Lerøy reports a better Q2, but Scotland remains challenging

The Lerøy Seafood combined aquaculture and fishing group today reported higher 2023 second quarter revenues and profits.

But the company is still experiencing serious problems at Scottish Sea Farms, in which it owns a half share.

The company said the group record high revenues of NOK 7,668m (£568m) were driven by strong prices resulting from a weakened krone.

On Scottish Sea Farms, however, the company said the April to June period was “extremely challenging”.

It added: “The profit contribution from associates and the joint venture before fair value adjustment related to biological assets was minus (loss) NOK 65 million (£4.8m) in Q2 2023, against (a profit of) NOK 70m (£5.18m) in Q2 2022.

“This development can be attributed to a challenging biological situation. Gradual improvement is expected through the second half this year.”

At a group level the operational EBIT was NOK increased by NOK 23m (£1.7m) to NOK 950m (£70m).

The Q2 report said the second quarter has been impacted by price inflation on seafood products and a challenging situation in the farming segment in the second half of 2022, which has resulted in low harvest weights and a low harvest volume in the first half of this year.

The group’s downstream activities showed a significant improvement from the same period of 2022 and, despite lower quotas this year, the wild catch (trawling) operation posted satisfactory results for Q2.

CEO Henning Beltestad said that the long production time for salmon meant it took time for improved performance to be reflected in the results.

“We’ve been impacted in Q2 2023 by a challenging second half of 2022. At the same time, developments year to date have been strong in Lerøy Midt and Lerøy Aurora, while the ISA confirmations on two sites in Lerøy Sjøtroll will impact profitability in third quarter, he said.

As discussed at the capital markets day last year, Lerøy has been working with new technology to protect the salmon from sea lice and hence reduce the number of sea lice treatments and improve biological performance.

Lerøy will implement solutions of this type at a number of locations in Lerøy Midt and Lerøy Sjøtroll over the coming months.

CEO Beltestad says that the company’s goal is for around 20% of the salmon to be protected by the technology during the first quarter of next year.

He believes there will be more location-specific technology in the future and that these investments have significant potential to improve biological performance.

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