Lerøy Seafood Group (LSG) Q4 2019 earnings summary

Executive summary

• Revenue reached NOK 20,427m in 2019, the first year above NOK 20bn; EBIT before fair value adjustments on biological assets was NOK 2,734m, down from NOK 3,569m in 2018.

• Lower Farming earnings and, to a lesser extent, Wild Catch results weighed on the year; VAP, Sales & Distribution improved. Earnings potential was considered higher than 2019 results.

Financial highlights

• Revenue was NOK 20,426.9m vs NOK 19,837.6m in 2018; adjusted EBITDA was NOK 3,746m vs NOK 4,228m and adjusted EBIT was NOK 2,734m vs NOK 3,569m.

• Adjusted profit before tax was NOK 2,718m vs NOK 3,697m; net income was NOK 1,870m vs NOK 3,598m, and reported EPS was NOK 3.12 vs NOK 5.77.

• Biological asset fair value adjustments were negative NOK 334m in 2019 vs positive NOK 755m in 2018; reported EBIT was NOK 2,401m vs NOK 4,323m.

• Net financial items were negative NOK 215m vs negative NOK 161m; income from associates before biological fair value adjustments was NOK 198m vs NOK 290m.

Outlook and guidance

• Harvest volume, including associates, was forecast at 183,000–188,000 tonnes of salmon and trout for 2020; the 2021 target was 200,000–210,000 tonnes.

• Farming harvest volume was expected to rise over the next four to five years as larger smolt from new RAS facilities support production growth and lower release-from-stock costs.

• Whitefish segment earnings were expected to improve in 2020 as facility investments and operating initiatives take effect.

• COVID-19 uncertainty led to a revised view: 2020 earnings could be below 2019, though Q1 guidance remained unchanged from the 25 February preliminary results.