Lerøy Seafood Group (LSG) Q4 2020 earnings summary

Executive summary

• 2020 earnings declined as COVID-19 restrictions weakened demand and realized prices, while revenue fell only 2% YoY, indicating resilient underlying activity.

• Flexible operations shifted toward grocery channels as hospitality and catering contracted; production and deliveries continued through the pandemic.

Financial highlights

• Revenue was NOK 19,960m, down 2% YoY; EBITDA before biological fair-value adjustments was NOK 3,109m vs. NOK 3,746m.

• EBIT before biological fair-value adjustments fell to NOK 1,950m from NOK 2,734m; reported EBIT was NOK 1,123m after a negative NOK 827m fair-value adjustment.

• Net profit was NOK 790m vs. NOK 1,870m; reported EPS was NOK 1.33 vs. NOK 3.12, while adjusted EPS before biological fair-value adjustments was NOK 2.46 vs. NOK 3.48.

• Operating cash flow was NOK 2,367m vs. NOK 2,859m; investing cash flow was negative NOK 1,354m, including NOK 1,833m in own and leased fixed-asset investments.

Outlook and guidance

• 2021 harvest guidance, including associates, was 205,000–210,000 tonnes; Norwegian harvest volume was projected at 192,000 tonnes.

• Higher 2021 harvest volumes and post-smolt investments are expected to reduce release-from-stock costs and support growth and lower production costs.

• COVID restrictions were expected to weigh on H1 2021 earnings; underlying demand and grocery sales remained strong, with high uncertainty over the pandemic’s duration.

• A planned three-stage RAS development in Vestland was estimated at ~NOK 1bn, with an expected 8,000–10,000 tonnes of additional annual sea harvest and completion scheduled for 2023.