GSF Q1 2016 – report and presentation

Grieg Seafood ASA: Q1 2016 – historical strong EBIT

Highlights – Third Quarter 2016q1 2016 En flott dag på Tinnlandet

  • Grieg Seafood (GSF) recorded its best-ever quarterly results with EBIT of MNOK 214 (EBIT/kg NOK 15.7) in Q1 2016.
  • EBIT/kg NOK 19.6 in Norway (contract share 25%).
  • A historically strong market.
  • Stable sea production in all regions.
  • The Group’s harvested volume in Q1 2016 was 13 635 tons gutted weight.
  • The expected volume for 2016 is maintained at 70 000 tons.
  • Significant increase in financial ratio and solidity.
  • The board propose a dividend NOK 0.5 per share.

First Quarter Results 2016

EBIT for the Group in Q1 before fair value adjustment of biomass was MNOK 214 against MNOK 70 in 2015. The harvested volume in Q1 2016 was 13 635 tons, against 13 081 tons in the same period last year, reflecting a volume reduction of 4.2%.

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 non-controlling interest in the above table.

Before taxes and fair value adjustment of biomass, the accounts for Q1 show a profit of MNOK 173, compared with a profit of MNOK 46 in the corresponding period last year.

Group sales revenues in Q1 totalled MNOK 1 299, an increase of 26% compared with last year’s corresponding figure.

The salmon market is at a historically strong level and prices were high throughout the first quarter, although the period started with somewhat more moderate prices in the American market. However, the US prices rose considerably in the course of the first quarter.

In Norway, the proportion of sales based on fixed price contracts stood at 25% in Q1 and is expected to rise to 35% in Q2. To be between 20% and 50% in contract is an overall target for GSF.

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 2017-2019.

GSF needs to improve operational efficiency, and this involves both increasing production per plant and 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.

Outlook

There are expectations of a decline in supply-side offers, presenting the prospect of a strong salmon market in the period ahead. This also applies in the US market.

GSF continues to expect a harvest volume of 70 000 tons in 2016. Norway accounts for 61% of the harvest volume in the current year, against 53% in 2015.


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 2016 report

GSF Q1 2016 presentation