Category Archives: Financial Reporting

Grieg Holdings AS: Restructuring of shareholding

Grieg Holdings AS, main shareholder in Grieg Seafood ASA (“Grieg Seafood”), has today decided to transfer all its shares in Grieg Seafood to Grieg Aqua AS through a demerger. Grieg Aqua AS will be established when the demerger is completed. The parent company of Grieg holdings AS, Grieg Maturitas II AS, will be the sole shareholder of Grieg Aqua AS.

Through the demerger 55 801 409 shares, corresponding to 49.97% of the outstanding shares in Grieg Seafood, are transferred. Grieg Holdings AS will not hold any shares in Grieg Seafood after the transaction.

In addition Grieg Ltd AS (owned 100% by Grieg Maturitas II AS) holds 217 390 shares, corresponding to 0.20%. The shares held by Grieg Ltd AS will be transferred to Grieg Aqua AS when the demerger of Grieg Holdings AS is completed.

In total Grieg Maturitas II AS holds 56 018 799 shares in Grieg Seafood through its subsidiaries, corresponding to 50.17% of the outstanding shares.

The Oslo Stock Exchange has, pursuant to section 6-2 (3) of the Norwegian Securities Trading Act, granted an exemption from the mandatory offer obligation with respect to the transactions.

This information is subject to the disclosure requirements pursuant to Sections 4-2 and 4-3 of the Norwegian Securities Trading Act.

 

CMU: A salmon farming pioneer entering the digital era

2020 volume target reaffirmed, ensuring a platform for sustainable growth

Grieg Seafood is hosting a Capital Markets Update in Oslo, Norway today 5 September 2018 under the headline “A salmon farming pioneer entering the digital era”.

Grieg Seafood represents 25 years of salmon farming. While the company’s harvest volumes have remained stable for a period of time, revenues have grown substantially in recent years driven by higher salmon prices. This has also led to improved profitability. Looking ahead, Grieg Seafood plans to grow harvest volumes substantially and continuously improve the sustainability of operations.

The company today confirmed its growth ambitions with a target of annual harvest volume of 100 000 tons in 2020 with cost at or below industry average. Furthermore, that the company is building a platform for further sustainable growth beyond 2020.

Grieg Seafood’s operational and financial targets presented at the capital markets update today are:

  • Harvest volume of 100 000 tons in 2020: Increasing harvest volumes to 100 000 tons in 2020, mainly through improving utilization of current capacity.
  • Cost at or below industry average in 2020: Aiming for a production cost in line with or below weighted industry average, targeting NOK 37.90/kg by 2020. Reduction mainly driven by better operational efficiency from higher volumes and improved biology.
  • NIBD to EBITDA ratio below 4.5: Balancing the Groups net interest-bearing debt with level of earnings before interest and depreciations, not exceeding a ratio of 4.5 times.
  • Equity ratio above 35%: At any given time, the Group shall have a level of equity which is appropriate in relation to the Group’s cyclical activities. The Board requires that equity consistently stay in accordance with current loan terms, as a minimum.
  • NIBD/harvest volume of NOK 20/kg: Balancing the Company’s debt levels with harvest volumes, aiming for a net interest-bearing debt of NOK 20 per kilo fish harvested.
  • Return on capital employed (ROCE) of 12%: Requirement of a minimum of 12% return on capital employed for all investment decisions.
  • Dividend policy to distribute 25%-35% of the Group’s net profit after tax adjusted for fair value appraisals: The Group’s objective is to give the shareholders a competitive return on invested capital through dividend payments and value appreciation of the share, which is at least at the same level as other companies with comparable risk. The future dividend will depend on the Group’s future earnings, financial situation and cash flow. The Board believes that the dividend paid should develop in pace with the growth of the Group’s profits, while at the same time ensuring that equity is at a healthy and optimal level and that there are adequate financial resources to prepare the way for future growth and investment and taking into account the wish to minimize capital costs. The Board believes it is natural that the average dividend, over a period of several years, should correspond to 25-35% pre-tax profit, adjusted for the accounting effect of fair value adjustment of biological assets.

Furthermore, it is reasonable that the company’s net interest-bearing debt per harvested kg at NOK 20. Based on this, the size of the dividend could be corrected both up and down according to the 25 – 35 % share of profit after tax.

