Strong figures for salmon farming

07.03.2018 | 3 min lukea

Spot rates rose in the salmon market due to lower harvest volumes in Norway. Handelsbanken expects Norwegian harvest volumes to increase in the second half of 2018, as the harvest of the 2017 generation is set to intensify. Leroy Seafood Group was able to increase its harvest volume due to high demand for its products.

Rising spot rates

Spot prices rose from NOK 61,67 (EUR 6,38) in week 8 to NOK 67,15 (EUR 6,97) last week, which are boosted by lower Norwegian harvest volumes. The International Salmon Exchange Fishpool reported contract prices (Nasdaq) at NOK 58.00/kg (EUR 6,00/kg) for Q2 and NOK 55.09/kg (EUR 5,67/kg) for H2 2018 in the forward market.

Harvest volumes expected to grow

In Norway, feed sales are reported down by about 10% y-o-y over the past four weeks, with YTD sales down 6% y-o-y, as colder seawater temperatures are impacting production and harvest volumes, according to Handelsbanken. But Norwegian harvest volumes are also expected to increase into H2, as the harvest of the 2017 generation is set to intensify (currently harvesting mainly on the 2016 generation, consisting of only 1% higher biomass y-o-y). Global supply growth of 5-6% for 2018, and 4-5% for 2019 is predicted.

Leroy Group: Top pick in the salmon sector

Leroy reported better than expected Q4 EBIT of NOK 777mio, driven by better farming margins. The group announced a dividend of NOK 1.5 per share, but Leroy’s strong cash flow and balance sheet provide sufficient room for higher dividends ahead. Leroy raised its harvest volume for 2018 to 182,000 tonnes (180,500 in 2017). The company is experiencing a strong demand for its products and anticipates a global supply growth of 5% in 2018.

Bakkafrost: Strong outlook for farming operations

According to Handelsbanken, harvest volumes are expected to increase from 51,000t in 2018 to about 70,000t in 2021. The salmon farming company reported a better than expected EBIT of DDK 331m in Q4, 53-55% above consensus and estimates of Handelsbanken, driven by fishmeal, oil and feed (FOF) and farming margins.

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