NORWAY’S Leroy Seafood has warned that its third and fourth quarter profits will be down, because of a ‘sea lice inferno’ and the Russian trade ban.
Nordea, the Nordic financial services group, said Leroy’s two biggest regions are ‘hurt by sea lice and market challenges, jeopardising H2 profits substantially’, Intrafish reported today.
Leroy indicated that its third quarter earnings before interest and taxes (EBIT) could drop to NOK 250 million ($31 million) from the NOK 467 ($57.90) previously expected, after sea lice challenges in central Norway.
‘The sea lice challenges in this region have escalated during the summer and early fall,’ said Nordea director and sector coordinator Kolbjorn Giskeodegaard, who called the problem a ‘sea lice inferno’.
‘There is massive resistance to normal treatments and the farmers cannot empty their nets quick enough due to under capacity on well boats for transportation.
‘We see a risk of negative effects on harvesting volumes during the next two years, which implies higher costs.’
In a press release, Leroy said: ‘Further restrictions were imposed with effect from late August on the import of salmon and trout to the countries surrounding Russia (the EAEU Customs Union). This has had a particularly negative impact on prices realised for trout.
‘Throughout the quarter, several of Lerøy Midt’s sites have experienced an escalation in lice challenges and this has required early harvest of the spring and autumn 2014 generations.
‘The earlier harvest of fish results in a lower average weight than planned and higher release from stock costs.
‘Earlier harvest also has an impact on the prices realised by the group. Also in the start of the fourth quarter there is a requirement for early harvest in Lerøy Midt. This factor combined with the increased requirement for treatment will continue to have a negative impact on earnings in Q4 2015.
‘The group’s production volume and cost profile will be affected by the above mentioned events, but the group will work to identify the best possible adaptations in order to minimise the consequences on the total slaughter volume in 2016.
‘More detailed information will be provided in the company’s presentation of the third quarter figures in Oslo on November 11.’