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Grieg Seafood ASA (“Grieg Seafood” or “the company”) will release the full report for the third quarter 2020 report on 17 November. Ahead of the report, the company hereby provides an operational and financial update. The numbers are estimates, and final numbers will be presented at Q3.
EBIT before fair value adjustment for the third quarter 2020 of NOK -187 million (154) due to lower spot prices, higher costs in British Columbia (BC) and NOK 150 million directly related to the discontinued operations on the Isle of Skye.
Postponing parts of Newfoundland project due to market uncertainty and lower visibility following Covid 19
Expect total harvest volume of 90,000 tonnes in 2020. Transferring harvest of 5,000 tonnes to 2021 to optimize harvest weight and time to market
The new reporting date for third quarter 2020 is 17 November, changed from 4 November as originally planned
Third quarter 2020
Grieg Seafood harvested 21,200 tonnes GWT in the third quarter, in line with guiding of 21,400 tonnes. In the third quarter 2019, total harvest was 21,000 tonnes.
Following market turbulence and demand shift from hotels, restaurants and catering (horeca) to retail due to Covid-19, market prices in the quarter were down compared with Q3 2019. In addition, prices achieved in Shetland were negatively impacted by advanced harvesting at Skye resulting in lower harvest weight. Prices achieved in Finnmark and Rogaland were good in the quarter.
Farming cost in the quarter is negatively impacted by the low harvest weights in Skye, in addition to increased costs from handling of biological challenges in both Shetland and BC.
As announced on 18 September, Grieg Seafood has decided to discontinue its operations on the Isle of Skye in Scotland, with immediate liquidation of parts of the operations. Previously communicated write-down of biomass due to mortalities, combined with low price achievements on fish harvested and high production and other shut-down costs will impact EBIT for the third quarter negatively by approximately NOK 150 million.
EBIT before fair value adjustment of biological assets is estimated to NOK -187 million in the quarter, compared with NOK 154 million in the third quarter of 2019.
Total harvest volume for the first nine months of 2020 was 63,472 tonnes. For the fourth quarter, the company expects to harvest 26,500 tonnes, bringing total volume for 2020 to around 90,000 tonnes. This is a reduction of 5,000 tonnes from previous estimate and is manly related to transfer of harvest volume to 2021. By utilizing acquired MTB capacity, Grieg Seafood aims to optimize harvest weight and timing to market.
EBIT pre FV (NOKm)
Harvest volume (tonnes)
EBIT pre FV/kg (NOK/kg)
2020 harvest volume estimates (tonnes)
The Covid-19 pandemic disrupted the salmon market, with a significant shift in demand and lower prices in core markets. A priority for Grieg Seafood is, in addition to protecting people, local communities, partners and business operations, to secure liquidity and financial solidity.
Following the outbreak of Covid-19, market uncertainty increased, and prices has come down in all core markets, impacting Grieg Seafood’s earnings negatively. With outlook for lower earnings short- to mid-term, results of performed stress tests on key financial indicators indicates that the company may breach with covenants outlined in the loan agreements. Following negotiations with the banks, Grieg Seafood is granted amendment to the covenants through the third quarter 2021.
Update on greenfield project in Newfoundland
In February, Grieg Seafood acquired a greenfield project in Newfoundland that includes exclusivity for salmon farming in the Placentia Bay area. The GSF Newfoundland project currently comprises licenses for 11 sea sites. Eight licenses are approved, while the rest are in different stages of application. The project also includes a high-end RAS facility under construction.
Grieg Seafood continuously evaluates its projects. In the current environment with increased market uncertainty because of the ongoing Covid-19 pandemic, low salmon prices and reduced market visibility, the basis for the development of GSF Newfoundland has changed. Further, due to more need for on-site construction rather than the planned module deliveries, the complexity has increased.
Therefore, to lower risk in the initial phase of this large project, the company has decided to slow down the pace of investments. The construction of the planned post-smolt A unit in the first phase is deferred out in time. The RAS facility currently under construction is dimensioned to serve all future post-smolt modules. Consequently, the facility has adequate capacity to ensure necessary on-growth, also in a situation with post-smolt A facility moved out in time.
The company estimates that the total investment for the RAS smolt facility, excluding completion of the post-smolt A unit, will be around CAD 60 million for the years 2020-2021. The project for post-smolt A will at a later stage be evaluated for construction. Current estimate for finalization is estimated to CAD 30 million.
Grieg Seafoods ambition for the Newfoundland project remains, and the company is committed to develop the project according to milestones outlined in the permissions granted by the authorities.
The first fish is already growing in the freshwater facility and the annual harvest volume target to be reached by 2025 for the first phase is still 15,000 tonnes, with the first harvest planned for 2022/2023.
Grieg Seafood will release the full report for the third quarter 2020 on 17 November at 06:00 CET, followed by a webcasted management presentation at 08:00 CET. At the event, the company will also provide an update on company strategy and priorities going forward.
For further enquiries, please contact:
Andreas Kvame, CEO
+47 907 71 441 / email@example.com
Atle Harald Sandtorv, CFO
+47 908 45 252 / firstname.lastname@example.org
For media enquiries, please contact:
Kristina Furnes, Global Communications Manager
+47 48185505 / email@example.com
About Grieg Seafood
Grieg Seafood ASA is one of the world's leading salmon farmers, targeting 90,000 tonnes of harvest (GWT) in 2020. Our farms are in Finnmark and Rogaland in Norway, British Columbia and Newfoundland in Canada, and Shetland in the UK. Our headquarter is located in Bergen, Norway. Grieg Seafood ASA was listed at the Oslo Stock Exchange in June 2007. More than 900 people are employed globally.
Sustainable farming practices are the foundation of Grieg Seafood's operations. The lowest possible environmental impact and the best possible fish welfare drive economic profitability. Towards 2025, we aim for global growth, to achieve cost leadership in each region and to evolve from a pure salmon supplier to an innovation partner for selected customers.
To learn more, please visit www.griegseafood.com.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.