Sales & MarketingLerøy Seafood Group ASA: Q1 2022 Results


The first quarter has been dominated by a very strong development in the prices for seafood, including salmon and trout. This price development has resulted in improved earnings from the farming of salmon and trout and from whitefish catches, but at the same time is a significant challenge for the Group’s downstream operations. The Group reported revenue of NOK 5,524 million in the quarter, up 12% on Q1 2021. Operating profit before fair value adjustment in Q1 2022 was NOK 852 million, a significant improvement on the figure of NOK 455 million in Q1 2021. Strong demand for seafood, including a substantial improvement in prices realised for the Group’s main products, is the most important factor behind the improved earnings, when compared with the same period last year.

  • “We have seen an extreme development in prices for seafood in the first quarter, in particular for salmon and trout. This development has been positive for earnings from farming and whitefish catches, but is a temporary challenge for earnings from the Group’s downstream operations,” says CEO Henning Beltestad.


The wholly owned subsidiary Lerøy Havfisk carries out the Group’s wild catch operations. Lerøy Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to around 30% of the total quota allocated to the trawler fleet. Lerøy Havfisk also owns several processing plants, which are mainly leased out to its sister company Lerøy Norway Seafoods (LNWS) on long-term contracts. Lerøy Havfisk’s trawler licences stipulate an operational obligation for these processing plants.

Lerøy Havfisk has had 10 trawlers in operation in Q1 2022. The catch volume in Q1 2022 totalled 25,116 tonnes, compared with 25,721 tonnes in Q1 2021. The company has prioritised haddock catches. Remaining quotas at the end of the first quarter are slightly lower than at the same time last year.

The prices that were negatively impacted over the past two years due to COVID-19 restrictions have seen a significant improvement in Q1 2022. Prices for cod were up around 46% on Q1 2021, while prices for haddock and saithe increased by 24% and 37% respectively. This development in prices is a clear indication of strong demand for seafood products, although the price volatility is also challenging, and evidence of the complexity of the Group’s daily operations.

Significantly higher prices realised for the main species are the drivers behind the increase in catch value from Q1 2021 to Q1 2022. Profitability is negatively impacted by higher costs, including increased costs for crew and fuel. When compared with Q1 2021, total fuel consumption remained the same, but fuel prices were around 50% higher. As a result, bunker costs were up by NOK 27 million from Q1 2021 to Q1 2022.

LNWS’s primary business is processing wild-caught whitefish. The company has use of 12 processing plants and purchasing stations in Norway, five of which are leased from Lerøy Havfisk. The Group’s focus on improving the competitiveness of the whitefish industry is a long-term project and continues undiminished, with earnings improving significantly in 2021. However, as mentioned in the Group’s report for Q4 2021, the price level for raw materials at the start of 2022 would present an increased challenge for the landbased processing industry. Throughout the first quarter of 2022, the prices for end products have not shown the same development as the prices for raw materials. This results in significant pressure on the margins for the onshore industry. The Group expects it to take time before the higher raw material prices will be fully reflected in the prices for end products.

Total earnings for the segment are showing a very positive development, and the segment reported EBIT of NOK 236 million in Q1 2022, compared with NOK 185 million in the same period of 2021.

  • “High demand and lower quotas are key factors behind the positive development in whitefish prices. This provides a boost for earnings from the trawler fleet, but is a challenge for earnings from the land-based industry,” he says.


The Farming segment comprises the Group’s three farming regions in Norway: Lerøy Aurora located in Troms and Finnmark, Lerøy Midt located in Nordmøre and Trøndelag and Lerøy Sjøtroll located in Vestland.

Operating profit for the Farming segment before fair value adjustment related to biological assets was NOK 621 million in Q1 2022, compared with NOK 251 million in Q1 2021. During the quarter, the Farming segment harvested 32,000 tonnes, compared with 42,000 tonnes in Q4 2021.

