Lerøy Seafood Q2 2025 slides: Strong biological performance amid lower salmon prices

Lerøy Seafood Group reported Q2 2025 operational EBIT of NOK 680 million, a decline from Q1, primarily impacted by significantly lower salmon and trout spot prices. Despite this, the company maintained its 2025 harvest volume guidance, leveraging strong biological performance in its farming segment due to investments in shielding technology, and achieved record earnings in its Value Added Products, Sales & Distribution (VAPS&D) segment. This performance underscores the resilience of Lerøy's diversified and integrated value chain, as strategic investments continue to support long-term efficiency and growth amidst challenging market conditions, even as near-term spot prices are expected to remain below production costs.

Analysis

Lerøy Seafood Group (OB:LSG) reported a challenging second quarter for 2025, with operational EBIT falling to NOK 680 million from NOK 1,049 million in the prior quarter, primarily driven by a significant drop in salmon spot prices of approximately NOK 30/kg year-over-year. Despite this pricing headwind, the company's integrated value chain demonstrated considerable resilience. The Value Added Products, Sales & Distribution (VAPS&D) segment achieved record earnings, with operational EBIT on a rolling 12-month basis increasing 18% from Q2 2024, providing a critical buffer against volatility in the farming segment. Operationally, the farming division posted its highest-ever net production for a second quarter, supported by strategic investments in shielding technology that led to improved survival rates and higher harvest weights. The company maintained its full-year harvest guidance of 195,000 GWT and a strong balance sheet with a 49% equity ratio, though net debt increased to NOK 8,461 million following a dividend payment. The near-term outlook remains cautious, with expectations for spot prices to stay below production costs and new challenges arising from high Q3 seawater temperatures, but the strong performance of VAPS&D and ongoing biological improvements underscore a robust long-term strategy.

Key Decisions for Investors

• Investors should assess the company's ability to weather the current downturn in salmon prices by focusing on the record performance of its VAPS&D segment, which serves as a key indicator of the success of its integrated business model.
• Monitor the development of salmon spot prices relative to production costs and any company disclosures regarding the impact of high seawater temperatures in Q3, as these are the primary near-term risks to profitability.
• For those with a longer-term horizon, the ongoing capital expenditure of NOK 2 billion into efficiency-improving technology and the maintained full-year harvest guidance may present a case for evaluating the stock during this period of cyclical price weakness.