Grieg Seafood’s strategic focus areas to achieve its targets and ensure sustainable growth are:

  1. Sustainability: Grieg Seafood wants to actively ensure sustainable food production in the ocean and invest its resources accordingly. Healthy fish, clean seas and economic profit are not regarded as contradictions. The company’s sustainability strategy is based on five pillars; sustainable value chain, profitable growth and innovation, good jobs for everyone, sustainable faming and productive oceans, and local value creation.
  2. Post smolt strategy: Through investments in post-smolt production, Grieg Seafood aims to improve biology, increase productivity and reduce cost. The main effect from larger smolt is increased robustness and shorter time to reach harvest size. The combination of stronger fish and reduced exposure to biological risk, will improve biology and increase survival rates.
  3. Digital salmon farming: By applying advanced sensor systems, big data, artificial intelligence and automation, Grieg Seafood aims to generate actionable insights to increase yield and resource efficiency.
  4. Biosecurity and fish welfare: Biosecurity and fish welfare is vital to secure sustainable growth and high harvest quality. Grieg Seafood aims to secure strong biological performance through implementation of a broad range of technological and operational initiatives, including post smolt strategy, GSF Precision Farming and preventive measures to prevent sea lice and algae issues.
  5. Expansion opportunities: Expansion to secure fulfillment of Grieg Seafood’s goal of harvesting 100 000 tons in 2020 will mainly come from improved utilization of existing capacity, driven by post-smolt strategy, digital salmon farming and improved biosecurity and fish welfare. To secure sustainable growth longer term, additional opportunities will be pursued, including acquiring new capacity, acquisitions and joint ventures and development of new concepts.

Commenting on Grieg Seafood’s capital markets update, Andreas Kvame, CEO, said:

“Our objective is to ensure sustainable growth in the years ahead by combining great people, nature and technology. We believe salmon will be an increasingly important food source globally, and that Grieg Seafood will be able to create value for multiple stakeholders, including the communities in which we operate, our employees and shareholders, while we provide salmon to the world.”

Presentation and lunch

The Astrup Fearnley Museum Strandpromenaden 2, 0252 Oslo Norway

Registration at the event from 8:30am CEST and presentations from 9:00am – 1:00pm CEST.

Lunch will be served from 1:00pm CEST.

Break-out sessions from 1:30 CEST.

Webcast

A live webcast of the presentations will be made available on our website: https://www.griegseafood.no/inverstors/webcast-2/ 

Materials

The presentations held at the Capital Markets Update event will be available on the company’s website www.griegseafood.no.

For further information, please contact:

  • Andreas Kvame, CEO, tel: +47 907 71 441
  • Atle Harald Sandtorv, CFO, tel: +47 908 45 252

About Grieg Seafood

Grieg Seafood ASA is one of the world’s leading fish farming companies, specializing in Atlantic salmon. The company has an annual production capacity of around 100.000 tons gutted weight.

The Group is today present in Norway, British Columbia (Canada) and in Shetland (UK), employing approximately 700 people. Grieg Seafood ASA was listed at the Oslo Stock Exchange OSEBX) in June 2007. Our headquarters are located in Bergen, Norway. The business development of Grieg Seafood ASA focuses on profitable growth, sustainable use of resources and being the preferred supplier to selected customers. To learn more, visit www.griegseafood.no

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

Webcast

Sections and presenters

1 A salmon farming pioneer entering the digital era – Download
Andreas Kvame, CEO

2 Ensuring sustainable growth- Download
Andreas Kvame, CEO and Trond Kathenes, CDO

3 Our four regions and their priorities – Download
Finnmark, Roy-Tore Rikardsen, Regional Manager
Rogaland, Knut Utheim, Chief Operating Officer
Shetland, Grant Cumming, Regional Manager
British Columbia, Rocky Boschman, Regional Manager

4 GSF Financial targets and investments in sustainable growth – Download
Atle Harald Sandtorv, CFO

Download the GSF CMU presentation

Transcript from Norwegian to English

Transcript Grieg Seafood CMU_Finnmark and Rogaland

Invitation to Capital Markets Update

Grieg Seafood ASA is pleased to invite investors, analysts, media and other stakeholders to a Capital Markets Update.

