Lerøy Seafood Group is a world-leading seafood corporation with a history reaching back to 1899
Lerøy reports higher earnings but lower profits for Q2
Wednesday, August 21, 2019, 23:50 (GMT + 9)
The Lerøy Seafood Group reports higher earnings in the secod quarter of 2019, compared with the same period in 2018, but lower profits.
In Q2 2019, Lerøy Seafood Group (LSG) reported revenue of NOK 5,340 million (USD 594 million), an increase of 5.9 % compared with the same period in 2018 (NOK 5,042 million).
Operating profit before fair value adjustment related to biological assets was NOK 774 million(USD 86.1 million) in Q2 2019, down 22.6 % compared with NOK 1,000 million in Q2 2018. Lower earnings for Farming, attributed to lower prices realised and higher release from stock costs, represent the most significant reason behind the fall in earnings in Q2 2019 when compared with Q2 2018.
Depreciation in Q2 2019 totalled NOK 250 million compared with NOK 161 million in Q2 2018. Net financial items amounted to NOK -48 million in Q2 2019, compared with NOK -50 million in the same period in 2018.
The Group’s profit before tax and fair value adjustment related to biological assets was NOK 776 million (USD 86.3 million) in Q2 2019, compared with NOK 1,021 million in Q2 2018. Estimated tax expense for the quarter is NOK 195 million, compared with a tax expense of NOK 338 million in the same period of 2018.
This constitutes earnings per share before fair value adjustment related to biological assets of NOK 1.00 in Q2 2019, compared with NOK 1.28 per share in Q2 2018. The Group’s annualised return on capital employed (ROCE) before fair value adjustment related to biological assets was 17.1% in Q2 2019 against 24.9 % in Q2 2018.
The Group reports revenue of NOK 10,086 million for the first half of 2019, compared with NOK 10,042 million (USD 1,121 million) in the first half of 2018. Operating profit before fair value adjustment related to biological assets for the first half of 2019 was NOK 1,465 million compared with NOK 1,960 million for the first half of 2018. The profit before tax and fair value adjustment related to biological assets for the first half of 2019 was NOK 1,524 million compared with NOK 2,038 million for the first half of 2018.
The wholly-owned subsidiary Havfisk's primary business is wild catches of white fish. Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to more than 30% of the total quota allocated to the trawler fleet. Havfisk also owns several processing plants, which are mainly leased out to their associate Lerøy Norway Seafoods (LNWS) on long-term contracts. Havfisk’s trawler licences stipulate an operational obligation for these processing plants.
Havfisk's total catch volume in Q2 2019 was 15,860 tonnes, compared with 18,190 tonnes in Q2 2018. Catch volumes for the main species in Q2 2019 were 6,332 tonnes of shrimp, 3,009 tonnes of cod, 2,250 tonnes of saithe and 928 tonnes of haddock. The catch distribution in Q2 2018 was 3,279 tonnes of shrimp, 3,817 tonnes of cod, 5,401 tonnes of saithe and 441 tonnes of haddock. Compared with Q2 2018, the average price realised for all species was up 14% in Q2 2019. The prices for cod, haddock and saithe increased by 7%, 4% and 24% respectively in the quarter. The average increase in price compared with the same quarter last year is impacted by the composition in catches, but the price increase is also attributed to lower quotas and the growing demand for products.
The Farming segment comprises the Group’s three farming regions in Norway: Lerøy Aurora located in Troms and Finnmark, Lerøy Midt located in Nordmøre/Trøndelag, and Lerøy Sjøtroll located in Hordaland.
Operating profit for the Farming segment before fair value adjustment related to biological assets was NOK 595 million in Q2 2019, compared with NOK 833 million in Q2 2018. During the quarter, the Farming segment harvested 37,000 tonnes – in line with the figures reported for Q2 2018. Prices realised in the quarter are down when compared with the same period last year, and release from stock costs are up. In total, EBIT/kg for the segment was down from NOK 22.0 in Q2 2018 to NOK 16.1 in Q2 2019.
The Group also reported that in Q2 2019, a substantial outbreak of toxic algae was seen in parts of the region where Lerøy Aurora has operations. Although this company experienced very limited mortality, it decided, as a precautionary measure, not to feed the fish for long periods of time, causing loss of growth. The company also increased costs for emergency preparedness. The total estimated loss in growth for Lerøy Aurora is approximately 2,000 tonnes. In total, these incidents have significantly affected costs for Lerøy Aurora in Q2 2019.
Click here to see the Lerøy 's Q2 2019 report