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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lake Shore Gold Corp Ordinary Shares (Canada) (delisted) | AMEX:LSG | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.4686 | 0 | 01:00:00 |
GOOD EARNINGS FROM LOW HARVEST VOLUME
In Q2 2017 Lerøy Seafood Group (LSG) reported operating profit before fair value adjustment related to biological assets of NOK 801 million in Q2 2017, compared with NOK 760 million in Q2 2016. This corresponds to operating profit before fair value adjustment related to biological assets for Q2 2017 of NOK 27.3 per kg against NOK 18.5 per kg in Q2 2016.
The Group reported revenue of NOK 4,224 million, compared with NOK 4,262 million in the same period in 2016. The harvest volume of salmon and the volume in Q2 2017 are down 36% when compared with Q2 2016, but these figures must be viewed in light of the high harvest volume in Q1 2017. For 2017 as a whole, the harvest volume is expected to be higher than in 2016.
For the first half of 2017 the Group reports revenue of NOK 9,684 million, up 20% on the equivalent period last year. The operating profit before fair value adjustment related to biological assets for the first half of 2017 was NOK 2,078 million compared with NOK 1,345 million for the first half of 2016. The profit before tax and fair value adjustment related to biological assets for the first half of 2017 was NOK 2,134 million compared with NOK 1,367 million for the first half of 2016.
THE WILD CATCH AND WHITEFISH SEGMENT
In the autumn of 2016, Lerøy Seafood Group obtained 100% ownership of both Havfisk ASA (Havfisk) and Norway Seafoods Group AS (now Lerøy Norway Seafoods AS). As a result of this transaction, both companies were consolidated into Lerøy Seafood Group as of 1 September 2016 and comprise the Wild Catch and Whitefish segment.
Havfisk's primary business is wild catches of whitefish. Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to more than 30% of the total quota allocated to the trawler fleet.
Havfisk's total catch volume in Q2 2017 was 16,769 tonnes, compared with 17,020 tonnes in Q2 2016. The ratio of saithe in Q2 2017 was significantly higher than in Q2 2016. The harvest volume in Q2 2017 comprised 4,067 tonnes of cod, 6,585 tonnes of saithe and 2,050 tonnes of haddock. The distribution in Q2 2016 was 6,057 tonnes of cod, 1,820 tonnes of saithe and 4,181 tonnes of haddock. On comparison with Q2 2016, prices for cod were up 9%, prices for haddock were up 30% while prices for saithe were down 28%. The remaining quotas for cod, haddock and saithe as of Q2 2017 are approximately 25,000 tonnes, on par with the remaining quotas at the same time last year.
LNWS's primary business is processing wild caught whitefish. The company has eight processing plants in Norway, five of which are leased from Havfisk. LNWS is the largest purchaser of cod from the coastal fishing fleet in Norway.
The total contribution to operating profit made by these two companies in Q2 2017 was NOK 86 million.
FARMING SEGMENT - HIGH PRICES FOR SALMON, INCREASE IN PRICES FOR TROUT
The Farming segment reported operating profit before fair value adjustment related to biological assets of NOK 613 million in Q2 2017, down from NOK 674 million in Q2 2016. As previously reported, the harvest volume in Q2 2017 was significantly lower than in Q1 2017. The segment harvested a total of 26,156 GWT salmon and trout in Q2 2017, down 36% from the same period in 2016. The harvest volume for the first half of 2017 is 12% lower than in the corresponding period in 2016. Nonetheless, the Group currently expects to report a higher harvest volume for 2017 as a whole than in 2016. EBIT/kg increased from NOK 16.4 per kg in Q2 2016 to NOK 23.4 per kg in Q2 2017.
In Q2 2017, Lerøy Aurora achieved operational EBIT per kg of NOK 30.8. Lerøy Midt and Lerøy Sjøtroll are reporting EBIT per kg of NOK 18.5 and NOK 20.7 respectively for the same period.
VAP, SALES & DISTRIBUTION (VAPS&D)
The VAPS&D segment reported revenue in Q2 2017 of NOK 4,043 million, down 3% when compared with the same period last year. Operating profit before fair value adjustment related to biological assets was up from NOK 97 million in Q2 2016 to NOK 115 million in Q2 2017. This provides an operating margin before fair value adjustment related to biological assets of 2.9% in Q2 2017.
MARKET AND OUTLOOK
The Group is in a transitional phase within production of salmon and trout, with extraordinarily high direct and indirect treatment costs, combined with increasing costs for prevention. One central element in the Group's strategy is to minimise the number of treatments. Since 2013/2014, the Group has made substantial investments in their own production of cleaner fish. The Group is also investing in other tools to optimise production. These include a significant increase in capacity for mechanical cleaning and fresh-water treatment in well boats.
Prevention costs are expected to increase in 2017, while costs related to treatment are expected to fall. There is high potential to reduce treatment costs and the Group has a clear strategy and goal to realise this potential. Developments to date in 2017 have been positive, and the Group currently expects to see a fall in release from stock costs in the next quarters. Nonetheless, the Board of Directors acknowledges that it will still take some time to realise the full potential of the measures implemented.
For a number of years now, the Board of Directors and management have clearly stated their views on the need for changes to regulations in Norway. The Board of Directors is of the opinion that a growth in demand over time is perhaps the most important driver for global competitiveness and increased value generation. From a long-term market perspective, the Norwegian fish farming industry is in a challenging situation in 2017, as lack of growth in volume has resulted in very high prices. The Norwegian fish farming industry will only be able to retain its global competitiveness over a time frame of the next five to ten years if framework conditions facilitate growth in production in Norway. Framework conditions of this nature must be based on an understanding of environmental sustainability and value generation.
In 2017, the Group expects to harvest 175,000 GWT of salmon and trout, including their share of LSG's volume from associates and a catch volume of more than 60,000 tonnes.
The Board of Directors is positive to the market outlook, and currently expects to see an improvement in result in Q3 2017 when compared with Q2 2017, and a significantly better result for 2017 than in 2016.
Questions and comments may be addressed to the company's CEO, Henning Beltestad, or to the CFO, Sjur S. Malm.
1 Year Lake Shore Gold Corp Ordinary Shares (Canada) (delisted) Chart |
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