Lerøy chief warns of ‘extraordinarily high’ costs
The chief executive of Lerøy Seafood Group – part-owner of Scottish Sea Farms – has hailed record earnings but warned that production costs remain “extraordinarily high”.
Henning Beltestad said: “In 2016, Lerøy Seafood Group achieved a record high result, and can report the highest revenue and highest operating profit before fair value adjustment of biomass in the group's history. We are naturally delighted with such a great result. We can look back on a quarter with extremely high salmon and trout prices, strong demand but also some biological challenges and a relatively high share of contracts at prices below the spot price.”
Compared with Q4 2015, the group's volume of harvested salmon and trout was down by 6 per cent, and Beltestad noted: "Our release from stock costs for salmon and trout remain extraordinarily high."
Beltestad identified the two biggest cost drivers as feed, and the outlay required to comply with statutory limits for salmon lice. "We have implemented a number of measures and expect to see a reduction in production costs for salmon and trout, but have to acknowledge that it is difficult to specify a timeline for such a development,” he said.
In the group’s farming division, operating profit before fair value adjustment of biomass in Q4 2016 was NOK 827 million (£79 million), up from NOK 221 million in Q4 2015. The farming segment harvested a total of 39,143 GWT salmon and trout in Q4 2016. EBIT/kg was up from NOK 5.3 per kg in Q4 2015 to NOK 21.1 per kg in Q4 2016.
Beltestad added: “2016 has been a very exciting year for Lerøy Seafood Group. With the acquisition of Havfisk and Norway Seafoods, we have embarked on a new journey during which we aim to integrate white fish into our well-established value chain. We are now a fully integrated company and have control of our entire value chain for a wide range of seafood products, from the sea to the plate, and we are very much looking forward to continuing with our market and product development."
For 2016 in total, the group reported revenue of NOK 17,269 million (£1.6 billion), up 28 per cent from 2015. Operating profit before fair value adjustment of biomass is NOK 2,843 million in 2016 compared with NOK 1,380 million in 2015. The profit figure before tax and fair value adjustment of biomass in 2016 was NOK 2,926 million compared with NOK 1,321 million in 2015.
In the fourth quarter of 2016, the group reported revenue of NOK 4,924 million (£472 million), compared with NOK 3,564 million in the same period of 2015. The operating profit before fair value adjustment of biomass was NOK 1.017 million in Q4 2016, compared with NOK 353 million in Q4 2015.
