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Lower salmon harvest dampens Leroy's earnings in Q3

Both the farming and wild-catch segments saw a decrease in volumes, earnings.

Leroy Seafood Group reported a fall in earnings in the third quarter of the year compared with the same period a year earlier, despite a slight increase in sales over the period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 19 percent, to NOK 820 million (€86.1 million/$98.5 million), while sales increased 2 percent, to NOK 4.5 billion (€472.7 million/$540.5 million).

“The decline in harvest volume is the main reason for the fall in profit in the third quarter of 2018,” the company said.

In the farming segment, Leroy reported revenues of NOK 2 million (€210,088/$240,206), down 23 percent from sales reported in the same quarter a year earlier.

The company harvested 37,200 metric tons of salmon and trout, a 19 percent decrease from the 46,024 metric tons harvested a year earlier.

Earnings before interest and taxes (EBIT) in farming was NOK 15.30 (€1.60/$1.80)/kg, similar to the NOK 15.50 (€1.60/$1.90)/kg reported for the same period a year earlier.

The average salmon prices in the third quarter was NOK 54.80 (€5.80/$6.60)/kg, compared with NOK 56.40 (€5.90/$6.80)/kg a year earlier. The group’s contract share in the quarter was 25 percent, and prices on contracts in the quarter were higher than in the spot market, the company said.

The group's standing biomass in the third quarter has gone from being 6 percent lower year-on-yea on June 30, to being 4 percent higher at on Sept. 30, compared to the same date in 2017.

"The biological production in the third quarter has been good," said CEO Henning Beltestad.

"Our harvest volume was low but we've capitalized on the good level of production with a significant increase in the biomass for subsequent harvesting.”

In this segment, the company reduced costs from stock released compared with the second quarter, but costs remain at unsatisfactory levels for the group.

In the wild-catch segment, Leroy reported a decrease of 12.5 percent in revenues, falling to NOK 462 million (€48.5 million/$55.5 million), and a 21.4 percent fall in EBIT per kilo of fish produced, which fell to NOK 1.10 (€0.12/$0.13)/kg.

Leroy’s wild-catch business, Havfisk, holds more than 30 percent of the total quota allocated to the Norwegian trawler fleet. During the third quarter, wild catches fell 16.5 percent to 14,282 metric tons, of which 4,714 metric tons were cod, 3,908 metric tons were saithe, 1,008 metric tons were haddock, and 2,703 metric tons were shrimp, up from 165 metric tons of shrimp landed in the third quarter of 2017.

"There is strong demand for white fish," said Beltestad.

"There was a lower catch volume in the third quarter, but the average price for all species was up 23 percent on the same quarter last year.”

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