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Lerøy Seafood Group ASA: Preliminary financial figures 2020

Lerøy Seafood Group ASA
·14-min read


In Q4 2020, Lerøy Seafood Group (LSG) reported revenue of NOK 5,170 million, compared with NOK 5,239 million in the same period of 2019. Operating profit before fair value adjustment related to biological assets was NOK 441 million in Q4 2020, compared with NOK 769 million in Q4 2019. The global COVID-19 pandemic has a negative impact on demand and has resulted in lower prices for both redfish and whitefish. The main factor behind the fall in earnings from Q4 2019 to Q4 2020 is the reduction in prices realised.

The Group reported annual revenue of NOK 19,960 million for 2020, compared with NOK 20,427 million in 2019. Annual operating profit before fair value adjustment related to biological assets in 2020 was NOK 1,950 million compared with NOK 2,734 million in 2019. Profit before tax and fair value adjustment related to biological assets for 2020 as a whole was NOK 1,869 million compared with NOK 2,718 million in 2019.

  • “Lerøy’s focus is developing an efficient and sustainable value chain for seafood that meets the customers’ long-term demand. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. Thanks to our robust and long-term focus on the customer, we feel that we have emerged all the stronger from a difficult year,” confirms CEO Henning Beltestad.

  • “We have invested heavily in our value chain in recent years, in the form of assets, human resources and our approach to operational improvements. This is a long-term process but, as we enter 2021, we are starting to reap the results of our initiatives and we are confident that we have a strong position for the years to come,” confirms Henning Beltestad.


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 took delivery of the new trawler, “Kongsfjord”, on schedule in February 2020, and subsequently had 10 trawlers in operation in 2020. Experience of operations with Kongsfjord is positive.

As described in the previous interim reports, demand for seafood has been negatively impacted by the restrictions introduced to combat the spread of COVID-19. It is difficult to project how long this extraordinary situation will last. The pandemic is also having a negative effect on prices realised.

The catch volume for Q4 2020 is 12,619 tonnes, compared with 12,949 tonnes in Q4 2019. Catch rates for haddock were weak in the fourth quarter. Catches of other species have been as expected.

When compared with Q4 2019, the prices for cod and haddock were down 13% and 17% respectively, while the prices for saithe were up 5%. Our sales of seafood continue, but the prices realised are lower than normally experienced before the COVID-19 restrictions were introduced. In comparison with the peak in prices in Q1 2020, the prices for cod and haddock are down 18% and 17% respectively.

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. The processing of whitefish in Norway has been extremely challenging for many years. All else being equal, increased stability and predictability will have a positive effect on the land-based industry. The repercussions of COVID-19 have been negative for both the producer and the customer. Market demand for fresh and conventional products saw a significant decline in the quarter.

In total, the segment reported EBIT of NOK -10 million in Q4 2020, compared with NOK 42 million in the same period of 2019. For 2020 in total, the segment contributed EBIT of NOK 205 million, compared with NOK 293 million in 2019.

  • “The winter cod season has just started, and we are facing a very high seasonal supply volume on a difficult market. With our experience of processing whitefish all year round in Norway, we feel we have the capacity and strength to face this challenge,” 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 Vestlandet.

Operating profit for the Farming segment before fair value adjustment related to biological assets was NOK 296 million in Q4 2020, compared with NOK 597 million in Q4 2019. During the quarter, the Farming segment harvested 48,000 tonnes, compared with 43,000 tonnes in Q4 2019.

In Q4 2020, the EBIT/kg figure for Lerøy Aurora was NOK 11.10, NOK 3.40 for Lerøy Midt and NOK 4.50 for Lerøy Sjøtroll. In total, EBIT/kg for the segment was down from NOK 14.00 in Q4 2019 to NOK 6.10 in Q4 2020. In comparison with the same quarter in 2019, costs per kilo are slightly lower, but the reduction in prices realised in the same period is significantly larger.

  • “We have seen a positive development in our costs per kilogram of harvested fish in 2020, and this has been confirmed in the fourth quarter,” explains CEO Henning Beltestad.

  • “As we enter 2021, we expect that the initiatives and investments made in recent years will provide a substantial growth in volume, and that this will help us scale down our cost base and achieve lower costs,” he continues.


With its fully integrated, 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. Lerøy distributes more than 70 different seafood products from Norway to more than 80 different markets in the space of one calendar year. In addition, the Group processes and distributes a number of market-specific seafood products to 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, the seafood markets have been negatively impacted by the COVID-19 pandemic. The impact was seen first in markets in Asia, spreading globally throughout Q1 2020 and into Q2 2020. The COVID-19 pandemic has had an effect on demand trends. The grocery market now represents a larger volume of consumption, while the hospitality and catering segment on many core markets has practically been closed down for long periods of time. 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.

