Grieg Seafood ASA: Q4 2022 results

Highlights

• 2022 resulted in a record high operational EBIT of NOK 1,739 million (NOK 442 million) and the highest ever harvest volume in our current farming regions
• Harvest volume in Q4 2022 of 21,186 (23,727) tonnes
• Operational EBIT in the quarter of NOK 156 million (NOK 265 million), with operational EBIT/kg of NOK 7.4 (11.2)
• Salmon market remains strong, supporting earnings
• Quarterly harvest volume above guidance due to early harvest to reduce biological risk
• Newfoundland developing according to plan
• Ranked 2nd by the Coller FAIRR Protein Producer Index of the world’s most-sustainable protein producers
• Received Leadership (A-) score by the CDP for transparency and actions related to manage climate change risks
• Expect harvest of 11,000 tonnes in Q1 2023 and 82,000 tonnes in 2023

Financial results

The full-year 2022 ended with a record harvest volume of 84,697 tonnes (75,601 tonnes) and an operational EBIT of NOK 1,739 million (NOK 442 million), as both Rogaland and Finnmark reached highest ever harvest volume and operational EBIT.

Operational EBIT in Q4 2022 for Grieg Seafood was NOK 156 million compared to NOK 265 million in the corresponding quarter last year. Harvest volume was 21,186 tonnes during the quarter (23,727), which gives an operational EBIT per kg of NOK 7.4 (11.2).

Operational EBIT/kg in Q4 2022 for Rogaland ended at NOK 13.8 (11.5) and was positively impacted by a superior share of 91% compared to 85% in the corresponding period last year, offset by a negative contribution from contracts and low average harvest weight. The 12-month rolling survival rate remained strong and came to 92% at the end of the quarter. The average weight of smolt transferred to sea for the year was 550 grams, in line with the region’s post-smolt strategy.

In Finnmark, harvest volume for the quarter was 3,000 tonnes above guidance, mainly due to early harvest of fish impacted by the parasite Spironucleus salmonicida (Spiro). Operational EBIT/kg for the quarter ended at NOK 12.5 (17.0), reflecting decent price achievement, but a cost level impacted by Spiro. The source of the parasite is believed to be the water intake to the freshwater facility. A NOK 70 million investment in UV treatment will be taken in 2023 at the facility to mitigate the Spiro challenge. Spiro also impacted the 12-month rolling survival rate, which came to 91 % at the end of the quarter.

Overall, BC had a strong performance in 2022.  The operational EBIT/kg in Q4 of NOK -22.9 (4.1), however, was a result of very low harvest volumes, as the region prioritized to grow biomass during the quarter. The cost was also impacted by the discontinuance of operations in the Sechelt area. Seawater production in British Columbia was good during the quarter, with a stable 12-month rolling survival rate of 91%.

In Newfoundland, the seawater production is according to plan, with high survival and no sea lice issues. The year-end biomass of Newfoundland was 2,600 tonnes, with an average weight of 1.3 kg. Freshwater production has also been good this quarter. The aim is to transfer smolt to sea again during late spring or summer of 2023. First harvest is expected in Q4 2023.

Over the last years, Grieg Seafood has reduced farming costs through operational improvement initiatives. However, during 2022, the industry experienced a general cost inflation, particularly affecting feed prices. In addition, the biological events of 2022 will increase Grieg Seafood’s farming cost until the impacted fish are harvested. While the underlying biology is improving, the company is also launching an improvement program to review all aspects of its operations and identify areas where it can improve profitability and reduce cost.

Commenting on the quarter, Andreas Kvame, CEO of Grieg Seafood ASA said:

"2022 was a record-breaking year for Grieg Seafood. In our 30 year long history, we have never achieved a higher operational EBIT, seen a stronger market or harvested higher volumes in our existing farming regions. I want to sincerely thank all of my colleagues in farming, sales and support functions for their hard work and efforts.

During the fourth quarter, we experienced challenging biological conditions in our Norwegian regions, particularly in Finnmark. Mitigating measures have been taken and the underlying biology is improving. In BC, production was good during the quarter with stable survival. The Newfoundland region is developing according to plan.

As a result of Inflation and the biological events of last year, which impacted cost levels negatively, we are launching an improvement program to review all aspects of our operations and identify areas where we can increase profitability across our business.”

Outlook

The global harvest of Atlantic salmon in 2023 is expected to increase by 2%, or 47,300 tonnes, to a total of 2.9 million tonnes. With limited supply growth, combined with continuing strong demand development, Grieg Seafood believes in sustained strong market prices in 2023.

As a results of the proposed resource tax on farmed salmon in Norway and the ongoing political uncertainty, Grieg Seafood has put all growth investments (approximately NOK 2.3 billion) in Norway on hold. The tax proposal is currently under review and the final version is expected to be adopted by the Norwegian Parliament before the summer. Grieg Seafood will then assess how the tax will impact the company’s strategy and plans, and allocate investments to the farming regions with the biggest potential for sustainable and profitable development and growth.  

Grieg Seafood targets an annual contract share of 20-50%. Estimated contract share for the Norwegian operations is 15% both for Q1 2023 and for the full year 2023. The contract market has been impacted by the proposed resource rent tax on salmon in Norway, however we see signs of improvement going into 2023.

In the first quarter of 2023, expected harvest volume is 11,000 tonnes, distributed as follows:

• Rogaland: 5,300 tonnes
• Finnmark: 5,700 tonnes
• BC: 0 tonnes

The company guides for a harvest volume of 82,000 tonnes in 2023, distributed as follows:

• Rogaland: 29,000 tonnes
• Finnmark: 28,000 tonnes
• BC: 20,000 tonnes
• NL: 5,000 tonnes

Results presentation

CEO Andreas Kvame and CFO Atle Harald Sandtorv will present the results live at Hotel Continental, Stortingsgaten 24/26, Oslo today at 8:00 a.m. CET.

The presentation can be accessed at investor.griegseafood.com, or with the following link:
https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20230216_3  

The presentations and the subsequent Q&A will be held in Norwegian. An English transcript of the presentations will be made available at www.griegseafood.com.

For further enquiries, please contact:

Andreas Kvame, CEO
Cell phone: +47 907 71 441

Atle Harald Sandtorv, CFO
Cell phone +47 908 45 252 

About Grieg Seafood

Grieg Seafood ASA is one of the world's leading salmon farmers. Our farms are in Rogaland and Finnmark in Norway, and in British Columbia and Newfoundland in Canada. Our headquarter is located in Bergen, Norway. Grieg Seafood ASA was listed at the Oslo Stock Exchange in June 2007. More than 750 people work in the company throughout our regions.

Sustainable farming practices are the foundation of Grieg Seafood's operations. The lowest possible environmental impact and the best possible fish welfare is both an ethical responsibility and drive economic profitability. Towards 2026, we aim for global growth, cost improvements and to evolve from a pure salmon supplier to an innovation partner for selected customers.

To learn more, please visit www.griegseafood.com.

This information is publicly disclosed in accordance with article 17 of the Market Abuse Regulation and section 5-12 of the Norwegian Securities Trading Act.

Attachments

• GSF Q4 2022 quarterly report
• GSF Q4 2022 quarterly presentation