Date:
Wednesday 5 September 2018.

Location:
The Astrup Fearnley Museum
Strandpromenaden 2, 0252 Oslo
Norway

During the event, Grieg Seafood will provide an update on the company’s goals, strategy, operations, financial developments and outlook.

The day will include presentations by CEO Andreas Kvame and CFO Atle Harald Sandtorv as well as the directors of all of Grieg Seafood’s regions; Rogaland, Finnmark, Shetland and British Columbia

See full invitation here

Q2 2018 – High harvest volume in Q2

Grieg Seafood Rogaland
Foto: Tommy Ellingsen

Highlights – Q2 2018

  • Highest harvest volume for a quarter (22 568 tonnes)
  • High prices on strong demand
  • EBIT/kg NOK 18.89, total EBIT NOK 426 million
  • Good production in Finnmark, BC and on Shetland
  • Production in Rogaland negatively impacted by PD
  • Algal bloom causing loss of 1 000 tonnes in BC
  • Estimated harvest for the year is 75 000 tonnes, up 20% from 2017
  • Dividend of NOK 2.00 per share paid out

Results Q2 2018

The Grieg Seafood Group harvested 22 568 tonnes of salmon in Q2 2018, compared to 18 503 tonnes in Q2 2017, an increase of approximately 22%.

The average spot price (Nasdaq Salmon Index) for the period was NOK 68.81 per kg, up by NOK 0.98 per kg compared to the same period in 2017. The average realized price for Grieg Seafood was down by NOK 3.21 per kg comparing these quarters. This was partly due to a combination of a high proportion of harvesting towards the end of the quarter when prices were lower, and partly due to lower price achievement for PD-affected fish from Rogaland

Grieg Seafood’s total operating income in Q2 2018 amounted to NOK 2 318.7 million, an increase of 14% compared to the same period last year.

The farming cost (total cost related to fish harvested this quarter) decreased by NOK 1.54 per kg compared to the same quarter last year. Higher harvested volume in Finnmark and BC contributed positively.

The Group’s EBIT before fair value adjustment of biological assets was NOK 426.3 million during the quarter, compared to NOK 392.3 million in the same quarter of 2017. EBIT per kg amounted to NOK 18.89 for the period, down from NOK 21.20 in Q2 2017.

Strategic priorities

Grieg Seafood has an overall goal of increasing production by at least 10% annually until 2020, with the main growth in 2019. Furthermore, the Group has an ambition to achieve production cost at or below the industry average.

Continued access to high-quality smolt is critical to ensure future growth. In addition, larger smolt will result in shorter production time in sea, thus contributing to reduced biological risk and increased survival. Another essential aspect of Grieg Seafood’s growth strategy is the increased utilization of the Group’s licenses. High site flexibility is essential to improve utilization, and Grieg Seafood cooperates with local authorities on an ongoing basis to optimize flexibility.

Increased volumes, improved capacity utilization and shorter production time in sea will contribute to higher efficiency and reduced production costs. The Group also continually undertakes cost-reducing initiatives and has established an internal improvement program, scheduled to run until 2020.

Market developments

Salmon prices were very volatile in the second quarter of 2018. Despite of this the average price level was high compared to Q1 2018. The salmon supply has been higher month by month compared to Q2 2017, which in relation to the high average prices confirms the strong underlying demand for farmed salmon.

The Group’s total share of fixed price contracts in Norway in Q2 2018 was 27%. For Q3 the share of fixed price contracts is estimated to be 31%, with an estimate of 30% for the full year.

Outlook

Supply growth is limited and expected to stabilize going forward. The strong underlying demand for salmon is likely to continue, and prices are expected to remain strong for the rest of 2018.

Grieg Seafood expects to harvest approximately 17 100 tonnes in Q3 2018 and 75 000 tonnes for the full year 2018, corresponding to an increase of 20% from 2017. The full year estimate has been reduced by 5 000 tonnes due to PD in Rogaland and algal bloom in BC.

Please find enclosed the company’s Q2 2018 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.