The main focus for the VAPS&D segment has been to keep the value chain open. Throughout the second quarter, key markets showed a considerable level of improvement as the supply chain adapted to the change in consumer trends, with a much higher focus on groceries, but also as some parts of the hospitality and catering segment have gradually reopened. At the start of the third quarter, demand had improved considerably in comparison with the status in the middle of the second quarter. At the start of the fourth quarter, we once again experienced an increase in restrictions on key markets, with a significant impact on demand. At the same time, we are pleased to note that demand continues to be as strong as it is, and that the value chain has proved to be very adaptable. This gives grounds for an optimistic outlook once the pandemic is over and the restrictions are lifted.

Despite significantly lower prices realised for key species, the segment reported revenue in Q4 2020 that was only 1% lower than in the same period in 2019. This is a clear indication of a high level of underlying activities. In recent years, the Group has implemented substantial initiatives for improvement of several of the units in the segment, including facilitating better interaction along the Group’s value chain. These initiatives are now producing results, and the operating profit before fair value adjustment related to biological assets in Q4 2020 is NOK 176 million, up from NOK 162 million in Q4 2019.

  • “2020 has been a difficult year during which it has been important to focus on keeping our value chain open and ensuring supplies of seafood to the end consumer. It is our experience that we have clearly demonstrated the value of the Group's long-term investments in downstream operations, and we believe that we are in a strong position to develop upon this in the years to come,” says Henning Beltestad.

  • “The Group’s products are healthy and good. Production is financially, climate-related and environmentally sustainable. We continue to expect a positive underlying growth in demand in the years to come,” he continues.


Price developments for Atlantic salmon have been highly volatile in 2020 also, substantially influenced by the ripple effects of COVID-19. This situation remains at the start of 2021, with demand suffering significantly from the COVID-19 restrictions. 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 the growth in volume on the grocery market does 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 developments for seafood.

Currently, the Group’s production of redfish 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 using alternative technologies. These incentives have existed for several years now, but with long lead times in the industry, Norwegian production in marine fish farms has maintained its predominant position. The harvest volume from salmon produced on land 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. In addition to the development of existing farming operations, the Group is accumulating knowledge and competencies within both land-based and offshore-based 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 is now completed and has an annual biomass production of around 4,000 tonnes. Lerøy Aurora completed the final construction stage of a new development in Q4 2020, and the facility is expected to reach full exploitation in 2021. Lerøy Midt can report that the developments to the Belsvik facility are going to schedule. The plan is for completion by the start of 2022, and the facility is expected to produce around 5,000 tonnes of biomass. 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 increased competitiveness by means of a reduction in production costs.

The Group's substantial investments in post-smolt facilities have not only increased the Group's annual harvest volume by means of improved exploitation of existing assets, but also provided significant competencies related to RAS technology. This is in the main the same technology applied for full-scale land-based production of salmon. The Group is now negotiating for a further development of a new RAS facility in the region of Vestland. The plans are initially to develop the facility in three stages. The first and second stages represent further increases in the Group's post-smolt production. The third and final stage will also provide facilities for post-smolt production, but may also be used for salmon production up to harvest size. The location of the plant, including the links to the Group’s farming operations in West Norway, could potentially provide successful interaction between sea and land. The lessons learned may also be exploited to realise land-based projects in other regions. The development will take place in stages, but initial estimates indicate that the first two stages will represent estimated costs of around NOK 1 billion. The development is projected to provide an annual increase in production in the sea of 8-10,000 GWT. Construction work is scheduled for completion in 2023.

The Group can report significant improvements in production in the sea in 2020. The harvest volume is up from approx. 158,000 tonnes in 2019 to 171,000 tonnes in 2020. Moreover, standing biomass has increased from 111,000 tonnes at year-end 2019 to 119,000 tonnes at year-end 2020. The Group maintains its projections 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.

For the Group, the aim is clear – for this growth, combined with other improvement measures, to provide reductions in the Group's release from stock costs for salmon and trout in 2021 and the following years.

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 established as 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 on demand of COVID-19 in 2020. 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 reliant on seasons continue, along with well-organised and meticulous work on making improvements to each unit. We believe that this process will generate results with time.

The Group expects to see an increase in quotas in 2021 as follows; 14% increase for cod, 6% for haddock, 16% for saithe north of 62 degrees. For saithe south of 62 degrees, the Group projects a reduction in the quota of 26%. The final quota decision is expected at the end of February 2021.

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 in, e.g., a new industrial facility for Lerøy Midt, a new factory in Stamsund and new factories in Spain and the Netherlands, now commissioned, will represent 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.

The Group’s products are healthy and good. Production is financially, climate-related and environmentally sustainable. 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 assess 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 are much higher than normal, but current estimates are for earnings in the first half of 2021 to be negatively impacted by the effect on demand of the COVID-19 restrictions. At the same time, the Board is of the opinion that the Group's underlying development is positive, and that Lerøy has an excellent position for improved profitability in the year to come.

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

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 the Norwegian Securities Trading Act