In Q1 2022, EBIT/kg was NOK 18.90 for Lerøy Aurora, NOK 24.30 for Lerøy Midt and NOK 15.70 for Lerøy Sjøtroll. In total, EBIT/kg for the segment was up from NOK 6.00 in Q1 2021 to NOK 19.40 in Q1 2022.

  • “We are witnessing a very strong increase in costs for practically all input factors, with the price increases for feed the most evident. This will result in higher costs in 2022 when compared with previous years. At the same time, it appears so far that the increase in prices realised will be higher than the increase in costs,” says CEO Henning Beltestad.


With its fully integrated, cost-efficient value chain for salmon, trout, whitefish and shellfish, Lerøy Seafood Group shall supply products that are best suited to the consumers’ preferences. Proximity to key markets and knowledge of the customer’s needs are therefore of decisive importance if the Group is to develop demand for its main products. In the course of a calendar year, Lerøy distributes a wide range of seafood products from Norway to more than 80 different markets. In addition, the Group processes and distributes a number of market-specific seafood products in its respective local markets where Lerøy has operations. Lerøy Seafood Group’s value chain shall be developed further in order to satisfy and increase the consumers’ total demand for seafood.

Demand for seafood has been significantly impaired by COVID-related restrictions over the past two years. Since Q4 2021, demand has shown a positive upturn. Demand in Q1 2022 has been excellent, resulting in an extreme development in prices due to the low volume of salmon and trout.

On 24 February 2022, Russia launched military operations against its neighbouring country of Ukraine. This is an escalation of the invasion that started in 2014. In the main, the Group has not had any major direct losses as a result of these tragic events.

Volatile prices and an extreme development in prices on the spot market are causing changes in margins throughout the value chain. It will take time for the various parties in the different parts of the value chain to adapt to the new price level. It is likely that the high prices for practically all raw materials have not as yet been fully passed on to the consumer. The Group therefore expects to see a significant increase in food prices, including for seafood, in the near future. The price development for salmon and trout at the start of 2022 has been much stronger than expected, and this has had a negative impact on earnings in Q1 2022, and will continue to do so in Q2 2022. The general level of cost inflation, in transport costs for example, will have a negative effect on the segment’s profitability.

The segment’s earnings in the first half of 2022 are temporarily under pressure. At the same time, the Group is experiencing a gradual improvement in market position, and the long-term outlook for this segment is not changed. In total, operating profit reported by the segment in Q1 2022 was NOK 26 million, down from NOK 101 million in the same period in 2021.

  • “The increase in prices for seafood and transport costs in the first quarter was much higher than expected. This puts temporary pressure on margins for the Group’s downstream operations, and will affect us in the second quarter,” he says.
  • “At the same time, we have developed a strong and integrated value chain for seafood, and this remains stable with a good position for gaining new market shares during turbulent times. The long-term outlook for own downstream operations has not changed,” he continues.


The start of 2022 has been affected by significant price increases for input factors/inflationary pressure, global political uncertainties and more uncertainty than normal regarding future outlook.

Over the past 30 years, the Group has built a vertically integrated value chain for seafood. This value chain is now strong and well positioned for further development, with the potential to gain market shares during turbulent times. In the short term, higher prices for seafood generate higher earnings for the Group’s farming operations and whitefish catches, but put pressure on margins for the Group’s downstream operations. This situation will, in our assessment, prevail for the second quarter of 2022.

The cost inflation will gradually result in increased bunker prices and energy costs, but not least in higher feed costs. The uncertainty concerning future cost levels for the Group’s input factors is high, and the Group currently expects, for example, feed prices to continue to increase in the coming quarters. Increasing prices will with time have an impact on release from stock costs for the Group’s farming operations. It is likely that the feed cost per kilogram harvested fish will increase by approx. NOK 3-4 per kg in 2022 when compared with 2021. The prices of other input factors are also increasing, and this inflationary pressure is a clear indication of the importance of operational improvements.