ATTACHMENTS:

GSF Q2 2018 Presentation
GSF Q2 2018 Report

 

 

Q1 2018 – Good biology, supporting further growth

Open 2018 Q1 GSF Quarterly report
Open 2018 Q1 GSF Presentation

 

Highlights – Q1 2018

  • Solid production in Finnmark, BC and UK
  • Production in Rogaland negatively impacted by low sea temperatures and PD
  • Higher fixed cost/kg due to lower harvest volumes
  • Spot prices increased throughout Q1 2018
  • EBIT/kg NOK 14.18
  • Harvest guiding 2018 of 80,000 tons maintained, up 28 % from 2017
  • Proposed dividend of NOK 2.00 per share

Results Q1 2018

Grieg Seafood harvested 11,433 tons in Q1 2018, up 34 % compared to 8,522 tons harvested in Q1 2017. The average spot price was down NOK 5.36 per kg compared to the same period last year. For Grieg Seafood the price achieved was only down by NOK 2.70 per kg. This is mainly due to high harvest volumes towards the end of the quarter, when the spot price was at its highest.

The resulting operating revenues for the first quarter 2018 was NOK 1,493.0 million, a 5 % increase compared to Q1 2017.

Operating costs/kg were down by NOK 1.00 in the quarter, mainly as a result of higher harvest volumes in addition to a more stable biological situation. The lower costs combined with strong price achievement in the quarter resulted in an EBIT/kg of NOK 14.20, down compared to NOK 15.40/kg in Q1 2017.

The company’s EBIT (operating income) before fair value adjustments were NOK 162.1 million in Q1 2018, up from NOK 131.5 million in Q1 2017.

Strategic priorities

Grieg Seafood’s overall goal is to maintain an annual production growth of minimum 10 % until 2020. Furthermore, the company aims to keep production costs at- or below the industry average.

Continued access to high-quality smolt is critical to ensure growth going forward. In addition, larger smolt will result in shorter production time at sea, thus contributing to reduced biological risk and increased survival. Another pivotal aspect of Grieg Seafood’s growth strategy is the increased utilization of the company’s licenses. High site flexibility is essential to improve utilization, and Grieg Seafood cooperates with local authorities on an ongoing basis to optimize flexibility.

Increased volumes, improved capacity utilization and shorter production time at sea will contribute to higher efficiency and reduced production costs. The company also continually undertakes cost reducing initiatives and has established an internal improvement program, which scheduled to run until 2020.

Market developments

Salmon prices increased in Q1 2018 compared to Q4 2017. Year-to-date, the supply of salmon has been lower than previously expected, which can partly be explained by the lower-than-normal sea temperatures in Norway. The spot price increase in the quarter points to a continued strong demand for salmon.

The Group’s total share of fixed price contracts in Norway was 46 % in Q1 2018. The high contract share was mainly due to the low harvest volume in the period. For Q2 2018, the estimated share of fixed price contracts is 27 %. For 2018 as a whole, the company expects a fixed price contract share of approximately 28 %.

Outlook

Low global production has led to increased spot priced throughout Q1 2018. The relationship between supply and demand is expected to stabilize in the longer term, which will likely give grounds stable, strong market prices in the future.

GSF expects to harvest approx. 21,400 tons in Q2 2018. For 2018 as a whole, the company expects to harvest approximately 80,000 tons, which corresponds to a 28 % increase over 2017.

Please find enclosed the company’s Q1 2018 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.

Annual Report 2017

The Grieg Seafood Annual Report, and Sustainability Report of 2017, as adopted by the Board of Directors, is now available:

Sustainability is a precondition for productivity and legitimacy in fish farming.  For several years, Grieg Seafood has reported key indicators of environmental and community engagement. The Sustainability Report is revised according to the Global Salmon Initiative (GSI) principles for 2017. This year we also report on Climate Accounts.

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.

