Lerøy Seafood warns looming tax darkens outlook for Norway’s salmon sector

The Norwegian government’s proposed new aquaculture resource tax, which if passed will levy an additional 35 percent tax on the seawater grow-out stage of farmed salmon production, will weaken the industry’s development and could cause ripple effects throughout the country, according to Lerøy Seafood Group CFO Sjur Malm.

Speaking at a presentation of the Bergen, Norway, seafood corporation’s first-quarter 2023 results in Oslo, Malm said contrary to what Norwegian politicians have been saying, the new tax wouldn’t be “investment-neutral,” but rather, would limit capital investment.

Malm said the company is disappointed the government didn’t consider the more than 400 consultation responses it received that emphasized the tax’s potentially harmful effects and operational challenges its current draft (as of 28 March 2023) would elicit.

“That view is strengthened the more we look and work on this topic,” he said.

With LSG paying around NOK 2 billion (USD 189.4 million, EUR 172.8 million) in taxes and fees in 2022 and also buying NOK 19 billion (USD 1.8 billion, EUR 1.6 billion) worth of goods and services from 5,100 Norwegian suppliers, Malm also warned the proposed tax could have serious repercussions the government may not be considering heavily enough.

“In our view, it’s obvious this tax will not be good for Norway because the risk of these ripple effects is probably larger than the income from taxes,” he said. “That is why we strongly oppose it.”

The current indication is that final voting on the proposal would occur in Norwegian Storting before the end of May, Malm said.

According to LSG’s first-quarter 2023 results, its revenues increased 26 percent year-over-year to a record NOK 6.97 billion (USD 660.2 million, EUR 602.1 million), while its operating profit before fair value adjustments climbed NOK 100 million (USD 9.5 million, EUR 8.6 million) to NOK 989 million (USD 93.7 million, EUR 85.4 million).

Despite the positive report, price inflation on seafood products impacted the company, while a challenging situation in its Farming segment in the second half of 2022 resulted in a low average first quarter harvest weight and a “less than optimal harvest profile with respect to prices,” the report said.

Farming (comprising the three Norwegian farming regions of Lerøy Aurora in Troms and Finnmark, Lerøy Midt in Nordmøre and Trøndelag, and Lerøy Sjøtroll located in Vestland) reported operating earnings before interest and taxes (EBIT) of NOK 742 million (USD 70.3 million, EUR 64.1 million) in the last quarter, compared with NOK 633 million (USD 60 million, EUR 54.7 million) a year previously.

Its Q1 slaughter volumes of salmon and trout decreased 11 percent gutted-weight tonnage (GWT) from Q1 2022 to 28,602 GWT, while its EBIT per kilogram increased from NOK 19.70 (USD 1.87, EUR 1.70) to NOK 26 (USD 2.46, EUR 2.25)....

Photo courtesy of Lerøy Seafood