Grieg grinds out Shetland improvements

Grieg Seafood Shetland- survival rates have improved but challenges remain

GRIEG Seafood said today that costs at its Shetland operation were still not at target level due to long standing biological problems, but it was slowly making vital improvements.

Announcing its 2019 fourth quarter results, Grieg said Shetland produced income of NOK 151.3 million compared with NOK 245.2 for the corresponding period in 2018.

This produced an EBIT or operational loss of NOK 8.9 million against a profit of NOK 4.8 million a year ago.

Harvest volumes were down by 37 per cent to 2,332 tonnes partly due to reduced harvest weight.

Grieg said costs in Shetland remain high due to issues with gill health, plankton and sea lice, but initiatives to improve biological performance, including more robust smolt, have increased survival to 89 per cent over the past 12 months.

The company is expecting an improved harvest of 17,000 tonnes this year (1,700 tonnes in the first quarter) on the back of gradual cost improvements.

Globally, the group announced strong Q4 earnings, with harvest volumes up by seven per cent to 25,342 tonnes.

Harvest volumes for the year rose by 8,000 tonnes to 83,000 tonnes. However, the average realised price was down because of the problems in the UK and British Columbia.

The group’s EBIT before fair value adjustment of biological assets was NOK 357 million (NOK 351 million in Q4 2018) during the quarter, corresponding to an EBIT per kg of NOK 14.10 (NOK 14.81). Revenues for the quarter rose by 12 per cent to NOK 2,390 million.

The figures do not include Grieg’s recent NOK 620 million acquisition of the Grieg Newfoundland fish farming operation.

Commenting on the results, CEO Andreas Kvame said: ‘2019 was an eventful year for Grieg Seafood, marked by good market conditions and continuous improvement across all our operations.

‘This trend continued in the fourth quarter, with particularly strong results in Rogaland and Finnmark, while our long-term initiatives to address biological challenges in BC and Shetland continued to yield positive results.

‘In Shetland in particular, cost remained at a high level in the quarter, but biological improvements led to higher survival rates.

‘For 2020, we have a long standing ambition of reaching 100,000 tonnes harvest with cost at or below industry average, and as we enter 2020 our volume target is within reach.’

On the group’s longer term growth strategy, Kvame said: ‘As we look beyond 2020, we aim to build on our existing platform to ensure continued growth and cost improvements to reach more than 150,000 tonnes harvest by 2025.

‘To scale our global operations, we will continue to grow organically, as well as through M&A activity.

‘We will also reposition Grieg Seafood from a pure commodity supplier to an innovation partner, increasing our presence downstream through partnerships, category development and brand cultivation.’