Lerøy Seafood Group (LSG) Q3 2021 earnings summary

Executive summary

• Q3 revenue reached a record NOK 6,325m, up 33% YoY; EBIT before fair value adjustments rose 56% to NOK 579m, supported by higher farming volumes and stronger Wild Catch and VAP results.

• Production challenges and late-quarter harvest changes led to lower harvest weights, higher costs and weaker realized prices, leaving earnings below projections.

Financial highlights

• Q3 EBITDA before fair value adjustments was NOK 895m, up 37% YoY; pre-tax profit before fair value adjustments was NOK 575m versus NOK 359m.

• Reported profit was NOK 274m versus NOK 372m, including a NOK 202m negative biological-asset fair value adjustment versus a NOK 95m gain.

• Q3 adjusted EPS was NOK 0.74 versus NOK 0.51; YTD revenue was NOK 16,554m and EBIT before fair value adjustments was NOK 1,617m.

• Q3 operating cash flow was NOK 1,101m; YTD operating cash flow was NOK 2,789m versus NOK 1,818m.

Outlook and guidance

• 2021 harvest guidance, including associates, was ~204,000 GWT; 2022 harvest was forecast at 207,000 GWT, including associates.

• Q4 earnings were expected to exceed Q3, with lower release-from-stock costs; demand outlook remained positive for 2022.

• Input-cost inflation was expected to affect 2022 operating costs; uncertainty around the pandemic and market developments remained elevated.

• Belsvik expansion was scheduled for first fish in January 2022, with production results expected to emerge gradually from 2023.