CEO’s perspective

Andreas-Kvame_GSF_1243POTENTIAL FOR FURTHER GROWTH

2015 has been a challenging and eventful year. Grieg Seafood has completed several significant projects in our four regions Rogaland (NO), Finnmark (NO), Shetland (UK) and British Columbia (CA). As the new CEO I have met many highly competent people with a great drive, and I recognize that my responsibility is to inspire and develop the good collaboration between the regions and the administration. Our employees are our most valuable assets. As a consequence we have created a new HR-manager position whose responsibilities will be employee qualifications and other measures to improve and develop the company’s human capital.

The value of our fish and our licences has increased during 2015, and the number of employees has been stable. At the same time, our equity constitutes a strong financial base for the continued efforts we make to be the leading salmon producer in our four regions.  After fluctuation in 2015, we observe that the start of 2016 shows promising salmon prices, which in turn increases interest in our company.

A lot can be said about the economic development in Norway, but I would like to focus on a positive element for Grieg Seafood: In a period of economic instability and falling oil prices, the aquaculture industry receives a lot of positive attention. The community recognizes that the industry is a job-provider with a healthy profit and a strong brand for Norway providing healthy and tasty salmon from clean waters. Additionally, we contribute to developing rural areas, and we are proud to be a part of the Bergen-based centre for the Norwegian aquaculture industry.

Our employees work purposefully to maintain a high production standard where healthy fish with good appetite stay in the nets. However, all salmon farming is exposed to risk due to biology, price fluctuation, political trade conditions and changes in currency and interest rates. Good plans and routines for managing risks is the foundation for succeeding with our strategies and maintaining a stable production platform.

High environmental standards at all our sites are of great importance to Grieg Seafood. During 2015 the green licences in Finnmark have undergone planning and implementation, and in 2016, all four licences will be fully operational. The Group management has set a goal of being self-supplied with smolt in all regions, and we are working specifically to increase the average weight of smolts released into the sea. At the end of 2015 regions were self-supplied with smolts up to 100 grams. In June 2015 Grieg Seafood Shetland opened the new RAS hatchery, and simultaneously the plans to reduce the region’s cycle at sea from 24 to 18 months were initiated. Thus we have achieved a substantial reduction of biological risks in the sea phase. This effort will be continued at full force in 2016.

During 2015, the group implemented a common IT platform for the regions that is currently operative on the biological factors. The project is being expanded to other operating areas. Our staff has delivered a great effort, and as CEO I conclude that the project complies with the positive expectations of the organization.

Another positive development is found in the sales and distribution company Ocean Quality. Since January 1st 2015, Ocean Quality been fully consolidated, and today it serves all four regions. The collaboration between Ocean Quality and owner companies Grieg Seafood and Bremnes Fryseri has been very good throughout the year.

Among the challenges I will mention licencing and capacity utilization, which is still too low in relation to the actual capacity of the group. The administration is working to increase utilization, especially at our Norwegian localities, which have the greatest potential in the current market. Increased capacity utilization will contribute to cost savings. Our on going efforts to reduce mortality through preventive measures such as bigger smolt, good locations, common fallowing, use of cleaner fish and early implementation of mechanical action, will further contribute to cost savings.

Throughout the year, prices were negatively affected in North America by a large overhang in shipments of fresh and frozen salmon from Chile, where parts of the production from 2014 were delivered in 2015. Simultaneously, high volumes from Canada led to historically low price levels in the North American market.

The European market has in return been very strong and showed a gradual upward trend throughout 2015. This includes an increased demand in Germany for fresh salmon at the expense of frozen products, which have given a positive result for Grieg Seafood and the rest of the aquaculture industry. Russia has in 2015 been closed for large parts of the global aquaculture industry including Grieg Seafood, whereas China has welcomed salmon from the Group regions outside of Norway.

Regardless of price fluctuations and changing biological conditions, farmed fish is the most promising nutritional resource for the world’s growing population. This means that demand for our services will increase. Our development depends on increased production while diminishing the negative impact on the environment and fauna. When we succeed, Grieg Seafood and our employees contributes to create value for the world community.