Grieg Seafood ASA: Q3 2021 results
Third quarter highlights
- Operating EBIT of NOK 149 million (-14 million) driven by high prices in BC and declining cost level
- Underlying operational improvement, with increased survival in all regions. Expect lower costs towards year end
- Good performance in Shetland, EBITDA of NOK 53 million (assets held for sale). UK competition authorities expected to decide on Shetland transaction by 15 December 2021
- Value added processing capacity for part of our volume secured in Norway
- One site ASC certified, total of 30 sites or 56% of net production certified
- Expect harvest ex Shetland of 25 100 tonnes in Q4 2021, 77 000 tonnes for the full year 2021 and 90 000 for 2022
Financial results
Grieg Seafood harvested 20 479 tonnes ex. Shetland in Q3 2021, up 42% compared to 14 416 tonnes in Q3 2020. Sales revenues from continuing operations amounted to NOK 1 303 million, an increase of 43% compared to Q3 2020. The price achievement was NOK 58.4 per kg vs NOK 52.9 per kg in Q3 2020. The average spot salmon price (Nasdaq Salmon Index)) for Q3 2021 was NOK 54.5 per kg, up NOK 7.4 per kg from Q3 2020. The difference in achieved price, measured by sales revenue/kg compared to Q3 2020, had a positive contribution to the EBIT by NOK 113 million. The Group's price achievement for Q3 2021 was positively impacted by strong market conditions for BC. The Norwegian regions performed below the Nasdaq Salmon Index mainly due downgraded volume, partly offset by positive contributions from fixed price contracts.
The higher harvest volume for the quarter impacted EBIT by NOK 10 million compared to Q3 2020, while decreases in operational costs impacted EBIT positively by NOK 51 million compared to Q3 2020. On average, the Group's farming costs decreased by NOK 2.5 per kg from NOK 51.2 per kg in Q3 2020 to NOK 48.7 per kg in Q3 2021, and down NOK 2.0 per kg from Q2 2021.
The Group’s EBIT before production fee and fair value adjustment of biological assets was NOK 149 million (NOK -14 million) for the quarter, corresponding to an EBIT per kg of NOK 7.3 (NOK -1.0 per kg).
Improved access to VAP capacity
During the third quarter, Grieg Seafood established a value added product (VAP) sales department, which will be a key contributor to increase the VAP product portfolio from Norwegian and Canadian origin.
As a first step towards repositioning the company in the market, Grieg Seafood has signed a Letter of Intent for cooperation with Isfjord Norway AS for value added processing (VAP) capacity in Norway. Through the cooperation Grieg Seafood will process a part of its harvest volumes at Isfjord Norway and sell finished products through its in-house sales organization. This capacity will also contribute to better price achievement should fish be downgraded.
Outlook
Despite high global supply growth in the third quarter 2021, up 7% compared to Q3 2020, the salmon spot price remained at seasonally good levels, driven by solid demand from the retail sector, in addition to the ongoing post pandemic recovery in the HoReCa segment. Retail demand in Europe and Asian countries has been particularly strong so far this year.
In North America, a strong increase in demand in the US, combined with a significant reduction in harvest volumes from Chile, tightened the market for Atlantic salmon and prices increased. The tight market in North America also increased import of Norwegian salmon to this market, positively impacting prices in Europe as well.
Going forward, Grieg Seafood see the case for a strong recovery in the HoReCa segment as society gradually moves back to pre-pandemic levels. With global supply growth muted for the remainder of 2021 and the start of 2022 due to significant decrease in supply of volumes from Chile and modest supply growth in Europe, outlook for continuing strong market prices is good.
Grieg Seafood targets a contract share of 20-50%. Estimated contract share for the Norwegian operations in Q4 is 20%, and 29% for 2021.
In the fourth quarter of 2021, expected harvest volume is 25 100 tonnes, distributed as follows:
- Rogaland: 7 100 tonnes
- Finnmark: 13 400 tonnes
- BC: 4 600 tonnes
Due to PD in Rogaland and optimization of capacity utilization in addition to skewing of volume to 2022 in Finnmark, estimated harvest volume for the full year 2021 is reduced by 3 000 tonnes to 77 000 tonnes ex Shetland. Estimated harvest volume for 2022 is 90 000 tonnes.
Results presentation
CEO Andreas Kvame and CFO Atle Harald Sandtorv will present the results live at Høyres Hus, Stortingsgaten 20, Oslo, and by webcast the same day at 8:00 a.m. CEST.
The presentation can be accessed at investor.griegseafood.com, or with the following link: https://channel.royalcast.com/landingpage/hegnarmedia/20211103_1/
The presentations and the subsequent Q&A will be held in Norwegian. An English transcript of the presentations will be made available at investor.griegseafood.com.
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, targeting 130 000 tonnes of harvest (GWT) in 2025. 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 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 and ethical responsibility and drive economic profitability. Towards 2025, 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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