Grieg Seafood ASA: Q3 2023 results
Highlights
Biological on-off events have impacted production and results. Action taken to reduce biological risks
Low harvest volume in the quarter to focus on rebuilding biomass
Milestone reached in Newfoundland, where we in October conducted our very first harvest
Expansion of post-smolt in Finnmark to accelerate post-smolt strategy
78% of the harvested volume in the quarter ASC certified
Expect harvest of 25,800 tonnes in Q4 2023. Total volume of 76,000 tonnes in 2023, increasing to 85,000 tonnes in 2024
Financial results
Operational EBIT for Grieg Seafood was NOK -86 million in the third quarter of 2023,
compared to NOK 145 million in the corresponding period last year. Harvest volume was 12,245 tonnes in the period (22,923), which gives an operational EBIT per kg of NOK -7.0 (6.3).
Commenting on the quarter, Andreas Kvame, CEO of Grieg Seafood ASA said:
“During the third quarter, Grieg Seafood’s main priority was to let the fish grow and build biomass. As a result, harvest volumes were low, causing increased costs per kilo. The operational performance was impacted by a mixture of different biological challenges, including Spiro in Finnmark, harvesting at low weights due to previous ISA outbreaks in Rogaland and seasonal biological issues in British Columbia. Unfortunately, these events reduced our price achievement and earnings.
I am not satisfied with the results. We are turning every stone in the regions to get back on track. Mitigating measures have been implemented, such as vaccination programs against ISA and winter ulcers as well as a UV filter to prevent Spiro from entering our smolt facility. Due to the long production cycle of the salmon, it takes some time before we see the effect of the measures. I am encouraged that the underlying biology in Rogaland is good. In Finnmark, the generation of fish transferred to the ocean during 2023 has not been impacted by Spiro and is performing well.
The development in Newfoundland was the high point of the quarter, with commenced first harvest in October. Biological control has been strong, with high survival, good fish health and welfare, good growth, good product quality and no sea lice issues. We look forward to taking the next steps in Newfoundland.
In addition to short-term measures to improve biology, Grieg Seafood are also taking steps towards our ambitions of sustainable growth in the medium to long term. We are investing NOK 1.1 billion in a 3,000 tonnes post-smolt expansion in Finnmark, to advance biological control, fish health and welfare and sustainability. In Canada, we see huge opportunities for sustainable salmon farming in close proximity to the growing North American market. We aim to realize the Canadian potential. However, developing the Canadian operations require substantial investments at a time when the resource tax and overall inflation require greater capital discipline. As such, we are seeking long-term partners to invest with us, allowing us to develop our business in Canada at pace.
While it has been a tough quarter, a lot of good work has been done to get back in shape. I want to thank all of my hard-working colleagues for their efforts.”
Harvest volume in Rogaland was 4,783 tonnes in the quarter (6,841). Farming cost increased compared to Q2 2023 mainly due to the low harvest volume and ISA-related harvesting. At quarter end, there were no sites with ISA. 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 0.7 for the quarter (13.4), impacted by the low harvest volume in addition to reduced average harvest weight compared to Q3 2022 due to early harvest. Due to the early harvest of ISA-infected fish in the quarter, the full year 2023 harvest target for Rogaland is reduced from 27,000 to 26,000 tonnes.
In Finnmark, harvest volume was 1,354 tonnes in the quarter (8,174). We did not plan to harvest during Q3, however we prioritized earlier harvest to maintain fish welfare related to Spiro. Water treatment equipment have been installed and disinfection measures have been implemented to significantly reduce future risks of Spiro entering the freshwater facility. We have not had any new detections of Spiro at the freshwater facility in 2023. The new generation of smolt transferred to sea in 2023 is in good health and is performing well. Farming cost increased from last quarter mainly due to low harvest volume at lower weights. Operational EBIT/kg for the quarter ended at NOK -27.1 (14.0), impacted by the low harvest volume, low superior share and low average harvest weight. Unfortunately, earlier harvest to maintain fish welfare has also occurred in Q4. Therefore, the full year 2023 harvest estimate is lifted from 26,000 to 27,000 tonnes.
In BC, harvest volume was 6,108 tonnes in the quarter (7,908). The seawater performance was impacted by seasonal challenges including high sea lice pressure necessitating treatments and events of low dissolved oxygen, however the situation improved towards the end of the quarter. The survival rate remained stable from last quarter, however these events impacted farming 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. During the quarter, Newfoundland completed the smolt transfer to sea this year, which totals 2.5 million smolt with an average weight of 140 grams. The 12 month rolling survival rate as of quarter end was 96%, with good growth at sea, and no sea lice issues. At the end of Q3 2023, we had approximately 9 300 tonnes biomass at sea with an average weight of 2.0 kg. The average weight of the fish transferred to sea in 2022 was 4.1 kg at the end of the quarter. We started harvesting in October, with excellent results. Total harvest for the year is estimated to 5,000 tonnes.
Outlook
Global harvest of Atlantic salmon in 2023 is expected to be slightly reduced compared to 2022. With expectations of no growth in global harvest in 2023, combined with an outlook for continuing strong demand fueled by an increased focus on healthy food and sustainably produced proteins, we currently expect sustained strong market for the remainder of 2023.
Grieg Seafood generally targets an annual contract share of 20-50%. Estimated contract share for the Norwegian operations in Q4 2023 is 15% and 15% for the full year 2023.
In Q4 2023, expected harvest volume is 25,800 tonnes, distributed as follows:
Rogaland: 2,200 tonnes
Finnmark: 12,200 tonnes
BC: 6,400 tonnes
Newfoundland: 5,000 tonnes
Grieg Seafood guides for a total harvest volume of 76,000 tonnes in 2023, down from previously guided 78,000 tonnes:
Rogaland: 26,000 tonnes
Finnmark: 27,000 tonnes
BC: 18,000 tonnes
Newfoundland: 5,000 tonnes
Results presentation
Grieg Seafood ASA releases its third quarter 2023 report today at 6:00 a.m. CET.
At 8:00 a.m. CET, 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/landingpage/hegnarmedia/20231114_3/
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
For media enquiries, please contact:
Kristina Furnes, Chief Communications Officer
Cell phone: +47 48185505 / kristina.furnes@griegseafood.com
About Grieg Seafood
Grieg Seafood ASA is one of the world's leading salmon farmers. Our farms are in Rogaland and Finnmark in Norway, as well as in British Columbia and Newfoundland in Canada. Our headquarter is in Bergen, Norway. Grieg Seafood ASA was listed at the Oslo Stock Exchange in June 2007.
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. 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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