q2 2020 to NOK 10.6 in Q2 2021. Compared with the same quarter in 2020, costs per kilo were down, but the improvement in prices realised was the main factor in the higher earnings.

CEO Henning Beltestad said that while Lerøy was not exploiting the full potential in its farming division, the company ‘can and will improve’.

‘The last quarter shows that we have a robust business model with significant potential,’ he said.

Covid-19 restrictions

‘There has been a good development in demand for seafood in 2021. Demand in retail was strong in the first quarter. This continued in the second quarter, when we also saw demand gradually picking up in the hospitality and catering segments further to the easing of Covid-19-related restrictions. We’re seeing a very strong position for seafood in the markets.’

Beltestad said there were more downgrades in quality in its farming segment than normal in the second quarter.

‘This has had a significantly negative impact on earnings in the quarter, and is an obvious top-priority area of improvement for us.

‘Growth in the second quarter has been good, and we’re maintaining our guidance, with our Norwegian business expected to harvest around 192,000 tonnes this year.

Organic growth

‘This will be a substantial increase over the last two years, up from 158,000 tonnes in 2019. This growth is organic, and makes us one of the fastest growing companies in Norway in this period – and we have the potential for further organic growth in the years ahead.’

The group maintains its forecast of a total harvest volume for 2021 of 205,000 to 210,000 tonnes.

Lerøy said its investments in improved smolt production and post-smolt production, combined with a number of other initiatives, will support the company’s ambition for continued growth in volume and improved competitiveness by means of lower production costs.

In February, Beltestad announced the company was investing around NOK 1 billion (£85m) in an on-land post-smolt RAS facility that could also be used to grow fish to harvest size in Vestland in western Norway.

Lerøy Seafood Group said Scottish Sea Farms’ acquisition of Grieg Shetland would bring significant potential for increased earnings through sound operational understanding, improved biological control and realising synergies by integrating the two companies.