In May 2022, the spot price for salmon is at an historic high, partly due to good demand but also the small volume available on the spot market. The Group’s harvest profile in 2022 implies that the Group will have a high contract share again in the second quarter. The so-called forward prices have seen a substantial increase at the start of 2022 as a whole, including for the second half of 2022. Lerøy’s management and Board of Directors believe the sustained strong development in demand for seafood gives grounds for optimism about the Group’s activities and lasting value creation.

In recent years, Lerøy has made significant investments in several parts of the value chain, including the construction of facilities for smolt/post-smolt capacity in all the Group’s regions. These investments in the Group’s smolt production have been an important driver for the growth in the Group’s harvest volume in Norway from 158,000 tonnes in 2019 to 187,000 tonnes in 2021. At the same time, the new smolt facilities enable significant changes in our operations that we assess will help us realise improvements in the years ahead.

For its consolidated operations, Lerøy Seafood Group currently estimates a harvest volume of around 185,000 tonnes in 2022. The Group’s share from associates is forecast to be approx. 23,000 tonnes. This includes the projected volume from Scottish Sea Farms Ltd’s new acquisition, Grieg Seafood UK. LSG’s total harvest volume in 2022 is thus estimated to be in the region of 208,000 tonnes.

The Group has made significant investments in catching and processing whitefish in recent years. One new vessel was added to the fleet in 2018 – Nordtind – and another in early 2020 – Kongsfjord. Further improvements to fish quality were priority design criteria for Kongsfjord. Consumers have ever-increasing demands and expectations where quality is concerned. High quality and competitiveness are essential for success in the competition for consumers’ favour. The Group’s target of significantly reducing greenhouse gas emissions makes new demands of technology within the fleet. The Group is monitoring developments closely.

Within the whitefish segment, the increase in raw material prices generates higher earnings from catches, but is challenging for the onshore industry. A substantial increase in raw material prices takes time to recoup in the market, so this factor will negatively impact earnings in the onshore industry for much of 2022. Efforts and investments to make the factories less seasonally dependent continue. Together with structured and meticulous improvement initiatives in each unit, we believe that this process will generate results.

The quotas for cod and haddock are lower in 2022. The cod quota is down 18% and the haddock quota down 20% compared with 2021. For saithe caught north of 62 degrees, the quota has been increased by 3%, while the quota for saithe in the North Sea is down 13%. As well as the quota changes, Havfisk’s catch volumes will be impacted by approximately 1,350 tonnes of the 2021 cod quota having been transferred to 2022. The fact that the coastal fleet, too, transferred quota from 2021 to 2022 is also positive for the onshore industry.

Lerøy works to develop an efficient and sustainable value chain for seafood. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. Investments in recent years, including in a new industrial facility for Lerøy Midt, a new factory in Stamsund and new factories in Spain, the Netherlands and Italy that are close to being commissioned, will make a positive contribution in the years to come. The management and Board of Directors are confident that Lerøy has a good starting point for continued profitable growth and development of Group operations. Earnings in this part of the value chain are under pressure at the start of 2022, but the Group has a clear ambition for earnings in VAPS&D segment to continue to grow in the years to come.

The Group’s products are healthy and tasty. Production is sustainable from a financial, climate and environmental perspective. The management and Board of Directors continue to expect good underlying growth in demand in the years ahead. At the same time, the Group is experiencing rising prices for key input factors, and inflation will impact cost developments in 2022. Nonetheless, the Board of Directors is confident that the Group is well positioned for the years ahead. The Board of Directors currently expects earnings in Q2 2022 to be substantially higher than in Q2 2021, with a corresponding significant improvement in earnings for full-year 2022 compared with 2021.

Questions and comments may be addressed to the company’s CEO, Henning Beltestad, or to the CFO, Sjur S. Malm.

Globe Newswire

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