Grieg Seafood reports a profit slump, project postponement and possible breach of loan terms. The salmon stock is now set to record its worst day ever.
Published:Updated: October 21, 2020 2:31 PM, Published: October 21, 2020 1:36 PM
Grieg Seafood announced on Wednesday that it expects operating profit (ebit) before value adjustments to end at minus NOK 187 million in the third quarter, against a positive result of NOK 154 million in the same period last year.
This is due to lower spot prices, higher costs in British Columbia and NOK 150 million that is directly related to the closure of operations on the Isle of Skye, it appears.
Negotiated with the banks
The company also reports that it may violate its loan terms due to the prospect of lower earnings in the short and medium term.
Therefore, Grieg Seafood has negotiated with its banks and received “changes” in the loan terms that expire in the third quarter of next year.
“The Covid-19 pandemic disrupted the salmon market negatively, with a significant shift in demand and lower prices in key markets,” the company writes.
At the same time, parts of the Newfoundland project are being postponed due to the coronavirus and an uncertain market. The pace of investment will therefore be slowed down and the construction of the post-smolt facility will be pushed forward in time.
It was this winter that the salmon giant announced the acquisition in Canada, which entails exclusive rights for salmon farming in Placentia Bay, a farming area with an area larger than the Faroe Islands.
Historically heavy trading day
The share has been very heavy this year and has been down close to 50 percent since the turn of the year.
The share was down 3.11 percent at a price of NOK 82.6 before trading was stopped pending the announcement. After the trade, the salmon share has opened down more than 17 per cent at a price of NOK 70.6.
If the fall ends at over 15.60 percent on Wednesday, Grieg will note its largest daily share fall in percent ever, according to figures from Infront.
The most Grieg stock has fallen in percentage during a trading day was in September 2011.
The total harvest volume for Grieg this year is now expected to land at 90,000 tonnes.
In the third quarter, the harvest volume was 21,200 tonnes, slightly below the company’s guiding.
The company’s presentation of results for the third quarter has been postponed until 17 November.
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