Farmed salmon. (Photo Credit: Lerøy Seafood)
NORWAYThursday, November 13, 2014, 04:00 (GMT + 9)
The second largest salmon and trout producer worldwide, Lerøy Seafood Group ASAreported the third quarter this year was 'challenging' due to higher output costs and lower prices, which caused the decline in operating profit before biomass value adjustment compared to the second quarter 2014.
“However, in total for the three quarters of 2014, Lerøy Seafood Group can record the highest turnover, highest operating profit and highest profit figure before tax and biomass adjustment ever to be reported at the end of Q3 in the Group's history, “ pointed out the firm’s CEO Henning Beltestad.
The firm informed that in Q3 2014, its operating profit before fair value adjustment of biomass was NOK 303 million (USD 44.4 million) compared to NOK 370 million (USD 54.2 million) in the same period last year.
Furthermore, the Group’s turnover reached NOK 2,962 million (USD 434.4 million) compared with NOK 2,690 million (USD 394.5 million) in the same period in 2013. And there was also a 13 per cent growth in the firm’s harvested salmon and trout volume when comparing the third quarters this year and in 2013.
On the other hand, as of Q3 2014 the Group’s operating profit before value adjustment of biomass was NOK 1,353 million (USD 198.4 million) compared with NOK 1,201 million (USD 176 million) for the same period in 2013.
Besides, the Group's share of Villa Organic AS is reported as a wholly-owned interest from the start of the third quarter, which generated profits amounting to NOK 75 million (USD 10.9 million) and represents an operating profit before biomass value adjustment of NOK 7.3 per kg (USD 1), compared to NOK 10.1 (USD 1.4) in the same quarter last year.
As a result of this move, apart from the eight new licences effective since July 2014,Lerøy Aurora was awarded with a demonstration facility licence, and now has a total of 26 licences. Moreover, Lerøy Vest has been nominated for the acquisition of one new licence during the governmental green licence allocation rounds.
The Farming segment’s operating profit before biomass adjustment fell from NOK 310 million (USD 45.4 million) in Q3 2013 to NOK 154 million (USD 22.5 million) in Q3 2014.
Another decline was observed in the EBIT/kg, changing from NOK 8.5 per kg (USD 1.2) in Q3 2013 to NOK 3.7 per kg (USD 0.5) in Q3 2014.
The Group expressed satisfaction about the underlying developments achieved by the Value Added Processing segment and confidence that the segment's unexploited capacity provides the potential for sustained growth.
The turnover for this segment has increased by 34 per cent from NOK 305 million (USD 44.7 million) in Q3 2013 to NOK 410 million (USD 60 million) in Q3 2014.
The Sales and Distribution segment also reported an increase in turnover from NOK 2,553 million (USD 374.4 million) in Q3 2013 to NOK 2,820 million (USD 413.5 million) in Q3 2014, undoubtedly the highest turnover ever achieved in a third quarter.
The Group believes that in addition to the seasonal increase in supply, the ban on imports to Russia have exercised more pressure on prices for salmon and trout.
This ban on imports has also had a particularly negative impact on trout, as trout sales to Russia have historically represented about 50 per cent of total sales for trout producers in Norway.
The Group’s CEO explained they are working hard to find alternative markets and are visualising signs of success from their efforts.