GSF Q4 2017: Lower harvest volume than guided in Q4, 28 % volume growth in 2018

Highlights – Q4 2017

  • Profit decline as a result of lower market prices and reduced harvested volumes
  • 3 000 tonnes of harvest volume transferred from 2017 to 2018
  • Results impaired by PD-affected fish in Rogaland
  • Upsurge in market activity and good demand expected in 2018
  • Harvested volume expected at 80 000 tonnes in 2018, up 28 % from 2017
  • Number of fish in sea increased by 27 % YoY
  • Biomass in sea increased by 20 % YoY

READ THE REPORT:

GSF Q4 2017 Report ENG

DOWNLOAD PRESENTATION:

GSF Q4 2017 Presentation ENG

VIEW PRESENTATION WEBCAST:

 

Grieg Seafood ASA: Best Q3 ever

Highlights – Third quarter 2017

  • Improved results driven by higher volume
  • Margins maintained by good prices supported by and cost reductions
  • EBIT margin negatively affected by planned harvesting stoppage in Rogaland
  • Stable production in Norway and BC, Shetland remains challenging
  • New location allocated in Finnmark (two in 2017)
  • Special dividend of NOK 1.00 per share
  • Planned volume growth of 17 % to 77 000 tons in 2018

Third quarter 2017 results
The harvest volume for the Grieg Seafood Group in Q3 2017 was 16 875 tons, up from 13 911 tons in the corresponding period last year, reflecting an increase of 21 %.

Combined with higher realised prices aggregate operating income amounted to NOK 1 855 million in the quarter, 19 % up on the corresponding period in 2016.

EBIT per kilo stood at NOK 13.60 in Q3, slightly up from NOK 13.30 per kilo in the same period last year. The average spot price in the quarter was down NOK 3.92 per kilo on the same period last year, while Grieg Seafood’s realised price increased by NOK 2.79 per kilo. The contract share for the Norwegian operation was 30 % during the period. Compared with last year’s third quarter, costs in Q3 increased by NOK 2.50 per kilo. This year’s increase was driven by a low harvest volume in Rogaland and a weak biological situation in Shetland.

“Grieg Seafood has an overall goal to increase production by minimum 10 % annually until 2020. The company also has an ambition for production-costs to be at or below industry average. We are working relentlessly to reach these targets, continuously initiating efforts throughout the entire organisation to improve operations. The positive development seen in the quarter indicates that our work is paying off”, says CEO Andreas Kvame in Grieg Seafood.

Access to smolt is vital to ensure growth and lower costs. In addition, release of larger smolt shortens time in sea, contributing to reduced biological risk. During 2017, Grieg Seafood entered collaborations with other industry players to improve smolt capacity. For 2017, Grieg Seafood plans to release 26 million smolt, an increase of 28 % from 2016. By the end of the third quarter the release program was according to plan, with an accumulated release of 18 million smolt year to date. Another key element to the growth strategy is greater yield per licence. In order to achieve the desired improvements, locational flexibility is crucial, and this is an ongoing focus of attention in the Company’s contact with local authorities which we seek to optimise.

The Group aims to provide a competitive return on capital investment to the shareholders in the form of payment of a dividend and share price appreciation. The company’s financial position is regarded as solid and available liquidity at the end of the quarter was strong. Based on this, the board of directors has approved a special dividend of NOK 1.00 per share.

Market developments
Salmon prices were slightly down in Q3 2017. This is normal for this period since production, especially in Norway, increases towards the end of the third quarter and brings pressure to bear on the market prices. Demand normally picks up as the Christmas period approaches, with price increases as an expected consequence.  In North-America the market for Atlantic salmon was stable throughout the third quarter.

Outlook
The demand for salmon is expected to increase as the Christmas season approaches, which normally leads to higher prices in the fourth quarter. In the longer term, the relationship between supply and demand is likely to be stable, giving grounds to expect a continuation of good prices for salmon in the marketplace.

Grieg Seafood’s contract share for the fourth quarter is estimated to 18 %. The renegotiation of contracts is an ongoing activity for the company, and so far, contracts have been signed for 22 % of the Norwegian harvest volume for 2018. The harvest volume for Q4 2017 is expected to be 22 100 tons, giving an overall harvest volume for 2017 of around 66 000 tons. In 2018, an increase in the amount of smolt set out is expected to increase the harvest volume to around 77 000 tons.

Quarterly report material
Please find the company’s Q3 2017 report and presentation attached here:

GSF Q3 2017 Rapport ENG

GSF Q3 2017 Presentation ENG

Contact information
Andreas Kvame, CEO, tel: +47 907 71 441
Atle Harald Sandtorv, CFO, tel +47 908 45 252

About Grieg Seafood
Grieg Seafood ASA is one of the world’s leading fish farming companies, specializing in Atlantic salmon. The business development of Grieg Seafood ASA focuses on profitable growth and sustainable use of resources. The company has and annual production capacity of more than 100,000 tons gutted weight. The Group is present in Norway, British Columbia (Canada) and in Shetland (UK), employing approximately 700 people.

