Grieg Seafood ASA Q1 2021 results – Low market prices impacted earnings
First quarter highlights
- Harvest volume of 13 583 tonnes (16 315)
- EBIT before production fee and fair value adjustment of NOK -16 million (216 million)
- EBIT/kg NOK -1.2 (13.3)
- Low market prices impacted earnings by NOK -141 million vs Q1 2020
- Oversupply of downgraded salmon in the market due to winter ulcers impacted margins in Norway
- Good biological performance in Rogaland and BC
- Satisfactory financial situation
- Process to divest Shetland operations ongoing, assets classified as held for sale and not included in EBIT
- New integrated sales and market organization fully operational, handling 50% of volume sold in the quarter
- One new site ASC certified during Q1. Total of 27 sites or 50% of net production ASC certified
- Expect harvest of 15 400 tonnes in Q2 2021, and 80 000 tonnes (ex. Shetland) for the full year 2021
The Covid-19 pandemic has disrupted the salmon market, causing a significant shift in demand and lower prices in core markets. Grieg Seafood’s priorities are to protect our people, the local communities where we operate, our partners, our business operations, and to secure liquidity and financial strength. Despite the challenging circumstances, demand for Atlantic salmon remains strong and Grieg Seafood has been able to maintain efficient operations throughout the quarter.
During the first quarter 2021, Grieg Seafood harvested 13 583 tonnes ex. Shetland, a reduction of 17% compared to 16 315 tonnes in Q1 2020.
The average spot price for salmon during the quarter (NQSALMON, weekly average less distributor margin) was NOK 52.8 per kg, down by NOK 15.6 per kg compared to Q1 2020, but up by NOK 9.5 per kg compared to Q4 2020.
Q1 2021 sales revenues from continuing operations amounted to NOK 660 million, a decrease of 43% compared to Q1 2020. The decrease is mainly due to lower market prices in addition to reduced harvest volume. Cross industry challenges related to winter ulcers has resulted in oversupply of downgraded salmon in the Norwegian, impacting prices significantly.
The difference in price achievement, measured as sales revenue/kg compared with Q1 2020, had a direct negative impact on EBIT contribution of NOK 141 million compared to the corresponding period last year. Lower volume impacted EBIT before production fee and fair value adjustment by NOK -40 million, while the price effect of operational cost impacted EBIT before production fee and fair value by NOK -57 million.