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Lerøy Seafood Group ASA: Results for Q2 and first half 2021

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In Q2 2021, Lerøy Seafood Group (LSG) reported revenue of NOK 5,304 million, compared with NOK 4,712 million in the same period in 2020. Operating profit before fair value adjustment related to biological assets was NOK 583 million in Q2 2021, compared with NOK 303 million in Q2 2020. The gradual easing of restrictions linked to the COVID-19 pandemic in a number of key markets means stronger demand and higher prices realised. Higher prices realised, and improved productivity in the whitefish industry, are the key drivers of the improvement in earnings compared with the same period in 2020.

  • “There has been a good development in demand for seafood in 2021. Demand in retail was strong in the first quarter. This continued in the second quarter, when we also saw demand gradually picking up in the hospitality and catering segments further to the easing of COVID-19-related restrictions. We’re seeing a very strong position for seafood in the markets,” says CEO Henning Beltestad.

  • “Lerøy is a full-service seafood provider with a vertically integrated value chain for both red and white fish. In the second quarter, we’ve seen a significant improvement on last year within Wild Catch and good progress in downstream activities, although we’re not exploiting the full potential of our Farming segment. We can and will improve, and the last quarter shows that we have a robust business model with significant potential,” Beltestad continues.


The wholly owned subsidiary Lerøy Havfisk’s primary business is wild catches of whitefish. Lerøy Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to around 30% of the total quota allocated to the trawler fleet. Lerøy Havfisk also owns several processing plants, which are mainly leased out to its sister company Lerøy Norway Seafoods (LNWS) on long-term contracts. Lerøy Havfisk’s trawler licences stipulate an operational obligation for these processing plants.

Lerøy Havfisk had 10 trawlers in operation in Q2 2021. The catch volume of 16,345 tonnes in Q2 2021 is lower than the 19,708 tonnes caught in the same period of 2020, but a change in catch composition means the value is higher. Catches of shrimp and haddock have been prioritised in Q2 2021, while catches of redfish are significantly down on the same period in 2020. With a substantial cod quota remaining, Lerøy Havfisk is well positioned for the remainder of the year.

As described in the Group’s recent interim reports, demand for seafood has been negatively impacted by the restrictions introduced to combat the spread of COVID-19, and this situation continued in Q2 2021. Compared with Q2 2020, prices for cod, which is the most important species, are down 12%, while prices for haddock and saithe have risen 3% and 13% respectively. Current expectations are that further easing of the COVID-19-related restrictions could result in a positive price development for the remainder of 2021, including for cod.

LNWS’s primary business is processing wild-caught whitefish. The company has use of 12 processing plants and purchasing stations in Norway, five of which are leased from Lerøy Havfisk. Processing of whitefish has been extremely challenging for many years – with Q2 2021 no exception – but it is pleasing to note a substantial improvement in underlying operations, which has also led to an improvement in the financial results for Q2 2021 compared with the same period of 2020.

The Group’s focus on boosting the competitiveness of the whitefish industry is a long-term process and will continue undiminished, despite what the Group hopes is temporary market-related challenges brought about by the pandemic. Over time, a number of organisational changes have been introduced, which, in combination with significant investments in facilities and in developing the organisations, we consider will deliver sustainable earnings.

In total, the segment contributed EBIT of NOK 65 million in Q2 2021, compared with NOK -5 million in the same period of 2020. Please note that Havfisk has opted to leave a higher share of the cod quota for the second half of the year compared with 2020.

  • “Earnings in the Wild Catch segment have improved significantly in the second quarter compared with 2020. Several factors have played a part in this, but it’s very encouraging that the underlying improvements in land-based operations are gradually delivering increased earnings in this part of the business,” says CEO Henning Beltestad.


The Farming segment comprises the Group’s three farming regions in Norway: Lerøy Aurora located in Troms and Finnmark, Lerøy Midt located in Nordmøre and Trøndelag, and Lerøy Sjøtroll located in Vestland.

Operating profit for the Farming segment before fair value adjustment related to biological assets was NOK 388 million in Q2 2021, compared with NOK 216 million in Q2 2020. A total of 37,000 tonnes was harvested during the quarter, compared with 39,000 tonnes in Q2 2020.

