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Lerøy Seafood Group ASA: Q2 2020 Results


In Q2 2020, Lerøy Seafood Group (LSG) reported revenue of NOK 4,712 million, compared with NOK 5,340 million in the same period in 2019. Operating profit before fair value adjustment related to biological assets was NOK 322 million in Q2 2020, compared with NOK 774 million in Q2 2019. Exclusive of earnings from the Wild Catch segment, this corresponds to an EBIT per kilo before value adjustment related to biological asset in Q2 2020 of NOK 7.8 compared to NOK 19.0 for the same period in 2019. The most significant factor behind the fall in earnings from the same period last year is the lower margin per kilo for Farming, caused by significantly lower prices realised.

The Group reports revenue of NOK 10,017 million for the first half of 2020, compared with NOK 10,086 million in the first half of 2019. Operating profit before fair value adjustment related to biological assets for the first half of 2020 was NOK 1,138 million compared with NOK 1,465 million for the first half of 2019. Profit before tax and fair value adjustment related to biological assets for the first half of 2020 was NOK 1,037 million compared with NOK 1,524 million for the first half of 2019.

  • “Earnings in Q2 2020 are substantially lower than expected at the start of the year,” says CEO Henning Beltestad. “The key factor behind this is the fall in salmon prices caused by the impact on demand of the COVID-19 pandemic. We have no way of knowing how long we will be affected by the pandemic, but we are experiencing that the Group’s model of close integration with our customers has grown even stronger throughout these challenges. We are confident that the long-term demand for healthy and sustainable high-quality seafood has not changed and will remain high,” says Henning Beltestad. “Our main focus has been to keep the value chain open and ensure deliveries to our customers. We have succeeded in this. I am proud of and grateful for the hard work and determination my colleagues have shown,” says CEO Henning Beltestad.


Lerøy Havfisk’s primary business is wild catches of whitefish. The total catch volume for Lerøy Havfisk was 19,708 tonnes in Q2 2020, compared with 15,860 tonnes in Q2 2019. Catch volumes for the main species in Q2 2020 were 1,972 tonnes of shrimp, 2,299 tonnes of cod, 6,218 tonnes of saithe and 1,046 tonnes of haddock. The catch distribution in Q2 2019 was 6,332 tonnes of shrimp, 3,009 tonnes of cod, 2,250 tonnes of saithe and 928 tonnes of haddock.

The market for whitefish suffered a significant blow from the ripple effects of COVID-19 in Q2 2020, with falling prices for the main species when compared with Q1 2020 and a challenging market situation for shrimp, which has affected both catch strategy and catch patterns.

Lerøy Norway Seafoods (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. The processing of whitefish in Norway has been extremely challenging for many years. In normal circumstances, lower prices for raw materials should be a positive factor for the onshore industry, but the ripple effects of COVID-19 have been negative for both production and marketing. Market demand for fresh and conventional products saw a significant decline in the quarter.

In total, the segment reported EBIT of NOK -5 million in Q2 2020, compared with NOK 40 million in the same period of 2019. Catch patterns will always affect the timing of earnings realisation. In the first half of 2020, the segment contributed EBIT of NOK 264 million, compared with NOK 212 million in the first half of 2019.

  • “In the second quarter, the whitefish market has also suffered the impact of the ripple effects of COVID-19,” confirms CEO Henning Beltestad. “Based on market status, we have focused on targeting our catches towards lower value species, resulting in an average price realised for all species in the second quarter that is substantially lower than the price realised in the same quarter last year. Towards the end of the second quarter and at the start of the third quarter, the Group has seen a more positive development in demand,” confirms Henning Beltestad.


The Farming segment reported operating profit for the Farming segment before fair value adjustment related to biological assets was NOK 216 million in Q2 2020, compared with NOK 595 million in Q2 2019. During the quarter, the Farming segment harvested 39,000 tonnes, compared with 37,000 tonnes in Q2 2019.

In Q2 2020, the EBIT/kg figure for Lerøy Aurora was NOK 6.30, NOK 14.10 for Lerøy Midt and NOK -1.60 for Lerøy Sjøtroll. In total, EBIT/kg for the segment was down from NOK 16.10 in Q2 2019 to NOK 5.50 in Q2 2020, due to a significant reduction in prices realised per kilo and higher costs per harvested kilo.

  • “Due to extremely high export volumes from Norway, price developments for trout have been much weaker than for salmon in the second quarter and start of the third quarter,” confirms CEO Henning Beltestad.
  • The total release from stock costs in Q2 2020 are higher than in the same quarter last year, but – as previously reported – we expect to see a decline in these costs in the second half of the year,” confirms Henning Beltestad.


