Algae outbreak hits Lerøy Q2 results

THE Lerøy Seafood Group, co-owners of Scottish Sea Farms, today announced higher earnings, but lower profits for the 2019 second quarter period .

Revenues were up six per cent and  totalled NOK 5,340 million, compared to NOK 5,042 million for the same period in 2018.

Operating profit (EBIT) before fair value adjustment related to biological assets came out at NOK 774 million, down from NOK 1,000 million in Q2 2018, due to lower farmed fish prices and earnings.

But the company also said that the unexpected algae outbreak in the north of Norway last May had affected results.

CEO Henning Beltestad said: ‘In terms of earnings, the second quarter figures are in line with the expectations we had going into the quarter.

‘However, we know that we have the potential to do better and that our skilled employees are doing their utmost to exploit this potential to the full.’

He continued: ‘We have made several major investments in farming in recent years. The results of these, however, are not immediately obvious as the projects have long lead times.

‘Release from stock costs were too high in the second quarter, but we expect to see an improvement in the second half of the year and into 2020.

‘Our trawler fleet for white fish has been successful in the quarter, while our onshore facilities in this segment have had a challenging quarter.

‘We have made a number of investments in this area also, and expect these to provide lasting improvements by 2020.’

He said downstream, the company was watching the results of investments made in recent years and ‘can report a strong quarter’.

Turning to other problems, Belstead said: ‘A  fire in a smolt plant in the winter and an unforeseen outbreak of toxic algae have impacted the results both for the second quarter and the first half of the year.

‘But now that this difficult period is behind us, we are confident that we have a strong position moving forward into the second half of the year and into 2020.

‘For our farming segment, the results of the investments we made in smolt will gradually materialise, and we expect to gain potential in terms of both increased volume and lower costs per kilogram of fish produced.’