Our 'BBB' issuer rating and 'BBB-' issue ratings on Lerøy Seafood Group ASA (Lerøy) are unchanged following the publication of its third-quarter results.
Early harvesting due to disease tempers quarterly results
The results were somewhat weaker than our earlier expectations, due to disease-induced early harvesting at some sites in western Norway, leading to lower average prices and higher costs. The Wildcatch and Value-added Processing divisions nonetheless performed well, and we believe that our full-year expectations remain valid. We note, however, that raw-material cost inflation is likely to have a greater negative impact over the next few quarters.
Harvesting guidance for full-year 2021 is down by 5,000 tonnes to 187,000 tonnes while 2002 guidance is 190,000 tonnes. New hatcheries scheduled to go into operation from early 2022 are likely to boost harvests from 2023 onward.
Further EBITDA improvements likely
Lerøy Seafood issued NOK 1.5bn in green bonds in the third quarter. Investment levels were moderate in the quarter, and we expected them to remain so through year-end. Accordingly, capital investments in full-year 2021 appear likely to be lower than our earlier expectations of NOK 1.4bn and we expect the company's year-end credit metrics to be stronger than our original forecast.
Figure 1. Lerøy key credit metrics, 2019–2021e
| NOKm | 2019 | 2020 | 2021e | LTM to Sep. 21 |
|---|---|---|---|---|
| Total revenue | 20,427 | 19,960 | 22,537 | 21,724 |
| NCR-adjusted EBITDA | 3,997 | 3,123 | 3,856 | 3,343 |
| NCR-adjusted net debt | 4,015 | 4,740 | 5,792 | 4,891 |
| Total assets | 30,189 | 30,163 | 31,869 | 33,262 |
| NCR-adjusted debt/EBITDA (x) | 1.0 | 1.5 | 1.5 | 1.5 |
| NCR-adjusted EBITDA/interest (x) | 19.9 | 14.9 | 15.8 | 20.5 |
| NCR-adjusted FFO/debt (%) | 83.1 | 54.0 | 45.7 | 55.8 |
This commentary does not constitute a rating action.
Contacts:
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
Mille Fjeldstad, analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com