Grieg Seafood ASA: Q2 2023 results
Highlights
Harvest volume of 22,645 tonnes (23,672 tonnes)
Operational EBIT in the quarter of NOK 547 million (NOK 986 million), with operational EBIT/kg of NOK 24.2 (41.6)
Salmon market remains strong, supporting earnings
Biological control improved as a result of mitigating actions taken, supporting good growth going forward
Newfoundland developing according to plan
85% of the harvested volume in the quarter ASC certified
Expect harvest of 10,500 tonnes in Q3 2023, prioritizing biomass growth
Target harvest volume of 78,000 tonnes for the full year 2023
Financial results
Operational EBIT for Grieg Seafood was NOK 547 million in the second quarter of 2023, compared to NOK 986 million in the corresponding period last year. Harvest volume was 22,645 tonnes in the period (23,672), which gives an operational EBIT per kg of NOK 24.2 (41.6).
Commenting on the quarter, Andreas Kvame, CEO of Grieg Seafood ASA said:
“Second quarter 2023 was yet another good quarter for the salmon farming industry, with continued strong demand in all main markets and segments. With only marginal increases to global supply, market prices were high, contributing to high revenues for Grieg Seafood.
Challenging biological conditions seen in previous quarters were still present in the second quarter, particularly in the Finnmark region. However, a broad range of mitigating actions to thoroughly address the issues, particularly ISA and Spiro in our Norwegian operations, were completed in Q2 and we have started to see positive results. Improved biological control, combined with the transfer of increasingly larger smolt and reduced production time in the ocean, provide the basis for improved fish welfare and performance as well as stronger growth in the coming quarters.
While we are still working to understand the implications of the resource tax in Norway, we see opportunities in Canada. Our Newfoundland greenfield project is developing according to plan, with the first harvest expected in Q4 2023. In British Columbia, we support the Government’s efforts to transition the industry into better practices, and we continue a constructive dialogue, focusing on sustainable solutions.
I want to sincerely thank all of my dedicated and hardworking colleagues in both farming and sales for their efforts and achievements throughout the quarter. Together, we continue our journey of improvements and sustainable growth.”
Harvest volume in Rogaland was 11,536 tonnes in the quarter (5,014), contributing to record high quarter results driven by high prices and optimal timing of harvest. Farming cost was stable from Q1 2023, somewhat impacted by ISA-related harvesting and write-downs. Addressing the issue, Grieg Seafood has initiated a vaccination program against ISA for all smolt release to sea, and completed additional measures at its smolt facilities, which is expected to reduce risk related to ISA significantly going forward. Operational EBIT/kg ended at NOK 36.7 for the quarter (48.9), impacted by a reduced superior share, negative contribution from contracts and reduced average harvest weight compared to Q2 2022. Due to early harvest of ISA-infected fish during the first half year, the full year 2023 harvest target for Rogaland is reduced from 29,000 to 27,000 tonnes.
In Finnmark, harvest volume was 5,573 tonnes in the quarter (9,843). Results were satisfactory under prevailing biological conditions. However, biological control has improved throughout the first half of the year, which improves the foundation for growth going forward. Farming cost was down compared to the previous quarter, mainly due to lower write-down of biomass. Operational EBIT/kg for the quarter ended at NOK 25.4 (53.0), impacted by a low superior share, low average harvest weight and negative contribution from contracts. To compensate for the advance harvesting in Finnmark in previous quarters, Grieg Seafood plans for no harvest in Q3 2023, prioritizing biomass growth. The full year 2023 target of 26,000 tonnes harvest remains.
In BC, harvest volume was 5,537 tonnes in the quarter (8,815). The seawater performance during the quarter was impacted by seasonal challenges including sea lice treatments and events of low dissolved oxygen, reducing survival and increasing costs, resulting in negative results for the BC operations during the quarter.
In Newfoundland, both freshwater and seawater production was good during the quarter. High smolt quality combined with favorable biological conditions contributed to good fish health and survival high. Grieg Seafood plan to release some 2.3 million smolt during 2023. Average weight of fish transferred to sea in 2022 was 2.1 kg and first harvest is expected to commence in Q4 2023. Total harvest for the year is estimated to 5,000 tonnes.
Outlook
Global harvest of Atlantic salmon in 2023 is expected to be in line with 2022, with only a 1% increase compared to last year. Grieg Seafood expects a continued strong salmon market going forward. However, current inflation reducing household purchasing power might impact demand from both the HoReCa (hotels, restaurants and catering) and retail segment. This, in combination with the expected seasonal increase in supply for the next months will most likely drive prices downwards.
Grieg Seafood generally targets an annual contract share of 20-50%. Estimated contract share for the Norwegian operations in Q3 2023 is 42% and 15% for the full year 2023.
In Q3 2023, expected harvest volume is 10,500 tonnes, distributed as follows:
Rogaland: 4,500 tonnes
BC: 6,000 tonnes
Finnmark targets no harvest in Q3, prioritizing biomass growth.
Grieg Seafood guides for a total harvest volume of 78,000 tonnes in 2023, down from previously guided 80,000 tonnes:
Rogaland: 27,000 tonnes
Finnmark: 26,000 tonnes
BC: 20,000 tonnes
NL: 5,000 tonnes
Results presentation
Grieg Seafood ASA will release its second quarter 2023 report on Friday, 25 August 2023, at 6:00 a.m. CEST.
The same day at 8:00 a.m. CEST, CEO Andreas Kvame and CFO Atle Harald Sandtorv will present the results live at Hotel Continental, Stortingsgaten 24/26, Oslo.
Following the presentation, it will be opened up for questions from the audience. The presentation and the subsequent Q&A will be held in Norwegian.
A live webcast from the presentation can be accessed at www.investor.griegseafood.com or with the following link: https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20230825_1
Webcast participants need to register to post questions. A recording of the webcast and an English transcript of the webcast will be made available on the company’s website.
For further enquiries, please contact:
Andreas Kvame, CEO
Cell phone: +47 907 71 441
Atle Harald Sandtorv, CFO
Cell phone +47 908 45 252
About Grieg Seafood
Grieg Seafood ASA is one of the world's leading salmon farmers. Our farms are in Finnmark and Rogaland in Norway, as well as in British Columbia and Newfoundland in Canada. Our headquarter is located in Bergen, Norway. Grieg Seafood ASA was listed at the Oslo Stock Exchange in June 2007. More than 750 people work in the Company throughout our regions.
Sustainable farming practices are the foundation of Grieg Seafood's operations. The lowest possible environmental impact and the best possible fish welfare is both an ethical responsibility and drive economic profitability. Towards 2026, we aim for global growth, cost improvements 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.
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