Norwegian salmon farmer Grieg Seafood posted record-breaking earnings and harvest volumes for 2022, however the company faced "challenging biological conditions" in the fourth quarter.

Grieg Seafood's full-year 2022 operational earnings before interest and taxes (EBIT) was just over NOK 1.7 billion (€156.1 million/$167 million), compared with NOK 442 million (€40.6 million/$43.4 million) in 2021. The increase was predominantly driven by significantly higher prices and volumes.

Operational EBIT in the fourth quarter, however, dipped 41 percent to NOK 156 million (€14.3 million/$15.3 million) compared with the same period a year ago, with the group achieving an operational EBIT per kilo of NOK 7.40 (€0.68/$0.73). Harvest volume in the fourth quarter was also down 11 percent at 21,186 metric tons.

Group sales revenue amounted to NOK 7.2 billion (€661.1 million/$707.4 million) in 2022 and NOK 1.6 billion (€146.9 million/$157.2 million) in the fourth quarter.

The year also ended with a record harvest of 84,697 metric tons, up 12 percent on the previous year.

Grieg said it is anticipating a harvest volume of 11,000 metric tons in the first quarter of this year and 82,000 metric tons for the whole of 2023.

Early harvest in Finnmark

In fourth quarter, the harvest volume at the group’s operations in Finnmark was 3,000 metric tons above guidance, due to the early harvest of fish impacted by the parasite Spironucleus salmonicida (Spiro).

Operational EBIT per kilo for the quarter in this region ended at NOK 12.50 (€1.10/$1.20), down from NOK 17 (€1.60/$1.70) in the same period a year earlier, reflecting a decent price achievement but a cost level impacted by Spiro, said the group.

The company said the source of the parasite is believed to be the water intake at a freshwater facility, and a NOK 70 million (€6.4 million/$6.9 million) investment in UV treatment will be taken in 2023 at the facility to mitigate the problem.

In British Columbia, Canada, Grieg said operational EBIT per kilo in the fourth quarter was negative NOK 22.90 (€2.10/$2.20) because of very low harvest volumes, as the region prioritized growing biomass during the quarter.

The cost was also impacted by the discontinuance of operations in the Sechelt area, it said.

In Newfoundland, Grieg said production is going according to plan, with high survival and no sea lice issues. The year-end biomass in Newfoundland was 2,600 metric tons, with an average weight of 1.3 kilograms.

Freshwater production was also good in the quarter, and the aim is to transfer smolt to sea cages during the late spring or summer of 2023. First harvest is expected in the fourth quarter 2023.

Challenging biological conditions, cost inflation

Over the last few years, Grieg Seafood has reduced farming costs through operational improvement initiatives, it said.

However, during 2022, the industry experienced a general cost inflation, particularly affecting feed prices. In addition, the biological events of 2022 will increase Grieg Seafood's farming cost until the impacted fish are harvested.

While the underlying biology is improving, the company is also launching an improvement program to review all aspects of its operations and identify areas where it can improve profitability and reduce cost.

“2022 was a record-breaking year for Grieg Seafood. In our 30-year long history, we have never achieved a higher operational EBIT, seen a stronger market or harvested higher volumes in our existing farming regions,” said Andreas Kvame, CEO of Grieg Seafood.

However, during the fourth quarter, “we experienced challenging biological conditions in our Norwegian regions, particularly in Finnmark,” he said.

As a result of the proposed resource tax on farmed salmon in Norway and the ongoing political uncertainty, Grieg Seafood has put all growth investments -- approximately NOK 2.3 billion (€211.2 million/$226 million) -- in Norway on hold.

The tax proposal is currently under review and the final version is expected to be adopted by the Norwegian Parliament before the summer.

Grieg Seafood said it will then assess how the tax will impact the company's strategy and plans.

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