Lerøy Seafood Group ASA: Continued biological progress amid low salmon prices

Q3 2024 AFFECTED BY LOW PRICES
Lerøy Seafood Group ASA today announced a consolidated operational EBIT of MNOK 412 for the third quarter of 2024.

The Farming segment reported an operational EBIT of MNOK 310. CEO Henning Beltestad commented: “The third-quarter results reflect the impact of weaker prices for salmon and trout, coupled with historically high seawater temperatures in Northern Norway, which have intensified sea lice challenges. In the short term, this has slightly moderated growth in certain parts of our operations. We expect the total harvest volume this year to end at 190,000 GWT (previous guidance: 193,500 GWT), including 20,000 GWT from Scottish Seafarms.

Scottish Seafarms has shown substantial year-over-year profit growth, underscoring strong biological performance. I am also pleased to see the continued positive development in our Value-Added Processing and Sales & Distribution segment (VAP S&D), delivering another strong quarter.”

FURTHER INVESTMENTS IN NEW FARMING TECHNOLOGY TO SUPPORT FISH WELFARE
“Looking ahead to 2025, we are optimistic about further advancements in our biological performance. Daily, new data reinforces our belief that shielding, particularly through submerged cages, leads to a reduced need for treating the fish against sea lice. Compared to traditional farming methods, this approach has reduced lice treatment frequency by nearly 90%, with positive impacts on survival rates, the share of superior-quality fish, and overall fish welfare.

To accelerate this progress, we plan to invest an additional MNOK 350 in submerged cages in first half 2025, aiming to shield up to 45% of our salmon population by mid-year.

STRONG EARNINGS MOMENTUM CONTINUES IN VAP S&D
The VAP S&D segment posted an operational EBIT of MNOK 220 in Q3 2024, reaching MNOK 884 on a 12 months rolling basis. Beltestad noted, “VAP S&D continues its positive trajectory, achieving another all-time high on a 12-month rolling basis. This growth is driven by operational improvements and greater utilization of our integrated value chain.”

DIFFICULT OUTLOOK FOR WILD CATCH IN 2024-25
The Wild Catch segment reported an operational EBIT of MNOK -58, a substantial decline from the same quarter last year. CEO Henning Beltestad commented: “The outlook for Wild Catch remains challenging due to significant quota reductions over the past few years. This has created strong headwinds for our trawling fleet, while our processing facilities along the Norwegian coast are heavily under-utilized and impacted by high raw material costs.”

REACHING AMBITIOUS TARGETS THROUGH OPERATIONAL ENHANCEMENTS
Beltestad concluded: “Low salmon and trout prices impacted the market in the third quarter and at the start of the fourth quarter; however, we remain ambitious and optimistic about our long-term prospects. Our dedicated, hard work towards the 200,000 GWT harvested volume target for our Norwegian operations in 2025 continues. The best estimate as of today is a harvested volume in Norway of approximately 195,000 GWT, which with a contribution of 16,000 GWT from Scottish Seafarms gives a total expectation of approximately 211,000 GWT in 2025.”

“Our continued focus on enhancing roe and smolt quality, implementing new farming technologies, and optimizing processes positions us well for long-term success.

Also, we expect to benefit from the growing demand for an integrated value chain with a robust sustainability profile. There is clear potential to continue growing earnings across our European downstream operations, as recent quarters have shown.”

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.

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