Sea Logistics

Lerøy Seafood Group ASA: Q1 2021 Results


 FIRST QUARTER 2021

In Q1 2021, Lerøy Seafood Group (LSG) reported revenue of NOK 4,925 million, compared with NOK 5,305 million in the same period in 2020. Operating profit before fair value adjustment related to biological assets was NOK 455 million in Q1 2021, compared with NOK 816 million in Q1 2020. The global COVID-19 pandemic is having a negative impact on demand and has resulted in lower prices for both redfish and whitefish. The main factor behind the fall in earnings from Q1 2020 to Q1 2021 is the reduction in prices realised. At the same time, the Group can report a good underlying demand for seafood.

  • The trend in 2020, with a higher share of seafood sold through the retail channel, has continued in 2021. Price realisation in the quarter is below the corresponding quarter in 2020, but in our view the underlying demand for seafood is strong, states CEO Henning Beltestad.
  • We continue to strengthen our efficient and sustainable value chain for seafood. A value chain which not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. Recent years investments in the end markets will contribute to our growth in the years to come. We have a strong position, says Beltestad

WILDCATCH

The wholly owned subsidiary Lerøy Havfisk’s primary business is wild catches of whitefish. Lerøy Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to around 30% of the total quota allocated to the trawler fleet. Lerøy Havfisk also owns several processing plants, which are mainly leased out to its sister company Lerøy Norway Seafoods (LNWS) on long-term contracts. Lerøy Havfisk’s trawler licences stipulate an operational obligation for these processing plants.

Lerøy Havfisk has had 10 trawlers in operation in Q1 2021. Due to excellent catch rates, these vessels have produced the highest catch volume in the company’s history. The catch volume in Q1 2021 was 25,721 tonnes, compared with 25,009 tonnes in Q1 2020. Fishing for haddock proved difficult in 2020, so the company has focused on haddock catches in Q1 2021. The share of cod in catches is down from 50% in Q1 2020 to 43% in Q1 2021. Lerøy Havfisk’s remaining quota for 2021 is positive in terms of market outlook.

As described in the previous interim reports, demand for seafood has been negatively impacted by the restrictions introduced to combat the spread of COVID-19. It is difficult to project how long this extraordinary situation will last. According to assessments, the pandemic is the most important factor behind the lower prices realised. Prices for cod, haddock and saithe in Q1 2021 are down 27%, 14% and 9% respectively from Q1 2020. Seafood is sold consecutively, and demand is considered to be good, but prices are lower than witnessed before the impact of the COVID-19 restrictions in the last part of Q1 2020.

LNWS’s primary business is processing wild-caught whitefish. The company has use of 12 processing plants and purchasing stations in Norway, five of which are leased from Lerøy Havfisk. Seasonal cod catches by the coastal fishing fleet represent an important source of raw materials, but the season had a late start in 2021. For several years now, processing of whitefish has been very challenging, and Q1 2021 was no exception. At the same time, however, there are fortunately signs that the initiatives taken are having a positive effect.

In total, the segment reported EBIT of NOK 185 million in Q1 2021, compared with NOK 270 million in the same period of 2020. Please note that Havfisk has a higher share of the remaining quota for cod in 2021 when compared with the same period last year.

  • Earnings in Wildcatch is lower than corresponding quarter last year, driven mainly by lower price realisation. However operations in…



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