Lerøy Seafood Group (LSG) Q3 2020 earnings summary

Executive summary

• Q3 adjusted EBIT before biomass fair-value adjustments was NOK 370m, down 26% YoY; pandemic-related weakness in Wildcatch and Whitefish was the main earnings drag.

• Covid-19 continued to disrupt operations and demand, especially in Whitefish, while downstream profitability improved and farming growth investments progressed.

• Reported EBIT was NOK 465m, compared with a NOK 44m operating loss in Q3 2019, as the biological-asset fair-value adjustment shifted to positive NOK 95m from negative NOK 545m.

Financial highlights

• Q3 revenue was NOK 4,773m, down 6% YoY; adjusted EBITDA was NOK 656m, down 14%, and adjusted EBIT was NOK 370m, down 26%.

• Q3 adjusted PBT was NOK 359m and adjusted EPS was NOK 0.51, versus NOK 0.57 a year earlier.

• YTD revenue was NOK 14,790m; adjusted EBITDA was NOK 2,359m, adjusted EBIT NOK 1,508m and adjusted PBT NOK 1,397m.

• Reported Q3 net profit was NOK 372m versus a NOK 126m loss a year earlier, reflecting the positive fair-value adjustment.

Outlook and guidance

• 2020 harvest including associates was expected at the lower end of 183,000–188,000 tonnes; 2021 harvest guidance including associates was 205,000–210,000 GWT.

• Q4 earnings were expected to be significantly better than Q3, with uncertainty elevated; Q4 salmon contract share was expected at ~30–35%.

• Release-from-stock costs were expected to fall in Q4; production growth, improvement measures and smolt investments were expected to reduce salmon costs and lift 2021 profitability.

• Expected 2021 regional harvest: Aurora ~47,000 GWT, Midt ~70,000 GWT and Sjøtroll ~75,000 GWT.

• Whitefish had significant potential, subject to quota decisions.