HIGH PRICES GENERATE GOOD
EARNINGS
In Q4 2016, Lerøy Seafood Group
(LSG) reported revenue of NOK 4,924 million, compared with NOK
3,564 million in the same period of 2015. The operating profit
before fair value adjustment of biomass was NOK 1.017 million in Q4
2016, compared with NOK 353 million in Q4 2015.
-
"In 2016, Lerøy Seafood Group achieved
a record high result, and can report the highest revenue and
highest operating profit before fair value adjustment of biomass in
the Group's history," confirms CEO Henning Beltestad. "We are
naturally delighted with such a great result," he continues. "We
can look back on a quarter with extremely high salmon and trout
prices, strong demand but also some biological challenges and a
relatively high share of contracts at prices below the spot price,"
explains Beltestad.
Compared with Q4 2015, the Group's
volume of harvested salmon and trout was down by 6%. The Group's
profit before tax and before fair value adjustment of biomass was
NOK 1.025 million in Q4 2016 compared with NOK 335 million in Q4
2015. This constitutes a profit before biomass adjustment of NOK
14.3 per share in Q4 2016, compared with NOK 6.4 per share in the
same period of 2015.
- "Our release from stock costs for salmon and
trout remain extraordinarily high," confirms CEO Henning Beltestad,
stating the most important cost drivers as feed costs and the costs
required to remain in compliance with statutory limits for salmon
lice. "We have implemented a number of measures and expect to see a
reduction in production costs for salmon and trout, but have to
acknowledge that it is difficult to specify a timeline for such a
development," adds Beltestad.
For 2016 in total, the Group reported revenue of
NOK 17,269 million, up 28% from 2015. Operating profit before fair
value adjustment of biomass is NOK 2,843 million in 2016 compared
with NOK 1,380 million in 2015. The profit figure before tax and
fair value adjustment of biomass in 2016 was NOK 2,926 million
compared with NOK 1,321 million in 2015.
-
"2016 has been a very exciting year for Lerøy
Seafood Group," confirms CEO Henning Beltestad. "With the
acquisition of Havfisk and Norway Seafoods, we have embarked on a
new journey on which we aim to integrate white fish into our
well-established value chain. We are now a fully integrated company
and have control of our entire value chain for a wide range of
seafood products, from the sea to the plate, and we are very much
looking forward to continuing with our market and product
development," confirms CEO Henning Beltestad.
At 31 December 2016, net interest-bearing debt was
NOK 3,433 million and the equity ratio 54%.
The Board of Directors proposes a dividend payment
of NOK 13 per share.
FARMING - COST LEVEL REMAINS
HIGH
Operating profit before fair value
adjustment of biomass reported by the Farming segment in Q4 2016
was NOK 827 million, up from NOK 221 million in Q4 2015. The
Farming segment harvested a total of 39,143 GWT salmon and trout in
Q4 2016, down 6% from the same period in 2015. EBIT/kg was up from
NOK 5.3 per kg in Q4 2015 to NOK 21.1 per kg in Q4 2016.
In Q4 2016, Lerøy Aurora achieved
operational EBIT per kg of NOK 28.3. Lerøy Midt and Lerøy Sjøtroll
are reporting EBIT per kg of NOK 17.9 and NOK 18.0 respectively for
the same period.
HAVFISK ASA AND NORWAY SEAFOODS
GROUP AS
On 27 October 2016, Lerøy Seafood
Group obtained 100 % ownership of both Havfisk ASA and Norway
Seafoods Group AS. As a result of this transaction, both companies
were consolidated into Lerøy Seafood Group as of 1 September 2016.
Significant changes were implemented to the operation of Norway
Seafoods Group in Q4 2016. With effect from 1 January 2017, all
sales and logistics are coordinated with the Group's sales and
distribution unit in Bergen. Some reorganisation costs are to be
expected in 2017 for the transfer, but efforts are well under way
to integrate the businesses in order to exploit synergy effects and
economies of scale. The business in Denmark has been sold to
Seafood International, in which Lerøy Seafood Group will hold 33%
of the shares.
The contribution from these
businesses in terms of operating profit in Q4 2016 amounted to NOK
76 million.
VAP (Value-Added Processing) -
GOOD GROWTH IN ACTIVITY
The volatile prices for salmon
have been and remain a challenge for processing activities, and the
Group continues its efforts to adapt to the expectation of
permanently high raw material prices. Revenue was up 9% in Q4 2016
compared with Q4 2015, but the operating margin fell from 7.1% to
4.6%. In total, the operating profit fell from NOK 39 million in Q4
2015 to NOK 28 million in Q4 2016.
SALES & DISTRIBUTION -
POSITIVE DEVELOPMENT
The Sales & Distribution
segment reported revenue of NOK 4,086 million in Q4 2016, up 25% on
Q4 2015. The operating margin was down from 3.0% in Q4 2015 to 2.8%
in Q4 2016. The Group still has extensive unutilised capacity in
several fish-cuts and has identified major potential to increase
activities and earnings within this part of the value chain in the
years ahead.
MARKET AND OUTLOOK
For a number of years now, the
Board of Directors and management have clearly stated their views
on the need for changes to regulations in Norway. The Board of
Directors is of the opinion that a growth in demand over time is
perhaps the most important driver for global competitiveness and
increased value generation. From a long-term market perspective,
the Norwegian aquaculture industry is in a challenging situation at
the start of 2017, as lack of growth in volume has resulted in very
high prices. Framework conditions that allow more flexibility in
relation to the harvesting of fish throughout the year would boost
the potential for industrial operations and most probably minimise
the risk of substantial fluctuations in prices throughout the year.
The re-establishing predictability in framework conditions for the
industry is more important than ever, and a minimum 5- to 10-year
horizonis required to secure future global competitiveness.
Framework conditions of this nature must be based on an
understanding of environmental sustainability and value generation.
Future competition to win global consumers will leave no room for
non-essential costs, or taxes or charges particular to Norway.
In Q4 2016, the Group became the
sole owner of both Havfisk ASA and Norway Seafoods Group AS. The
LSG Group has played a predominant role in relation to the end
market via its fully integrated value chain, product development,
increased traceability and availability, particularly for salmon.
The Group has also launched equivalent products for white fish, and
has identified similar trends for white fish as for salmon and
trout. The Board and management are confident that there is
considerable value generation potential in further developing the
white fish market, including increasing capacity utilisation in
Lerøy Seafood Group's downstream activities. The investments in
Havfisk ASA and Norway Seafoods Group AS are important to achieve
the Group's vision of being the leading and most profitable global
supplier of quality sustainable seafood.
The Group currently estimates a
total harvested volume of 180,000 GWT for 2017, including LSG's
share of volume from associates.
Based on the estimated harvest
volume and good market prospects, the Group currently expects
earnings in Q1 2017 to be strong.
Questions and comments may be
addressed to the company's CEO, Henning Beltestad, or to the CFO,
Sjur S. Malm.
This information is subject to the
disclosure requirements pursuant to section 5-12 of the Norwegian
Securities Trading Act.
Q4 2016 Presentation
Q4 2016 Report
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Lerøy Seafood Group ASA via Globenewswire
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