In Q2 2021, the EBIT/kg figure was NOK 8.70 for Lerøy Aurora, NOK 13.70 for Lerøy Midt and NOK 8.30 for Lerøy Sjøtroll. In total, EBIT/kg for the segment was up from NOK 5.5 in Q2 2020 to NOK 10.6 in Q2 2021. Compared with the same quarter in 2020, costs per kilo are down, but the improvement in prices realised is the main factor in the higher earnings.

  • “As mentioned in the first quarter, the Farming segment was facing more downgrades in quality than normal in the second quarter. This has had a significantly negative impact on earnings in the quarter, and is an obvious top-priority area of improvement for us,” says CEO Henning Beltestad.

  • “Growth in the second quarter has been good, and we’re maintaining our guidance, with our Norwegian business expected to harvest around 192,000 tonnes this year. This will be a substantial increase over the last two years, up from 158,000 tonnes in 2019. This growth is organic, and makes us one of the fastest-growing companies in Norway in this period – and we have the potential for further organic growth in the years ahead,” he continues.

VAP, Sales & Distribution (VAPS&D)

With its fully integrated, cost-efficient value chain for salmon, trout, whitefish and shellfish, Lerøy Seafood Group shall be able to supply products that are best suited to the consumers’ preferences. Proximity to key markets and knowledge of the customer’s needs are therefore of decisive importance if the Group is to develop demand for its main products. In the course of a calendar year, Lerøy distributes a wide range of seafood products from Norway to more than 80 different markets. In addition, the Group processes and distributes a number of market-specific seafood products in their respective local markets where Lerøy has operations. Lerøy Seafood Group’s value chain shall be developed further in order to satisfy and increase the consumers’ total demand for seafood.

In 2020, seafood markets were negatively impacted by the COVID-19 pandemic. The impact was seen first in markets in Asia, spreading globally through Q2 2020. The pandemic has affected the pattern of demand. The grocery market now represents a larger volume of consumption, while the hospitality and catering segment in many core markets has practically been closed down for long periods over the last year. The pandemic has also had an impact on logistics, particularly for overseas markets, with a reduction in cargo capacity resulting in increased costs during the period.

Demand for seafood in the grocery market remained strong in Q2 2021, and we have also seen a gradual improvement in the hospitality and catering market as, little by little, COVID-19 restrictions have been lifted.

The seafood group Seafood Danmark A/S was consolidated from 1 April. Seafood Danmark A/S occupies a particularly strong position on the Danish seafood market but also within other international seafood markets. The segment has posted positive one-time effects of NOK 38 million in connection with the consolidation, including valuation of the shares Lerøy already owned. Seafood Danmark has consistently enjoyed a positive development in recent years, contributing to the year-on-year improvement in operating profit.

The segment’s development has been impacted positively by improvement measures taken, but also negativly by start-up costs in connection with new plants in Spain and Italy. In total, operating profit before fair value adjustment of biomass reported by the segment amounted to NOK 161 million, up from NOK 114 million in the same period in 2020.

  • “We’ve made substantial investments in our downstream activities in recent years, also incurring a high level of start-up costs. The business is developing well this year. We’re seeing the impact of new activities and the improvement measures we’ve put in place, but are still absorbing start-up costs for the new factories in Italy and Spain. We believe we’re well positioned to continue our earnings growth in this part of the business,” says Henning Beltestad.


Price developments for Atlantic salmon have remained highly volatile at the start of 2021, substantially influenced by the repercussions of the COVID-19 pandemic. It is not possible for the management and Board of Directors to form any precise opinion on the duration or consequences of the pandemic, but developments in 2021 provide grounds for optimism. There are indications that seafood is gaining in popularity with consumers, and we are therefore optimistic with a view to the underlying future trend in demand for seafood, and consequently for the Group’s operations and value creation.

