Grieg Seafood is set to pull out of Shetland, the company said in a shock announcement today.
Publishing its third quarter results, in which it announced a loss, the company confirmed a decision announced in September that it was closing its operations on the Isle of Skye.
Then it dropped the bombshell that the company is “evaluating a divestment of Grieg Seafood Shetland”.
The company, which employs around 160 people on Shetland, indicated it intends to sell its Scottish assets and concentrate in future on Norway and Canada.
The statement said: “Production on Shetland has developed positively during the quarter and cost per kg is expected to come down in 2021 when operations at Skye have ended.
“The total impact from the mortality event in addition to low price achievement, high cost on harvested fish and the shutdown cost related to Skye, amounted to minus NOK 150 million for the quarter.
“The resulting EBIT per kg before fair value adjustment of biological assets was minus NOK 27.44 compared to minus NOK 3.53 in Q3 2019 and minus NOK 12.36 in Q2 2020.”
The statement then added: “Grieg Seafood Shetland has taken several measures in the last years to ensure strong biosecurity and improved fish health and welfare, such as extended fallowing areas coordinated with neighbouring farmers, and control of the sea lice situation by the use of aeration systems, sea lice skirts and freshwater treatments.
“Measures such as a new vaccination strategy to improve the smolt quality have significantly increased the survival rate on smolt transferred to sea.
As part of our growth strategy, with focus on operational areas with growth potential, we “have decided to cease our operations at the Isle of Skye and are evaluating a divestment of Grieg Seafood Shetland. Despite the high mortality event at Skye, we maintain our estimated harvest volume for 2020 at 15,000 tonnes.”
Harvest volume in Q3 2020 was 6,785 tonnes, an increase of 76 per cent compared to Q3 2019. Volume is well above guidance due to the accelerated harvest from Isle of Skye.
Grieg said Shetland had achieved a significantly lower price achievement compared to Norwegian salmon during the quarter.
The review could lead to Grieg’s Shetland assets coming under new ownership.
Globally, Grieg announced a negative EBIT of NOK 192 million compared to an operating profit of NOK 143 million this time last year. Harvest volumes totalled 21,201 tonnes, slightly up on Q3 2019.
Commenting on the company’s global performance in Q3, Grieg CEO Andreas Kvame, said: “The third quarter was challenging for Grieg Seafood. Effects of the Covid-19 pandemic impacted price achievements negatively in all markets and we experienced operational challenges out of the ordinary on Isle of Skye.
“On the other hand, our Norwegian regions delivered good results in the quarter. Progress is made at our recently acquired greenfield project in Newfoundland, and healthy fish are growing in our new hatchery.”
However, to lower risk in the initial phase of the project, we have decided to defer the construction of the first post-smolt unit to 2023, without causing delay to our target of harvesting 15 000 tonnes in 2025..”
He added: “In 2020, we have not been able to deliver on our ambitions. Grieg Seafood has a clear goal of creating value and we are taking decisive action and implementing measures to improve our performance the coming years. We will reduce cost per unit in all regions supported by cost effective and sustainable farming methods and profitably grow our salmon production by around 45 per cent towards 2025.”