Greig Seafood reports growth in consumption Published: 17 May, 2012
GRIEG Seafood has reported strong underlying growth in consumption, driven by greater market activity and lower prices in the first quarter of 2012.
The groups said production costs were lower compared to 2011, while unusually high seawater temperatures have increased seawater production and resulted in higher supply-side growth from Norway.
A spokesman for Greig Seafood said: In the first quarter, group EBIT before fair value adjustment of biomass was NOK 4.9 million (£510,000), compared with NOK 131.6 million (£13.7 million) in 2011. The harvest volume in first quarter increased by 6,330 tons (53.3 per cent) to 18,209 tons. This was 3,100 tons more than the previous guidance, while harvest volume guidance for the year in total is kept at 71,000 tonnes. The decline in profits was due to a decline in salmon prices from the second half of 2011. Realised prices in the first quarter were 27 per cent down on the corresponding period in 2011.
Production costs in the first quarter were generally lower compared with the same period last year, while biological production in Norway and Canada continued to maintain the progress shown in the previous quarters. Production in Shetland was weaker due to sea lice problems in one area, which also led to higher underlying costs in this region.
Higher seawater temperatures in Norway have resulted in increased production and a rise in global production that is more than expected. At the same time, there has been an equally strong increase in demand in several countries. The strong demand-side growth is a consequence of lower salmon prices from the second half of 2011, as well as increased distribution and market penetration in both established and emerging markets, and a generally higher level of market activities.
Looking to the future, the spokesman said: Grieg Seafood is carrying out a major investment programme in smolt production based on recirculation technology. This is the largest and most important initiative we have undertaken aimed at increasing production efficiency. In addition to reducing the cost of buying external smolts and transportation of smolt, the enhanced smolt quality and better control of both smolt released to sea and the smolt sizes will facilitate more optimal biological production, adapted to different production and environmental conditions. Altogether, the smolt programmed is expected to reduce production costs by NOK 1-2 per kilo.