Demand strong but costs high: Lerøy
LERØY Seafood Group, co-owners of Scottish Sea Farms, has said in its 2018 annual report today that it expects good underlying demand for seafood but costs are still too high.
Despite a two per cent decline in the harvest volumes forecast, the actual figure was up from 173,200 tonnes in 2017 to 175,800 tonnes.
Revenues were up from NOK 18,623 million to NOK 19,837 million, while the operating profit was down from NOK 435 million in 2017 to NOK 333 million last year.
The 2019 harvest volume forecast for Scottish Sea Farms, which it shares with SalMar, is 15,000 tonnes, up from 13,700 tonnes in 2018.
Lerøy said lower growth at the end of 2018 resulted in reduced harvest volume in the first quarter of 2019.
‘The board of directors and management have acknowledged that the group\’s release from stock costs for red fish (salmon and trout) are lower in 2018 than in 2017, but at the same time specify that they are not satisfied with the cost levels.
‘With time, the group\’s investments and continuous work on improvements will result in lower cost levels.
‘As a result of the investments in new smolt facilities, the smolt released to sea by Lerøy in 2019, for example, will be of a higher quality and considerably larger than before.
‘The group expects to see Lerøy gradually increase production and competitive strength from 2020.
‘The group’s contract share for salmon for 2019 is currently around 30 per cent of the estimated harvest volume of salmon.
‘Estimates for harvest volume of salmon and trout in 2019, including the share from associates, remains around 189,000 tonnes.’
In the VAP, sales and distribution segment, the company said it has major downstream activities and a clearly defined goal to drive demand for seafood in the form of new products and market development.
It has also identified positive synergy effects in its marketing work as a result of the acquisition in white fish.
Highly volatile prices for salmon and trout had a negative impact and affected earnings for the segment in 2018. But the group expects a positive development both in the level of activities and earnings in 2019.
Picture: Lerøy CEO Henning Beltestad
