Grieg posts strong quarter despite 'extraordinary mortalities' dragging down

Norwegian salmon farmer Grieg Seafood more than doubled earnings in the fourth quarter of 2018 compared with the year prior, thanks to increased sales and higher salmon prices.

Earning before interest, taxes, depreciation and amortization (EBITDA) in Q4 was NOK 412.6 million (€42.2 million/$47.8 million), up from NOK 204.2 million (€20.9 million/$23.7 million) reported a year earlier.

Revenues were NOK 2.1 billion (€215 million/$243.5 million), 23.5 percent up from the NOK 1.7 billion (€174.1 million/$197.1 million) reported a year earlier, while profit increased 50 percent, to NOK 439.3 million (€45 million/$50.9 million).

Total harvests for the quarter amounted to 23,682 metric tons, 26.9 percent up from the 18,667 metric tons harvested a year earlier.

Earnings before interest and taxes (EBIT) per kilo of salmon stood at NOK 14.81 (€1.50/$1.70), up from NOK 8.07 (€0.83/$0.94) a year earlier.

Results by region show different trends

However, EBIT per kilo decreased in two of the regions where the company has operations.

In Rogaland, Norway, EBIT/kilo was NOK 19.04 (€2/$2.20), up from NOK 6.80 (€0.70/$0.79) a year earlier. EBITDA was NOK 130.8 million, up from NOK 39.9 million (€4.1 million/$4.6 million) a year earlier, and revenues were NOK 355.7 million (€36.4 million/$41.3 million), up from NOK 219.9 million (€22.5 million/$25.5 million) a year earlier.

Harvests in this region increased 45.2 percent, to 6,185 metric tons.

In Finnmark, Norway, EBIT per kilo was NOK 20.07 (€2/$2.30), 68.6 percent up from the year before, while EBITDA nearly doubled, reaching NOK 240.1 million (€24.6 million/$27.8 million), and revenues went up by 40.7 percent, to NOK 594.4 million (€60.9 million/$68.9 million).

Harvests in this region were 10,824 metric tons, up 25.6 percent year on year.

In British Columbia, Canada, EBIT per kilo fell 6.9 percent year on year, to NOK 6.74 (€0.69/$0.78). EBITDA increased 13.2 percent to NOK 32.6 million (€3.3 million/$3.8 million), and sales went up by 20.6 percent, to NOK 187.3 million (€19.2 million/$21.7 million).

Harvests in the region amounted to 2,941 metric tons, up 12.2 percent from the year prior.

In Shetland, Scotland, EBIT per kilo fell drastically, from NOK 9.46 (€0.97/$1.1) to NOK 1.29 (€0.13/$0.15) year on year, while EBITDA also saw a steep decrease of 60.6 percent, falling to NOK 16.6 million (€1.7 million/$1.9 million). This is despite a 32 percent year-on-year increase in sales, which reached NOK 245.2 million (€25.1 million/$28.4 million) over the period.

Harvests were flat compared with the year prior, at 11,924 metric tons.

The fall in earnings were explained by reduced survival in the region caused by gill-related disease and winter ulcer, the company said.

According to the financial statements, the extraordinary mortality at the site caused a write-down of NOK 30 million (€3.1 million/$3.5 million) in the quarter, which decreased EBIT per kilo by NOK 7.99 (€0.82/$0.93).

“Q4 2018 ended a strong year for Grieg Seafood in which we reached our last guided harvest volume of 75 000 metric tons – an increase of 20 percent compared to 2017,” said Andreas Kvame, Grieg Seafood CEO.

“This was achieved by maintaining a strict focus on sustainability and driving forward improvements to our farming operations.”

A better year overall

For the full year, the company reported an increase of 18.2 percent in EBITDA, which reached NOK 1.3 billion (€133.1 million/$150.8 million), and a 7.14 percent increase in revenue, to NOK 7.5 billion (€767.9 million/$869.8 million).

Total harvests volumes for the year were 74,623 metric tons, up 19.2 percent year on year. Overall EBIT per kilo for the full year was NOK 14.72 (€1.50/$1.70), up 1.9 percent year on year.