Lerøy reports new Scottish RAS facility on track

Leroy CEO Henning Beltestad

LERØY Seafood said today that the new Barcaldine RAS facility at its Scottish Sea Farms operation was on track, with fish moving through the site and the first release of smolt having taken place this autumn.

But like SalMar yesterday, its co-partner in Scotland, it reports that biological challenges were continuing to impact on growth and financial results, leading to a significant quarter-on-quarter increase in costs. However, like SalMar, it expects a reduction in costs during the current quarter.

Reporting its third quarter results, Lerøy said its Scottish Sea Farms EBIT or operational profit fell from NOK 156 million in 2018 to NOK 27 million this year.

The EBIT per kg fell from NOK 19.2 to NOK 2.7, reflecting the effect of the increase in costs.

The entire group, which includes extensive aquaculture operations in Norway and a large white fish catching (Havfisk) and processing business, saw its Q3 revenues rise from NOK 4,456 million to NOK 5,102 million.

But operating profits before fair value adjustment related to biological assets was NOK 501 million, compared with NOK 660 million in Q3 2018.

Lower salmon prices, which have affected the performance of most farming companies this quarter, were one of the main reasons for the drop.

CEO Henning Beltestad said: ‘The group can report good growth in earnings from its downstream operations in Q3 2019, although total earnings in the third quarter are lower in comparison with the same quarter last year.

‘We are confident that our business potential is higher and know that our skilled employees are working hard to exploit this to the full.

‘The group’s farming segment has experienced more challenges than expected in Q3 2019.

‘The export volume for Atlantic salmon saw a substantial increase on Q3 2018, resulting in a fall in spot prices.

‘Release from stock costs in Q3 2019 are lower than in Q2 2019, but still too high. We expect falling release from stock costs to remain into Q4 2019.

‘The wild catch segment\’s fleet of trawlers has had successful operations in the third quarter, while the situation for land based operations remains difficult.

‘However, we also expect the significant investments made in recent years to generate lasting improvements in this segment leading up to 2020.’

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