The Group’s production of red fish currently takes place mainly in Norway. Norwegian and global salmon and trout production are experiencing relatively modest growth, which – combined with a weaker Norwegian krone – has resulted in very high prices. This provides an incentive to start production of salmon in new areas and using new, alternative technologies. These incentives have existed for several years now, but with long lead times for developing the industry, sea-based production in Norway has remained dominant. The harvest volume from land-based production of salmon remains insignificant on the end markets. The market share for Norwegian Atlantic salmon may, in the long term, be affected by production of salmon and trout in new regions and locations. Through business development, investments and a clear operational focus on competitiveness, the Group shall ensure that its value chain stands strong in the face of competition in the years to come. As well as developing existing farming operations, the Group is accumulating knowledge and/or expertise within both land-based and offshore salmon production.

In recent years, Lerøy has made significant investments in several parts of the value chain, including the construction of facilities for smolt/post-smolt capacity in all the Group’s regions. Lerøy Sjøtroll’s Kjærelva facility has now been completed, producing around 4,000 tonnes of biomass per year. Lerøy Aurora completed the final construction stage of its new smolt facility in Laksefjord in Q4 2020, and the facility is expected to reach full utilisation in 2021. Lerøy Midt can report that the second stage of development of the Belsvik facility is on schedule. It should be complete by the start of 2022, and the facility will produce around 5,000 tonnes of biomass per year. The Group’s investments in improved smolt production and post-smolt production, combined with a number of other initiatives, will support the Group’s ambition for continued growth in volume and improved competitiveness by means of lower production costs.

The Group’s substantial investments in post-smolt facilities have not only increased its annual harvest volume by means of improved exploitation of existing assets, but also provided significant learnings in RAS technology. This is basically the same technology used in full-scale land-based production of salmon. The Group is in negotiations on a possible further development of a new RAS facility in Vestland county. The plans are initially to develop the facility in three stages. The first and second stages will allow further increases in the Group’s post-smolt production. The final stage will also provide facilities for post-smolt production, but could be used for salmon production up to harvest size. The newly acquired industrial site, including the links to the Group’s farming operations in West Norway, could improve interaction between land and sea. The lessons learned may potentially be exploited to realise land-based projects in other regions in the future. The development will take place in stages, but initial estimates suggest a cost framework of around NOK 1 billion for the first stages. The development is projected to provide an annual increase in production in the sea of 8,000-10,000 GWT. Construction work is scheduled for completion in 2023.

The Group achieved significant improvements in production in the sea in 2020. The harvest volume was up from approx. 158,000 tonnes in 2019 to 171,000 tonnes in 2020. Moreover, standing biomass increased from 111,000 tonnes at year-end 2019 to 119,000 tonnes at year-end 2020. The first months of 2021 were cold, negatively affecting growth conditions, but growth in Q2 has been satisfactory and the Group maintains its forecast of a harvest volume for 2021, including associates, of 205,000-210,000 tonnes. Ongoing investments and additional improvement initiatives will provide further growth in the years to come.

We are convinced that this growth, combined with other improvement measures, will reduce the Group’s release from stock costs for salmon and trout in 2021 and going forward.

The previous interim report explained that the consequences of winter wounds would impair prices realised in Q2 2021. This proved to be the case, but a significant improvement is expected in the second half of the year.

The Group has made substantial investments in whitefish in recent years. One new vessel was added to the fleet in 2018 – Nordtind – and another in early 2020 – Kongsfjord. Further improvements to fish quality were important design criteria for Kongsfjord. Consumers’ expectations and quality requirements continue to increase, making high quality and competitiveness key factors for success when competing to attract consumers.

The whitefish industry, also including land-based operations, has suffered significantly from the impact of COVID-19 on demand at the start of 2021. It is naturally not possible for the Group to know how long the restrictions will last, but Lerøy’s long-term plans remain the same. The work on and investments in making the factories less seasonally dependent continue, along with structured and meticulous work on making improvements to each unit. We believe that this process will gradually generate results.

