Norwegian seafood giant Leroy reported a significant fall in earnings in the second quarter of 2019, attributed to lower realized prices for its farming segment and a higher release from stock costs.

Earnings before interest, tax, amortization and demortization fell 12 percent to NOK 1 billion (€100 million/$111 million), despite a revenue increase of 6 percent to NOK 5.3 billion (€530 million/$588.3 million).

Earnings for the farming and wild-caught segments of Leroy's business both fell, with its aquaculture business yielding a 29 percent drop in earnings before interest and tax (EBIT) to NOK 595 million (€59.5 million/$66 million), and its fisheries business plummeting 66 percent to NOK 40 million (€4 million/$4.4 million) in the quarter.

Meanwhile, the company's VAP business saw a distinct contrast in fortunes, more than doubling its EBIT to NOK 130 million (€13 million/$14.4 million).

"In terms of earnings, the second quarter figures are in line with the expectations we had going into the quarter," said CEO Henning Beltestad. "However, we know that we have the potential to do better and that our skilled employees are doing their utmost to exploit this potential to the full."

The group has made several investments in its farming operations over the years. "The results of these, however, are not immediately obvious as the projects have long lead times," said Beltestad, adding that he expects to see an improvement in release from stock costs in the second half and into 2020.

While average prices for key species such as cod, haddock and saithe, were up 14 percent year on year, harvest volumes were down 13 percent to 15,860 metric tons.

"Our trawler fleet for whitefish has been successful in the quarter, while our onshore facilities in this segment have had a challenging quarter," said Beltestad. "We have made a number of investments in this area also, and expect these to provide lasting improvements by 2020. "Downstream, in the VAP segment, we are now observing the results of investments made in recent years and can report a strong quarter."

Parent company Austevoll also reported a drop in earnings in the quarter.

Finance

Costs drag down Leroy's Q2 earnings