Grieg Seafood ASA Earnings Call: Operational Gains Amid Financial Strains

Grieg Seafood ASA ((NO:GSF)) has held its Q1 earnings call. Read on for the main highlights of the call.

Grieg Seafood ASA’s recent earnings call painted a mixed picture of operational success and financial challenges. While the company showcased significant improvements in Norway, particularly in Rogaland and Finnmark, it also highlighted ongoing difficulties in Canada and financial instability that require urgent attention.

Operational Efficiency in Norway

Rogaland exceeded expectations by producing 900 tonnes more than the guidance, thanks to favorable growth conditions and low mortality rates. This resulted in an operational EBIT of NOK260 million, with a notable NOK8 improvement in cost efficiency.

Financial Transformation Success

Grieg Seafood successfully placed a NOK2 billion hybrid bond and initiated a sale-leaseback for its post-smolt facility in Finnmark. These actions have significantly strengthened the company’s financial flexibility, providing a solid foundation for future operations.

Strong Performance in Finnmark

Finnmark also delivered strong results, with harvest volumes surpassing guidance by 500 tonnes. The region achieved an operational EBIT of NOK110 million and expects a 25% increase in harvest for the year.

Improvement in Biological Performance

The quality of fish in Rogaland improved dramatically, with superior quality fish increasing from 57% to 83%. Similarly, in Finnmark, the percentage of superior grade fish rose from 47% to 64%.

Challenges in Canada

Canada faced significant challenges, with no commercial harvest in British Columbia during the quarter, leading to a negative EBIT of NOK28 million. The region is expected to incur high costs due to environmental events from the previous year.

Financial Instability

The company reported high one-off costs totaling NOK68 million, related to organizational changes and the demobilization of the PSA site. These financial challenges were underscored by the CFO during the call.

Reduced CapEx in Newfoundland

Due to financial constraints, Grieg Seafood reduced its capital expenditures in Newfoundland by NOK600 million, which could impact the region’s long-term potential.

Forward-Looking Guidance

Looking ahead, Grieg Seafood projects a total harvest of 84,000 tonnes for the year, with a strategic focus on Norwegian assets and cost control. The company reported an EBIT of NOK220 million for the first quarter of fiscal year 2025, with significant contributions from Rogaland. Despite lower-than-expected spot prices, operational improvements were evident, with farming costs improving by NOK3.4 per kilo compared to Q4.

In summary, Grieg Seafood ASA’s earnings call highlighted a dual narrative of operational success in Norway and financial challenges in Canada. The company’s strategic focus on financial restructuring and operational efficiency in Norway appears promising, yet the ongoing difficulties in Canada and financial instability remain areas of concern.