Turning a corner

Lerøy farm, Tveitnesvik, Norway

As Vince McDonagh reports, Lerøy Seafood Group says it is finding solutions for the many challenges that beset the business last year

The Lerøy Seafood Group is celebrating its 125th anniversary this year, but 2024 is already off to quite a dramatic start.

Fish escapes, biological challenges and issues with Listeria are among the problems that the company has been forced to tackle recently.

Determined to not to be overwhelmed, Lerøy is fighting back, and the early signs suggest that it is winning.

The group’s fish farming and deep sea trawling businesses are largely Norway based, but its fortunes are also important to the UK. Lerøy owns half of Scottish Sea Farms which, incidentally, has turned the corner with its own problems.

Leroy Seafood Group

Lerøy CEO Henning Beltestad tells investors in the group’s annual report that 2023 had been a year full of learning. Well, that is one way of describing events of the recent past.

In 2023 the company endured everything from the threat of large ice floes to severe jellyfish attacks and mass mortalities. And some of those issues did not end with the start of a new year.

Nevertheless, Beltestad says that the group continued to develop in growth as it has done throughout the last 30 years.

“Last year we passed an income of NOK 30bn (£2.2bn) for the very first time in our history. At the same time, 2023 has been a challenging year in some areas.

“However, we are working in a structured and targeted manner to solve the challenges and continuously creating the world´s most efficient and sustainable value chain for seafood. We are always looking for ways to improve our company.

Henning Beltestad

Henning Beltestad

“We are developing the company for eternity. And never in our history have we learned so much as we did in 2023. We got new and better insights about technology, handling big sets of data, and gained a lot of new insights.”

And despite cod quota reductions, the company recorded its highest wild catch volume because it was able to turn to other species.

It was also “leaving a rough time behind” with its aquaculture value added products ( VAP) sales and distribution segment following two years of Covid and extremely volatile prices.

To add to these challenges, the company had been faced with a strong increase in raw material prices.

The year 2023 wasn’t all uphill though. The group saw a significantly improved performance through better utilisation of the capacity in its factories and an improved market balance, and it expects that to continue.

Lerøy and its CEO believe new technology is one of the principal keys to future improvement.

He says: “We have had challenges due to fish health and welfare, and we see that implementing new technology helped to solve some major issues in our aquaculture segment.

“The new technology that we started to implement last year is working very well, and so far, the results are promising. Lerøy is committed to ensuring sustainable aquaculture and will continue to roll out these technologies in the near future.

“The aim is for 35% of the salmon to be placed in submerged or semi-closed cages by 2024. I am also eager to notice that our employees have a strong belief and motivation for these solutions, and everyone is working very hard in this direction.

“Working with our new shielding technology, we have significantly better control on the fish and on its welfare.

“This shielding of lice will bring down our need for lice treatment and the fish will have better health and welfare.”

There has been similar progress with sustainability and digital transformation, which it describes as a long-term strategy.

Lerøy has set out a development plan that includes ending the complex and very fragmented chains which seems to be an in-built part of aquaculture.

Lerøy fish farms 

Lerøy fish farms

It says these are incompatible with the requirements of customers and with regard to other issues such as food safety, cost efficiency, traceability and increased sustainability.

The CEO states: “We have always been a customer-centric company, and our vision requires us to keep developing to become a preferred supplier of seafood on a global scale.

“Our customers are predominantly within retail and food service, and our aim is to increase their satisfaction and willingness to pay through an efficient and sustainable value chain, with a large product range and customer integration.”

He adds: “In turn, this will help our customers gain new market shares. As we have grown, we have therefore focused on securing access to raw materials that are fully traceable and have gradually developed an integrated value chain for seafood.”

This integrated value chain for seafood is a key part of Lerøy’s long-term strategy, the company says. It will entail developing long-term customer relationships and an in-depth understanding of the customer’s requirements, continuously improving the processes in the group’s own value chain and developing strong alliances with suppliers.

Lerøy fish farms 

Lerøy fish farms

New ways of combating sea lice
Lerøy says lice pose a substantial challenge in the open sea phase.

Sea lice, and the treatments required to comply with the regulatory maximum number of lice per individual fish, have a substantial impact on both growth and fish welfare.

In 2022, a programme initiative called “Coastal Production Technology” was launched. The programme evaluated a significant number of different technologies intended to shield the farmed fish from sea lice, in order to determine which could be suitable and where the deployment of such new technology would have the greatest impact.

As of today, the technologies used across different sites in Norway are much the same. For its part, Lerøy believes that more site-specific technologies will be deployed in the future.

The implementation of such new technologies continued through 2023. This includes four fully submerged installations and one with semi-closed technology.

The plan now is to roll out a further 12 installations in 2024, of which 10 are submerged and two are semi-closed.

Around one third of Lerøy’s salmon will be raised in installations that make use of “shielding” technologies by the end of 2024.

Scottish Sea Farms

Scottish Sea Farms

Brighter for Scottish Sea Farms
Scottish Sea Farms Ltd (SSF) is one of the largest aquaculture companies in the UK. And Leroy says 2023 was an extremely challenging year, with significant biological challenges related in part to micro jellyfish.

SSF harvested about 25,000 tonnes of salmon in 2023, down from 36,000 tonnes in 2022. Which gave it an operating loss, before fair value adjustment related to biological assets, of NOK 303m (£22m) in 2023, down from an operating profit of NOK 214m (£15.5m) in 2022.

But at the start of 2024, the biological situation had turned around with a significant improvement in both biological and financial results.

The harvest volume in 2024 is expected to total 37,000 tonnes.

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