The VAPS&D segment reported revenue in Q2 2020 of NOK 4,483 million, down 12% on Q2 2019. Operating profit before fair value adjustment related to biological assets was up from NOK 54 million in Q1 2020 to NOK 114 million in Q2 2020, compared with NOK 130 million in Q2 2019.

  • “In 2020, the markets have suffered a severe impact from the COVID-19 pandemic. We have noticed a change in demand and trends relating to demand, and an impact on logistics for overseas markets, with a reduction in transport capacity generating increased transport costs. Our main focus has been to keep the value chain open. The situation at the start of the quarter was challenging, but we have seen signs of improvement towards the end of the quarter. Still it remains significant uncertainty relating to developments in the second half of the year,” says Henning Beltestad.   


Price developments for Atlantic salmon have been highly volatile in 2020, substantially influenced by the ripple effects of COVID-19. The situation has improved in the second quarter, partly due to the gradual easing of restrictions in end markets and a reduction in the costs related to logistics from Norway.  Nonetheless, the ripple effects of COVID-19 continue to have a negative impact on demand for seafood, and the Board of Directors is not able to form any definitive opinion on the duration or consequences of the pandemic.

Currently, the Group’s production of redfish takes place mainly in Norway. Norwegian and global salmon and trout production are experiencing a relatively limited growth. This factor, combined with a weaker Norwegian krone, has resulted in very high prices. This represents incentives to start production of salmon in new areas using alternative technologies. These incentives have existed for several years now, but with long lead times in the industry, Norwegian production in marine fish farms has maintained its predominant position. The harvest volume from salmon produced onshore remains insignificant in the end markets. The market share for Norwegian Atlantic salmon may be affected by the introduction of salmon and trout production in new regions and locations. The Group has a strong focus on competitiveness, and works hard to ensure that the value chain will stand strong in the face of competition in the years to come.

Capacity for flexibility and change is also important for global salmon production. Lerøy is developing its existing business by investing in knowledge and facilities to ensure competitive strengths. Irrespective of the above, the Group constantly seeks new knowledge and expertise within both onshore and offshore salmon production.

In line with its plans, the Group has reported a positive development in harvest volume in the first half of 2020, with a high share from Lerøy Sjøtroll, but has at the same time release from stock costs it considers to be higher than normal. The factors behind the high release from stock costs are a challenging situation for Lerøy Aurora and the sustained high release from stock costs for salmon at Lerøy Sjøtroll. To date in the third quarter, production in the sea has been as expected, and the current outlook is for a significant reduction in release from stock costs in the second half of 2020 and beyond. The investments made by the Group in recent years in larger smolt will gradually start to become evident. The average size of released salmon smolt at Lerøy Aurora and Lerøy Sjøtroll will be around 300 grams in 2020. Both the corporate management and the Board of Directors expect the completed investments in new smolt plants, and the ongoing investments, to provide considerable growth in production in the sea in 2020 and the years ahead. From 2020 onwards, this increase in production will gradually result in higher year-on-year harvest volumes over the next four to five years. The estimated harvest volume for 2020, including the share from associates, is currently 183,000-188,000 tonnes salmon and trout. The Group’s target is for the corresponding figures in 2021 to be between 200,000 and 210,000 tonnes.

The Group has made substantial investments in whitefish in recent years. One new vessel was added to the fleet in 2018 – Nordtind – and another in early 2020 – Kongsfjord.

For the onshore whitefish industry, the start of 2020 was difficult, but did show some signs of improvement when compared with 2019, until the ripple effects of COVID-19 started to emerge. The industry is subject to extremely strong seasonal fluctuations and Lerøy is of the opinion that profitability for the industry will depend on innovation and opportunities for specialisation. It is therefore sad and discouraging that the Norwegian Storting has not taken the input provided by the company and its employees into account in its resolution of 7 June (quota report or “Kvotemeldingen”). This resolution, implying a reduction in the quota basis for catches of cod by the trawler group, undermines the Group's raw material basis and will have negative consequences for industrial development and employment. The Storting appears to accept our proposal for more flexible utilisation of raw materials between the different facilities, but increased flexibility does not provide sufficient compensation for the disadvantages of having less raw material. In recent years, Lerøy has made a start on the work to facilitate utilisation of such increased flexibility by making substantial investments. A new processed fish factory opened in Stamsund in 2019, and phase 1 of a major conversion of the filleting plant in Melbu was completed at the start of 2020. Considerable investments have also been made in other facilities. The Board of Directors and the Group expect these investments, together with diligent, organised improvement measures in each factory, to gradually generate results. 

The quota recommendations from ICES (the International Council for the Exploration of the Sea) for 2021 are to increase the Norwegian total quota for cod by 20% and the haddock quota by 8%. ICES al...

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