Grieg Seafood bounces back into the black

With salmon prices increasing and more fish to sell, Grieg Seafood posted a fourth-quarter 2021 operational EBIT of NOK 265 million (USD 29.8 million, EUR 26.3 million) reversing the Q4 2020 operating loss of NOK 16 million (USD 1.8 million, EUR 1.6 million).

The Bergen, Norway-headquartered producer harvested 23,727 metric tons (MT) of Atlantic salmon in the last quarter, up 17 percent from 20,271 MT a year previously. It reported increased survival across all regions and strong biological indicators of fish health. Its Rogaland Europe segment supplied 7,259 MT in the quarter, its Finnmark Europe segment produced 12,411 MT, and its operations in British Columbia (BC) posted a production total of 4,058 MT.

Its Finnmark segment delivered “a significant cost improvement, based on excellent biological conditions on the sites harvested in the quarter.” In addition, 100 percent of its salmon produced was certified as produced using sustainable practices by the Aquaculture Stewardship Council. Grieg’s Rogaland segment experienced “satisfactory biology,” with “good sea lice control,” though it was impacted by quality costs caused by pancreas disease found at two of its farming sites. The company’s BC segment enjoyed a reduced impact from harmful algae blooms due to successful mitigation efforts, Grieg said.

Grieg’s nascent Newfoundland segment reported healthy smolt in the lead-up to the start of sea-water operations, scheduled to begin in the spring or summer of 2022, it said.

Also during the quarter, Grieg completed the sale of its Shetland operations to Scottish Sea Farms. The unit, after several improvement initiatives, delivered an overall profit for 2021, it said.

Overall, Grieg’s sales revenues in Q4 2021 totaled more than NOK 1.5 billion (USD 168.8 million, EUR 148.7 million), representing an increase of 32 percent year-over-year. Earnings before interest and taxes per kilogram reached NOK 11.20 (USD 1.26, EUR 1.11), up from a loss of NOK 0.80 (USD 0.09, EUR 0.07) a year previously. The average spot salmon price in the final quarter of last year was NOK 59.70 (USD 6.72, EUR 5.92) per kilo, an increase of NOK 16.50 (USD 1.86, EUR 1.64) per kilo compared to Q4 2020, and NOK 5.20 (USD 0.59, EUR 0.52) per kilo more than in Q3 2021.

“In the fourth quarter, operations continued the positive improvement momentum seen coming out of the third quarter, with improving survival rates and a declining cost level,” Grieg CEO Andreas Kvame said.

According to Kvame, development throughout last year was “largely as expected,” with costs in Norway gradually declining toward NOK 40.00 (USD 4.50, EUR 3.97) per kilogram. In BC, Kvame said costs have been too high, but the company expects positive results in the future.

“After year-end, we signed an agreement for refinancing of our debt, which combined with the completion of the Shetland transaction, secures the long-term financing of ongoing operations and the flexibility to execute on our strategic priorities, while maintaining a robust capital structure,” he said. “We are excited for 2022 and the years to come."

For the full-year 2021, Grieg’s operational EBIT increased to NOK 442 million (USD 49.7 million, EUR 43.8 million), from NOK 233 million (USD 26.2 million, EUR 23.1 million) in 2020. The total harvest increased by more than 4,000 MT to 75,601 MT. Its sales revenues for the full year amounted to NOK 4.6 billion (USD 517.8 million, EUR 456.2 million), up from NOK 4.4 billion (USD 495.3 million, EUR 436.4 million).

Grieg forecast a first-quarter 2022 harvest of 15,500 MT, with Finnmark contributing 5,000 MT, Rogaland 8,000 MT, and BC 2,500 MT. The target harvest for 2022 is 90,000 MT.

Earlier this month, Grieg signed a NOK 3.2 billion (USD 360.3 million, EUR 317.4 million) five-year senior secured sustainability-linked facilities agreement with DNB Bank ASA and Nordea Bank, refinancing the company's existing bank facilities. This agreement provides for a NOK 750 million (USD 84.4 million, EUR 74.4 million) term loan, a EUR 75 million (USD 85.1 million) term loan, and a NOK 1.5 billion (USD 168.8 million, EUR 148.7 million) revolving credit facility.

In addition, Grieg Seafood has access to a NOK 200 million (USD 22.5 million, EUR 19.8 million) overdraft facility.

The new debt structure will reduce financial costs and give a more flexible covenant structure, it said.

Photo courtesy of Grieg Seafood