Lerøy Seafood Group ASA: Q2 2022 Results
HIGH PRICES GIVES RECORD HIGH QUARTERLY REVENUE
Operating profit for Q2 2022 excluding settlement costs and before fair value adjustment is NOK 923 million, up 58% on the same period of 2021. Strong demand for seafood, including a substantial increase in prices realised for the Group’s main products, is the key factor in the year-on-year earnings improvement.
The Farming segment delivered improved results in the quarter. Salmon prices were high again in the second quarter, based on continued high demand and low supply. The harvest volume was slightly lower than in the same period of 2021 but will increase in the second half of the year. Inflationary pressure in the economy and the low harvest volume are affecting cost developments.
The total salmon and trout harvest volume for full-year 2022 is estimated at 203,000 GWT (including Lerøy’s share in Scottish Seafarms).
“The harvest volume of salmon and trout will increase in the second half of the year. As usual, there will be a seasonal reduction in prices in the second half, but the underlying market is robust, and we expect earnings in the Farming segment to remain good,” Beltestad explains.
The extreme price development for seafood and cost inflation for almost all input factors are having a bearing on results in the VAP, Sales & Distribution segment. The Group supplies a large share of its products on a contract basis to strategic customers in the end markets, and it takes time for higher prices and cost inflation for input factors, such as transport costs, to be fully reflected in the markets.
“Lerøy has developed long-term relationships with a number of strategic customers, which ensures stability and is a premise for building the world’s most efficient and sustainable value chain for seafood. However, it will take time for the recent cost inflation to be fully reflected in the value chain. This has a negative impact on earnings in VAP, Sales & Distribution, but the long-term picture is unchanged, and we expect to see a gradual improvement through the second half of the year,” Beltestad says.
Results for the Wild Catch segment improved significantly compared with Q2 2021, driven by high prices and higher catch volumes. Higher bunker costs are affecting cost developments.
“Seafood is a sustainable, nutritious and tasty protein source with attractive market prospects – including in the long term – driven by ever increasing demand. There is of course great uncertainty in the global economy at present, but history has shown seafood markets to be resilient, even in difficult times.
Efforts to develop the value chain and further strengthen our position with strategic customers continue. We have competent and motivated employees working towards this goal every day,” Beltestad continues.
Lerøy is hosting its first ever Capital Markets Day on 22-23 September. “We look forward to providing a deep dive into our strategy and farming operation for investors, analysts and other stakeholders, and demonstrating parts of our fantastic value chain in practice,” Beltestad finishes.
Queries may be addressed to the company’s CEO, Henning Beltestad, or to the CFO, Sjur S. Malm.
ABOUT LERØY SEAFOOD GROUP ASA
Lerøy Seafood Group ASA is a global seafood corporation with its head office in Bergen. The Group’s approx. 5,500 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, and 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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