Grieg plans higher growth as revenues rise

HIGHER earnings, profits and harvest figures during the second quarter of 2018 were unveiled by the Grieg Seafood Group today.
Harvest totals came to 22,568 tonnes of salmon compared to 18,503 tonnes in Q2 2017, an increase of around 22 per cent.
Grieg said the average realised price was down by NOK 3.21 per kg, due to a combination of a high proportion of harvesting towards the end of the quarter when prices were lower, and lower price achievement for pancreas disease-affected fish from Rogaland.
Grieg Seafood\’s total operating income in Q2 2018 came to NOK 2,318.7 million (£213.7 million), an increase of 14 per cent on Q2 2017.
The farming cost (total cost related to fish harvested this quarter) decreased by NOK 1.54 per kg compared to the same quarter last year. Higher harvested volume in Finnmark and British Columbia contributed positively.
In Shetland, harvest volumes were down 23 per cent, from 3,231 tonnes in Q2 2017 to 2,482 tonnes.
‘Cost in Shetland remains high, mainly attributable to algae prevention and sea lice treatments,’ the company said.
‘Low harvest volume also affects cost per kg. Harvest volume is expected to increase in the third quarter and the cost per kg is trending in a positive direction. Regardless, the cost level in Shetland will remain at a high level.’
Production in Shetland was stable throughout the period, with freshwater treatments providing good results and the sea lice situation under control.
The estimated harvest volume for the full year remains unchanged at 12,000 tonnes. EBIT before fair value adjustment of biological assets was NOK 16.72 per kg for the quarter, up from NOK 8.32 per kg in Q2 2017.
The group\’s EBIT before fair value adjustment of biological assets was NOK 426.3 million (£39.2 million) during the quarter, compared to NOK 392.3 million (£36 million) in Q2 2017.
And EBIT per kg amounted to NOK 18.89 for the period, down from NOK 21.20 in Q2 2017.
Grieg said that as part of its strategic priorities, it has an overall goal of increasing production by at least 10 per cent annually until 2020, with the main growth in 2019.
‘The group has an ambition to achieve production cost at or below the industry average,’ the company said. ‘Continued access to high quality smolt is critical to ensure future growth.
‘In addition, larger smolt will result in shorter production time in sea, thus contributing to reduced biological risk and increased survival.
‘Another essential aspect of Grieg Seafood\’s growth strategy is the increased utilisation of the group\’s licences.
‘High site flexibility is essential to improve utilisation, and Grieg Seafood cooperates with local authorities on an ongoing basis to optimise flexibility.’
Grieg said it is also continually undertaking cost-reducing initiatives and has established an internal improvement programme, scheduled to run until 2020.
It pointed out that salmon prices were very volatile in the second quarter of 2018. Despite this, the average price level was high compared to the first three months of this year.
‘The salmon supply has been higher month by month compared to Q2 2017, which in relation to the high average prices confirms the strong underlying demand for farmed salmon.’
Grieg expects to harvest 17,100 tonnes s during the third quarter this year and 75,000 tonnes for the whole of 2018.