GRIEG SEAFOOD ASA: Q2 2017 – Solid performance in Q2

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.

Outlook

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.

GSF Q2 2017 Report ENG
GFS Q2 2017 Presentation ENG

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.

GSF Q1 2017 – report and presentation

GRIEG SEAFOOD ASA: Q1 2017 – planned low harvest volume in Q1 in order to build biomass

Highlights – First Quarter 2017

  • EBIT: MNOK 131.5 (EBIT/kg: NOK 15).
  • Market remains strong.
  • Low harvest volume (8 552 tons) in three regions, as planned in order to boost sea production, increases costs per kilo.
  • Stable production in all regions.
  • EBIT/kg in Rogaland: NOK 28.0.
    – Normal harvest volume and stable costs.
  • EBIT/kg in Finnmark: NOK 9.4.
    – ILA location laid fallow, costs included in Q4.
  • EBIT/kg in BC: NOK 14.1.
    – Harvesting from weak generation previously affected by algae challenges.
  • EBIT/kg in Shetland: NOK -11.2.
    – Harvesting from weak locations to be laid fallow under new production plan.
  • Expected harvest volume of 70 000 tons in 2017 is maintained.
    – Smolt input as planned and reflects an increase (in both number and size) compared with Q1 2016.

First Quarter Results 2017

EBIT for the Group before fair value adjustment of biomass was MNOK 131 in Q1 2017, against MNOK 214 in 2016. The harvest volume in Q1 2017 was 8 552 tons, against 13 635 tons in the corresponding period last year, reflecting a reduction of 37%. The low harvest volume was planned in order to maximise the level of biomass in the sea in order to achieve higher growth.

EBIT from the four regions includes value creation from sales/Ocean Quality (OQ), while OQ’s value creation relating to fish from Bremnes (which owns 40% of OQ) appears in the item designated IKE in the above table.

The pre-tax accounts for Q1 show a loss of MNOK 69 against a profit of MNOK 252 in last year’s first quarter. The negative result must be seen in the light of the fair value adjustment of biomass to take account of the decline in salmon prices from Q4 2016 to Q1 2017.

Group operating income in Q1 2017 totalled MNOK 1 422, reflecting a 12% change compared with the same period in 2016. The increase was due to higher prices and some increase in volume from Bremnes (external fish) compared with Q1 2016.

The results for Q1 2017 reflect a reduction in the harvest volume in all regions apart from Rogaland. This has meant that fixed costs are divided over a smaller volume, thereby increasing costs per kilo.

Following a decline in salmon prices in the first weeks of 2017 the market has been relatively stable. GSF can report that demand for its salmon is good at the present price level.

In Norway, the proportion of salmon sold on fixed price contracts stood at 55% in Q1 2017 and this proportion is expected to be around 17% in Q2 2017. The decline in the proportion of fixed price contracts is partly explained by an increase in the harvest volume in Q2. The fixed price proportion for 2017 as a whole stands at 21%, and some increase in this figure is planned.

Measures to boost production and reduce costs

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 2018-2020.
GSF has an ongoing focus on improving operating efficiency, and this involves both increasing production per plant and per licence, as well as reducing costs per kilo.  One of the key steps being taken is to set out bigger smolt which will make it possible to shorten the production time in the sea. An increase in the number of smolt is also decisive to achieve growth and lower costs.

The company this therefore planning to increase the amount of smolt set out in 2017 compared with 2016. So far this year the steps taken are in accordance with the plan.

There is also a focus on improving the survival rate and wellbeing of the fish.

Outlook

In a global perspective, there are expectations of limited supply-side growth in the salmon market. There is strong underlying demand for salmon and good prices are therefore expected in 2017.

The harvest volume in Q2 2017 is expected to be 18 000 tons. For 2017 as a whole the figure is expected to be 70 000 tons, 8% up on 2016.

 

For further information, please contact:

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

 

GSF Q1 2017 report
GSF Q1 2017 presentation