Grieg freezes investment plans in Norway

Grieg Seafood CEO Andreas Kvame revealed today his company had identified several large investment opportunities along the Norwegian coastline, most of which have now been put on hold because of the government’s plans for taxing the industry.

Presenting the company’s third quarter results, he said political risk in Norway had increased significantly as a result of the 40% resource or ground rent tax proposal.

“The proposal and the uncertainty caused by the political process in which it was launched shows how geographical diversification has become even more important to reduce risk in the industry.

“Grieg Seafood is together with the industry working to ensure that Norway remains competitive within the global salmon farming industry, with a stable and attractive investment climate.”

He added: “The proposal is subject to a public hearing and adoption by the Parliament. Once that has happened, Grieg Seafood will assess how the final outcome will impact our strategy and plans and adjust accordingly. Grieg Seafood remains committed to continuous improvements and sustainable farming across our regions.”

Grieg has announced a third quarter operational EBIT or profit of NOK 145m (£12m), NOK 4m lower than a year ago. The harvest volume was slightly higher at 22,923 tonnes.

The company reported that, for the July to September period, salmon prices remained seasonally high despite significant supply growth, with strong demand in hotel retail and catering (HoReCa). A high proportion of contract sales and the timing of harvests impacted price achievement, however.

Biological challenges in British Columbia (BC), combined with underlying inflation, resulted in higher farming costs in that division. Production from seawater farms in Newfoundland was progressing according to plan. Grieg said it has initiated structural changes to BC operations as part of a strategy to optimise site structure.

The group’s total farming cost of NOK 59.4 per kg (£5.04) was impacted by the biological challenges in BC. For Q3 of 2021 the group farming cost had been NOK 48.7 per kg (£4.13).

Grieg saw challenging growth conditions in Norway from the middle of the quarter. The farming cost for Norwegian operations of NOK 49.8 per kg (Q3 2021: NOK 45.9 per kg, around £3.90) was mainly due to inflationary pressure, the report said.

The report said that a total of 33 sites are now ASC-certified (as meeting the standards set by the Aquaculture Stewardship Council), equivalent to 78% of net production.

The company expects a harvest of 17,500 tonnes in Q4 2022, 81,000 tonnes for the full year 2022 and 87,000 tonnes for 2023.

Grieg CEO Andreas Kvame