The Group’s quotas for 2021 are up 17% for cod, 22% for haddock and 16% for saithe north of 62 degrees latitude, and down 43% for saithe south of 62 degrees. In June, ICES (the International Council for the Exploration of the Sea) published its recommendations for the total quotas of cod, haddock and saithe in 2022. These recommendations entail reductions in the cod and haddock quotas of 20% and 23% respectively. For saithe north of 62 degrees latitude, a quota roughly equivalent to 2021 is recommended, while a 24% reduction is recommended in the total quota for the North Sea. The final quotas will be set by the Norwegian authorities in the autumn.

Lerøy works to develop an efficient and sustainable value chain for seafood. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. Investments in recent years, e.g. in a new industrial facility for Lerøy Midt, a new factory in Stamsund and new factories in Spain and the Netherlands, now commissioned, will make a positive contribution in the years to come. The management and Board of Directors are confident that Lerøy has a good starting point for continued profitable growth and development of Group operations.

In Q2 2021, the Group increased its shareholding in Seafood Danmark from 33% to 78%, and the company has been consolidated from Q2. This is the result of a long-term relationship between the parties, and Lerøy looks forward to having this company as an integrated part of the Group. Seafood Danmark’s collaboration with demanding customers has afforded them a strong position on the Danish seafood market, but the company is also active on other core markets. Thanks to its well-established organisation, Seafood Danmark will strengthen Lerøy’s downstream operations. The company has strong local management who have demonstrated solid operations and good earnings over several years. The company reported operating profit of approx. DKK 70 million in 2020.

On 29 June 2021, Scottish Sea Farms Ltd. (SSF), a joint venture between Lerøy Seafood Group ASA and SalMar ASA, entered into an agreement to purchase 100% of the shares in Grieg Seafood Hjaltland (GSHU) from Grieg Seafood ASA. The debt-free, cash-free purchase price has been set at GBP 164 million.

GSHU is a vertically integrated Scotland-based producer of salmon with operations in Shetland and the Isle of Skye. The company has 21 active sea locations, a smolt facility and a harvesting plant. GSHU harvested approx. 16,000 tonnes (HOG) Atlantic salmon in 2020. SSF is one of the largest producers in Scotland, with operations in the Orkneys and Shetland and on the Scottish mainland. SSF harvested approx. 24,000 tonnes (HOG) Atlantic salmon in 2020. The management of SSF looks forward to getting started on the work required to improve GSHU’s biological and operational performance. SSF’s organisation sees significant potential for increased earnings through sound operational understanding, improved biological control and realising synergies by integrating the two companies. The acquisition will be financed by new equity from shareholders and external capital. The transaction is expected to be completed by the end of Q4 2021, assuming approval is obtained from the relevant authorities and the standard terms and conditions.

The Group’s products are healthy and good. Production is sustainable from a financial, climate and environmental perspective. The management and Board of Directors continue to expect good underlying growth in demand in the years ahead. It is not possible for the management and Board of Directors to estimate how long the COVID-19 pandemic will last, but we are confident in assuming that demand will with time return to historic levels and continue to develop from there.

The Board of Directors underlines that uncertainties related to assessments of future developments remain higher than normal, but current estimates are that earnings could be negatively impacted by COVID-19 restrictions for some time to come. At the same time, it is noted that the Group’s underlying development is good, something that we consider – in the current circumstances – provides a basis for a significant uptick in profitability this year compared with 2020. The Group will harvest around 60% of the volume for 2021 in the second half of the year, and the market development, including price developments for salmon, will of course have a significant impact on earnings. The current forecast is for earnings in Q3 2021 to show a significant improvement on the second quarter.

The Board of Directors and corporate management would like to thank all the Group’s employees for their valuable work to date during the COVID-19 pandemic.


Lerøy Seafood Group ASA is a global seafood corporation with its head office in Bergen. The Group’s approx. 5,000 employees process between 350,000 and 400,000 tonnes of seafood every year via our value chain, corresponding to around 5 million meals every day. The Group has a vertically integrated value chain for red fish and whitefish, and significant activities using third-party products.

The Group’s values – open, honest, responsible and creative – shall underpin everything we do, and we work hard to achieve our goal of creating the world’s most efficient and sustainable value chain for seafood. The target for return on capital employed (ROCE) is 18%. The Group has set a number of targets within sustainability, including cutting greenhouse gas emissions by 46% by 2030.


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