Lerøy Seafood Group ASA: Q1 2023 Results
HIGH REVENUE AND EARNINGS IMPROVEMENT
Lerøy posted a 26% year-on-year increase in revenue for Q1 2023. Operating EBIT was NOK 989 million, up from NOK 889 million in Q1 2022. Q1 2023 has been impacted by price inflation on seafood products, but also by a challenging situation in the Farming segment in the second half of 2022 resulting in low average harvest weight and less than optimal harvest profile with respect to prices through the first quarter. The Group’s downstream activities showed a significant improvement from the same period of last year. Despite lower quotas in 2023 than 2022, Wild Catch posted strong results for Q1.
We are not satisfied with the profitability in the Farming segment this quarter and have implemented a number of measures expected to result in gradually improving performance, says CEO Henning Beltestad. These measures were covered during our capital markets day in September last year.
STRONG DEMAND, BUT PRICES IMPACTED BY A WEAK NORWEGIAN KRONE
Year to date, the seasonal pattern has mirrored 2022 with a low seasonal volume of salmon and trout at the start of the year. This is having a significant impact on pricing.
The demand for seafood is strong, but it is also worth noting that the spot prices for salmon so far in Q2 are significantly higher than this time last year in NOK, but lower in EUR, Beltestad continues.
RESOURCE RENT PROPOSAL DECISIVE FOR FURTHER DEVELOPMENT IN NORWAY
With more than 400 consultation responses received pointing out the harmful effects and operational challenges, it is extremely disappointing that the government did not take the input into consideration in its draft bill, which was published on 28 March 2023.
Our production is sustainable from an economic, social and environmental perspective. Norwegian aquaculture companies consistently appear in international rankings of the world’s most sustainable protein producers. We are contributing to the global green shift. It is difficult to comprehend that the government is now substantially limiting the capital available for investments. It is well documented in the consultation responses that the proposed tax is in no way investment neutral. If it is adopted, it will significantly weaken development in the industry, says CEO Henning Beltestad.
OUTLOOK
We expect a slight increase in farming costs in the second quarter, but lower costs in the second half of 2023, says Henning Beltestad.
The harvest volume for full-year 2023, including joint ventures, is expected to be 193,500 GWT. Our Wild Catch segment is affected by lower quotas, but we have a good basis of operations for the remainder of the year. The downstream activities are showing an improvement, and this is expected to continue in the next quarter.
Historically, demand for seafood has held up relatively well in economic downturns. Our perception is that our value chain meets the market’s needs and is well positioned for the future, concludes Henning Beltestad
ABOUT LERØY SEAFOOD GROUP
Lerøy Seafood Group ASA is a global seafood corporation with its head office in Bergen. The Group’s approximately 6,000 employees process between 350,000 and 400,000 tonnes of seafood every year via our value chain, corresponding to around 5 million meals every day. The Group has a vertically integrated value chain for red fish and whitefish, as well as significant activities using third-party products. The Group’s values – open, honest, responsible and creative – shall underpin everything we do, and we work hard to achieve our goal of creating the world’s most efficient and sustainable value chain for seafood. The target for return on capital employed (ROCE) is 18%. The Group has set a number of targets within sustainability, including cutting greenhouse gas emissions by 46% by 2030.
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