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Grieg Seafood ASA: Q1 2024 results

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Highlights

  • Harvest volume of 21,075 tonnes (15,357 tonnes)
  • Operational EBIT in the quarter of NOK 292 million (NOK 385 million), with operational EBIT/kg of NOK 13.8 (25.1)
  • Rogaland delivered second best quarterly results ever
  • Results in Finnmark significantly impacted by historical biological challenges and downgrades
  • Successful completion of harvest of the first generation in Newfoundland, with high share of superior quality
  • Construction of post-smolt facilities in Rogaland, Finnmark and Newfoundland on track
  • Process to identify long-term partners to take part in the development of Canadian operations is ongoing
  • 65% of the harvested volume in the quarter ASC certified
  • Expect to harvest 17,100 tonnes in Q2 2024
  • Target harvest volume for the full year 2024 remains at 81,000 tonnes


Financial results

Operational EBIT for Grieg Seafood was NOK 292 million in the first quarter of 2024, compared to NOK 385 million in the corresponding period in 2023. Harvest volume was 21,075 tonnes during the period (15,357), which gives an operational EBIT per kg of NOK 13.8 (25.1).

In Rogaland, harvest volume for the quarter was 9,426 tonnes (7,502), 2,500 tonnes above guiding for Q1 2024 due to advanced harvesting to mitigate biological risk. Supported by high average weight driven by post-smolt, Rogaland delivered second best quarterly results ever caused by lower costs and strong price achievement. For the quarter, Operating EBIT/kg ended at NOK 39.4 (38.4), confirming a continued positive operational development in the region.

In Finnmark, harvest volume for the quarter ended at 5,663 tonnes (7,856). Results were significantly impacted by low average harvest weights and reduced quality, with Operational EBIT/kg ending at NOK 3.1 (20.1). Biological performance in sea during the quarter has been impacted by a mix of Spiro (Spironucleus salmonicida), string jellyfish and low seawater temperatures. Measures have been taken to improve fish welfare, expecting effect in 2024 and significant improvements for the next winter.

British Columbia had a limited harvest volume of 666 tonnes in the quarter, as the region has prioritized biomass growth. Operational EBIT/kg ended at NOK 0.3. The underlying seawater performance was good during the quarter, with a 12-month survival rate of 93%.

In Newfoundland, the company has successfully completed the harvesting of the first generation in the quarter. Total harvest volume during the quarter was 5,320 tonnes, while the total harvest volume for the entire generation was approximately 8,500 tonnes. Realized price was NOK 85.0 per kg and the superior share was 98%.


Increased financial flexibility to move forward with post-smolt in Newfoundland

Grieg Seafood ASA and its lenders under its existing Facilities Agreement have signed an amendment letter by which two accordion facilities will be added to the existing facilities. The accordion facilities are consisting of a term loan facility over NOK 500 million and a revolving facility over NOK 500 million. The accordion facilities will increase Grieg Seafood's financial flexibility to support growth initiatives.

One of the growth initiatives is that Grieg Seafood envisages to move forward with the construction of the post-smolt facility in Newfoundland. Grieg Seafood has reached a material agreement with its main suppliers for the remaining construction work and is focusing on getting the last details in place. Completion of the post smolt facility is expected in the first half of 2026 and will require a CAPEX of approximately CAD 115 million, distributed by 40%, 40% and 20% over the 2024-26 period.

Commenting on the quarter, Andreas Kvame, CEO of Grieg Seafood ASA said:

“During the first quarter of 2024, we experienced progress after a challenging 2023. The main driver of the improvement was a strong biological performance in Rogaland, which reduced costs and increased price achievement. The underlying biology is improving in all of our farming regions. I want to thank my colleagues in all parts of the company for their efforts and hard work during this quarter.

Our Finnmark operations were affected by historical biological challenges, including the Spiro parasite and string jelly fish. Coupled with low seawater temperatures, the challenges impacted survival, fish health, welfare and quality. I am not satisfied with the fish welfare situation during the quarter. We have and continue to implement a variety of improvement measures, including a new vaccine against winter ulcers, a UV filter against Spiro and sea lice treatment capacity with improved welfare. We are also making changes to our production planning and reducing biological risk as our post-smolt strategy is gradually rolled out in our regions. Because of the long production cycles, it takes time to see the results of our measures. During 2024 and especially next winter, however, we expect significant improvements.

In Canada, we accomplished a significant milestone with the completion of our first harvest in Newfoundland. We have proven that it is possible to farm salmon with good welfare, low impact and high quality in Placentia Bay. This is strengthening our faith in Newfoundland as a future, robust farming region, which will generate jobs and shared value to the surrounding rural communities.

During the quarter, we also announced that we are establishing a 10,000 tonnes value-added processing plant, which will facilitate both of our Norwegian regions. This is a key step towards delivering on our downstream strategy, where we aim to work closer with our customers and increase value creation from our fish.


Outlook

The global harvest of Atlantic salmon in 2024 is expected to increase by 1%. With expectations of limited supply growth in 2024, combined with an outlook for continuing strong demand fueled by an increased focus on healthy food and sustainably produced proteins, we expect a sustained strong market.

Estimated contract share for the Norwegian operations is 11% for Q2 2024 and 7% for the full year 2024.

In the second quarter of 2024, expected harvest volume is 17,100 tonnes, distributed as follows:

  • Rogaland: 3,600 tonnes
  • Finnmark: 3,500 tonnes
  • BC: 10,000 tonnes
  • NL: 0 tonnes

The company guides for a harvest volume of 81,000 tonnes in 2024, distributed as follows:

  • Rogaland: 28,000 tonnes
  • Finnmark: 27,000 tonnes
  • BC: 15,000 tonnes
  • NL: 11,000 tonnes


Results presentation

Chief Executive Officer (CEO), Andreas Kvame and Chief Financial Officer (CFO) Atle Harald Sandtorv will present the results live at Hotel Continental, Stortingsgata 24/26, Oslo today at 8:00 a.m. CEST

Following the presentation, it will be opened for questions from the audience. The presentation and the subsequent Q&A will be held in Norwegian language.

A live webcast from the presentation can be accessed at https://investor.griegseafood.com/reports-&-presentations#quarterly or with the following link:
https://channel.royalcast.com/landingpage/hegnarmedia/20240516_2/

Webcast participants need to register to post questions.

An English transcript of the presentations will be made available at www.griegseafood.com.


For further enquiries, please contact:

Andreas Kvame, CEO
Cell phone: +47 907 71 441

Atle Harald Sandtorv, CFO
Cell phone +47 908 45 252


About Grieg Seafood

Grieg Seafood ASA is one of the world's leading salmon farmers. Our farms are in Finnmark and Rogaland in Norway, and British Columbia as well as Newfoundland in Canada. Our headquarter is located in Bergen, Norway. Grieg Seafood ASA was listed at the Oslo Stock Exchange in June 2007.

Sustainable farming practices are the foundation of Grieg Seafood's operations. The lowest possible environmental impact and the best possible fish welfare is both an ethical responsibility and drive economic profitability.

To learn more, please visit www.griegseafood.com


The information included in this announcement is defined as inside information pursuant to article 7 of the Market Abuse Regulation and is publicly disclosed in accordance with article 17 of the Market Abuse Regulation and section 5-12 of the Norwegian Securities Trading Act.
The stock exchange announcement was published by May Hansen, Executive administrative secretary, Grieg Seafood ASA, on 16 May 2024 at 6:00 a.m. CEST.

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