Resource rent tax proposal brings increased uncertainty

November 29, 2022
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Press release from Lerøy

Operating profit before fair value adjustment related to biological assets was NOK 831 million for Q3 2022, up 44% compared with the same period of 2021. Strong demand for seafood, including a substantial increase in prices realised for the Group’s main products, is the key reasons for improvement compared to Q3 21.

The Farming segment delivered improved results in the quarter compared to corresponding quarter last year. Salmon prices have fallen significantly since the second quarter but are still higher than last year. The harvest volume is in line with Q3 2021, and inflationary pressure in the economy is affecting cost developments.

The total salmon and trout harvest volume for 2023 is estimated at 202,000 GWT (including Lerøy’s share in Scottish Sea Farms).

– “Growth in the Farming segment has been slightly weaker than expected through the third quarter and at the start of the fourth, and accordingly the outlook for harvest volume has been reduced by 5,000 GWT for 2022,” explains CEO Henning Beltestad.

Earnings in the VAP, Sales & Distribution segment have been negatively impacted by the extreme development in salmon prices. Earnings gradually improved through the quarter, and a further margin improvement is expected in Q4.

Results for the Wild Catch segment improved compared with Q3 2021, driven by high prices and higher catch volumes. Higher bunkering charges are affecting cost developments.

On 28 September the Norwegian government proposed the introduction of a rent resource tax for the period during which the salmon are in open cages. With its fully integrated value chain, Lerøy sees significant weaknesses in the proposal, which reveals a lack of insight into the industry’s complex value chain.

The proposal is already having a severely negative impact on Lerøy’s day-to-day operations, and will have serious long-term consequences for Lerøy and the industry.

Norway has a long tradition of open processes when material changes are to be made to an industry’s framework conditions, including ensuring that concerns raised by businesses are heard and understood.

Open processes guarantee predictability, stability, trust and, not least, a knowledge and understanding of the industry affected. The proposal of 28 September breaks with this tradition. It lacks adequate insight into the industry’s dynamic, represents a breach of trust and is causing great uncertainty.

– “The consequences are extremely serious for Lerøy and our employees, and we expect implementation of the proposal to be delayed to allow time for a thorough consultative process, followed by discussion and broad compromise in the Storting,” says CEO Henning Beltestad.

Queries may be addressed to the CEO, Henning Beltestad, or the CFO, Sjur S. Malm.


Originally published on 15 November.

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