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COVID price slump, rising costs, Shetland jellyfish hit Grieg Seafoods results

The Grieg Seafoods site in Marystown, Newfoundland and Labrador.
The Grieg Seafoods site in Marystown, Newfoundland and Labrador.

Norwegian company Grieg Seafoods will release a detailed third-quarter report to shareholders on Nov. 17, but this week the company provided an operational and financial update giving a glimpse of how the last three months panned out.

According to its estimates for the third quarter (July 1 to Sept. 30) the company harvested 21,000 tonnes of salmon during the period. That is the same amount harvested for the same period in 2019.

Grieg expects to harvest 90,000 tonnes this year, but the COVID factor means lower revenues compared to 2019.

“Following market turbulence and demand shift from hotels, restaurants and catering ... to retail due to Covid-19, market prices in the quarter were down compared with Q3 2019,” the company said in a news release.

Grieg also incurred higher costs at its British Columbia operation this year, and a $21-million cost directly related to salmon mortalities and discontinued operations on the isle of Skye in Scotland.

“Prices achieved in Shetland were negatively impacted by advanced harvesting at Skye resulting in lower harvest weight,” the company said in its financial update.”

According to the company, a jellyfish incident at two sites in Skye caused the death of 1,500 tonnes of salmon. The company plans to harvest salmon at its other three sites in Skye, and then put the Scottish operation up for sale.

In a move to control costs Grieg also announced this week it was slowing its construction timeline at the land-based hatchery and nursery in Marystown. This week they announced they would hold off on the build of the post-smolt A unit, noting the Recirculating Aquaculture System (RAS) currently under construction will be big enough for the post-smolt stage for now.

Salmon eggs are already incubating at the site and smoltification tanks are in place for the next stage of the fish growth cycle.

The company estimates the total investment for the RAS smolt facility, excluding completion of the post-smolt A unit, will be around $60 million for 2020-21.

“The project for post-smolt A will at a later stage be evaluated for construction,” the company said, adding its current cost estimate to finalize the Placentia Bay project is $30 million. All numbers are in Canadian dollars.

Meanwhile, the reported positive numbers from their sites in Finnmark and Rogoland in Norway, with harvests of 2.7 tonnes and five tonnes, respectively.

“Prices achieved in Finnmark and Rogoland were good in the quarter,” the company said.

To deal with the financial challenges this quarter, Grieg said it has also negotiated with its banks to amend some of the terms of its loan agreements through the third quarter of 2021.

“The Covid-19 pandemic disrupted the salmon market, with a significant shift in demand and lower prices in core markets. A priority for Grieg Seafood is, in addition to protecting people, local communities, partners and business operations, to secure liquidity and financial solidity,” the company stated.

Grieg Seafood's final report for the third quarter on Nov. 17 will be followed by a webcast management presentation the same day.

The company will also provide an update on company strategy and priorities going forward.


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