Lerøy reports 44% rise in operating profits for Q3

The Lerøy Seafood Group, which issued 339 redundancy notices last week, today announced a 44% increase in third quarter operating profits to NOK 831m (£70m).

The figure for operating profits before fair value adjustment compares with NOK 579m (£49m) on the same period last year, an increase of 44% year on year. This represents the highest quarterly revenue in the group’s history.

Based in Bergen, Lerøy is a combined fish farming and catch fishing business operating one of Norway’s largest whitefish trawler fleets. It also owns a half share in Scottish Sea Farms (also known as Norskott Havbruk) with SalMar.

Lerøy Seafood said strong demand for seafood, including significantly better price achievement for the group’s main products, is the most important reason for improved earnings compared to the corresponding period last year.

CEO Henning Beltestad said: “The growth in aquaculture through the third quarter and the start of the fourth quarter has been somewhat weaker than expected, and as a result the expectation for harvesting volume has been reduced by 5,000 tonnes for 2022.”

The group’s salmon and trout harvest by volume in Q3 2022 was 56,179 tonnes (compared with 56,397 tonnes in Q3 2021) and the total harvest volume for 2023 is estimated at 202,000 tonnes including the group’s joint venture.

Turning to the tax controversy, he went on: “Lerøy, with a fully integrated value chain, feels that the proposal contains significant weaknesses which are characterised by a lack of insight into the industry’s complex value chain.

“The proposal already affects Lerøy’s day-to-day operations significantly negatively, and will have significant long-term negative consequences for Lerøy and the industry.”

He added: “This entails great uncertainty, a breach of trust and, not least, a proposal that lacks sufficient insight into the industry’s dynamics.

“The consequences are very serious for Lerøy and our employees, and our expectation is that implementation of the proposal will be postponed so that a thorough consultation round can be carried out with subsequent consideration and a broad settlement in the Storting [Norway’s parliament].”

Lerøy Havfisk had 10 deep sea trawlers in operation with the catch volume totalling 14,862 tonnes during the quarter, compared with 12,336 tonnes in Q3 2021. A higher catch volume, higher catch rates and good demand were key factors in the improved earnings from the trawler fleet.

The Q3 report said higher volumes, coupled with a significant drop in prices for salmon and trout, are leading to lower margins in farming and increasing margins in downstream operations. Price inflation for almost all input factors over the last year has also affected costs for the group.