Grieg Seafood ASA: Q2 2017 - Solid performance in Q2

Thursday, 24. August 2017 06:00

Highlights - Second Quarter 2017

  • Profit growth driven by high prices.
  • Sound financial position.
  • Stable production in Norway and BC.
  • Sea lice and algae present challenges in Shetland.
  • New location allocated in Finnmark.
  • Two locations receive ASC certification
  • Ownership interests secured in large smolt production in Finnmark and Rogaland.

Second Quarter Results 2017
The harvest volume for the Grieg Seafood Group in Q2 2017 was 18 503 tons, up from 16 263 tons in the corresponding period last year, reflecting an   increase of 14 %.
Combined with higher prices this resulted in total operating income of NOK 2 030m, an increase of 21 % compared to the same period in 2016.
EBIT for the Group before fair value adjustment of biomass was NOK 392m in Q2 2017, compared to NOK 312m in Q2 2016.EBIT per kilo in the period was NOK 21.20, up from NOK 19.20 per kilo in Q2 2016.
The average spot price rose by NOK 3.60 per kilo, while GSF's realized prices showed an increase of NOK 7.70 per kilo. The difference was largely due to higher contract prices. Costs was NOK 5.70 per kilo higher compared to Q2 2016.
The challenging biological situation in Shetland has been a major contributor to the increase in costs.

Strategic priorities
A stated goal is to reduce GSF's cost level to the industry average, or lower. The company will also be aiming to increase production by 10 % annually in the period through 2020.
GSF has an ongoing focus on improving operating efficiency. This involves both increasing production per plant and per licence, and reducing costs per kilo.
One of the key steps being taken to increase production is to set out bigger smolt. This shortens the production time in the sea and reduces the biological risk.  An increase in the number of smolt is also decisive to ensure future growth and lower costs per kilo.
The company is planning to set out 26 million smolt in 2017, which is an increase of 28 % compared to 2016. After the first half-year GSF are on track on the plan. So far 10 million smolt have been set out.
In order to achieve growth by increasing the yield per licence, greater locational flexibility is a key factor. This is therefore an ongoing focus of attention in our contact with local authorities. 

Market development
There was some increase in salmon prices in Q2 2017, the only exception being the North American market where prices declined through the period.
Fixed price contracts for Norway accounted for 18 % of sales in Q2 2017. This share is expected to be 32 % in Q3 2017. For 2017 as a whole, it is estimated that fixed price contracts will account for 25 % of the total. Work is also in hand pertaining to contracts for 2018.

The supply of salmon is expected to increase in Q3 2017, which may put prices under pressure. However, in the longer term, there is no indication of changes in the strong market trend that has characterised the last few years.
The harvest volume for Q3 2017 is expected to be 16 500 tons. The harvest volume for 2017 as a whole is expected to be 67 000 tons, which is 3 000 tons less than previously indicated. This must be considered in light of the biological situation in Shetland.

Please find enclosed the company's Q2 2017 report and presentation.

For further information, please contact:

- CEO Andreas Kvame (cell phone: +47 907 71 441)
- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Grieg Seafood ASA via Globenewswire

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