August 29, 2024

 

Norwegian salmon farmers report decline in profits

Norwegian salmon farmers experienced a decline in second-quarter profits as the rising cost of living led to reduced consumer demand for salmon, while health challenges impacted production yields, Bloomberg reported.

 

Grieg Seafood ASA's shares plummeted by as much as 16% in Oslo, marking the company's largest drop since 2022. Meanwhile, shares of Mowi ASA, the world's largest salmon producer, saw a modest increase of about 1%, and Leroy Seafood Group ASA's shares rose by 3.8%. Both Mowi and Leroy had previously seen declines of over 2% following a lacklustre report from SalMar ASA.

 

Mowi reported that its earnings were affected by weaker demand in the US and high raw material costs in Europe, resulting in a 24% decline in earnings before interest and taxes compared to the same period last year. Grieg Seafood ASA reported a loss, while Leroy Seafood Group ASA's operating EBIT fell more than expected. All three companies provided advance reports on their harvest volumes for the quarter.

 

The salmon farming industry continues to face challenges from earlier health issues, including winter sores and string jellyfish in Norway. These problems have forced producers to export more fillets at lower prices compared to the higher-value whole fish.

 

Grieg's operations in British Columbia, Canada, were severely affected by low dissolved oxygen levels in the water, leading to higher mortality rates, loss of feeding days, and reduced growth. In Norway's northernmost region of Finnmark, Grieg's earnings were impacted by low average harvest weights and high costs due to earlier problems with the Spiro parasite and string jellyfish.

 

Analysts from Pareto Securities, Sander Lie and Oda Djupvik, anticipate "massive negative earnings revisions to short-term earnings" for Grieg, reflecting the ongoing challenges.

 

Norway's seafood exports saw a record decline in June, dropping by more than NOK 2 billion (US$190 million). The country, which accounts for over half of the global farmed salmon supply, benefits from favourable conditions along its fjords and coastline that are difficult to replicate elsewhere.

 

Despite these challenges, Mowi aims to increase its annual harvest to 500,000 metric tonnes in 2024, up from 475,000 metric tonnes in 2023. The company stated on Wednesday that it plans to outpace industry growth by reducing the time smaller fish spend in the sea, thereby minimising health issues. Mowi also expects the US market to gradually improve as Western economies continue to recover.

 

-      Bloomberg