Grieg Seafood ASA: Q2 2022 - best quarter ever
Highlights
- Operational EBIT of NOK 986 million, with operational EBIT/kg of NOK 41.6, driven by exceptionally high prices and good biological performance
- Accelerated harvest taking advantage of high market prices - good coordination between farming and sales
- First fish to sea in Newfoundland, with high survival
- Seawater production good in all regions with stable survival
- Group farming cost of NOK 48.6 per kg (NOK 50.7 in Q2 2021). NOK 42.7 per kg for Norwegian operations, despite inflationary pressure
- Expect harvest of 21,400 tonnes in Q3 2022 and 87,000 tonnes for the full year 2022
Financial results
Operational EBIT for Grieg Seafood was NOK 986 million in the second quarter, up from NOK 44 million in the corresponding period last year. Harvest volume was 23,700 tonnes during the period (17,800), which gives an operational EBIT per kg of NOK 41.6 (2.4).
“As a continuation of the positive trend in Q1, the second quarter of 2022 also turned historic. Due to the strongest market the industry has seen, coupled with solid production, I am proud to present Grieg Seafood’s best result in a single quarter ever. I want to sincerely thank all of my dedicated and hard working colleagues in both farming and sales for their efforts and achievements throughout the quarter. In line with the strategy of our integrated sales organization, we successfully expedited some harvest to capitalize on strong prices in the market,” says CEO Andreas Kvame in Grieg Seafood.
The Norwegian farming operations delivered record results during the quarter, driven by high prices and good biological performance. Results in both Rogaland and Finnmark were positively impacted by strong price realization from high average harvest weights and positive cost development.
Results in British Columbia were solid, driven by good price achievement from premium on VAP products, in addition to stable costs from harvesting of sites with good biological performance.
In Newfoundland, fish transferred to sea is performing well, with high survival and no sea lice issues. Currently, two million smolt has been transferred to sea, with harvesting commencing late 2023.
Outlook
Global harvest of Atlantic salmon in 2022 is expected to decrease by 1% with all major regions seeing declining volumes. In the first half of 2022, the global harvest was down 4% compared to the first half of 2021. Consequently, harvest volume for the second half of 2022 is expected to increase by close to 1% compared to the corresponding period in 2021.
With limited supply growth in the second half of 2022, Grieg Seafood expects good market conditions going forward. However, current inflation reducing household purchasing power, might impact demand from both the HoReCa and the retail segment.
Over the last years, Grieg Seafood has been able to reduce farming costs through operational improvement initiatives. However, the general cost inflation, and higher feed prices in particular, are expected to gradually impact farming costs going forward.
Grieg Seafood cost ambition remains - being the cost leader in all regions where the company operates. To achieve this, the company executes on its strategic priorities - post smolt, preventative farming practices, digitalization, integrated operations and by utilizing existing capacity.
Grieg Seafood generally targets an annual contract share of 20-50%. Estimated contract share for the Norwegian operations in Q3 2022 is 37% and 22% for the full year 2022.
In the third quarter of 2022, expected harvest volume is 21,400 tonnes, distributed as follows:
- Rogaland: 7,100 tonnes
- Finnmark: 7,100 tonnes
- BC: 7,200 tonnes
The company now guides for a harvest volume of 87,000 tonnes in 2022, down from the previously guided level of 90,000 tonnes. Estimated harvest volume in Finnmark has been reduced by 2,000 tonnes to 36,000 tonnes due expedited harvest to capitalize on strong market and somewhat reduced growth in sea during the quarter as a result of lower temperatures. Estimated harvest volume in BC has been reduced by 1,000 tonnes to 21,000 tonnes due to accelerated harvest of fish due to risk of early maturation. Of the total harvest volumes for 2022, Grieg Seafood expects to sell some 5-10% as VAP products.
Results presentation
CEO Andreas Kvame and CFO Atle Harald Sandtorv will present the results live at Hotel Continental today at 9:00 a.m. CEST.
The presentation can be accessed at https://investor.griegseafood.com/reports-&-presentations#quarterly, or with the following link: https://channel.royalcast.com/landingpage/hegnarmedia/20220823_2/
The presentations and the subsequent Q&A will be held in Norwegian. An English transcript of the presentations will be made available at https://investor.griegseafood.com/reports-&-presentations#quarterly.
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, and British Columbia as well as 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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