Although the results were known after the profit warning, Grieg’s Q3 report was disappointing. Costs in Q4 will be higher than previously expected, the 2021 target of 95’t was 7’t below our expectation and we have lowered our estimates in this update. Once again, the company seeks to divest its Shetland operations and as a consequence, the 2025 ambition is now 130’t with NOK 5bn investments. We stick to Hold and lower our TP to NOK 85 (100).
Companies: Grieg Seafood ASA
Q3/20 figures in-line with profit warning
2020 volume guidance of 90’t (95’t), also on par with PW
Introduces 2021 guidance of 95’ vs Arctic at 102’t
We expect to lower our estimates
Grieg Seafood will release its Q3/20 report on 4 November – and, following lower salmon prices for the quarter as well as discontinuation of its Skye operations, we now expect an operational EBIT of NOK -30m (72) vs consensus at NOK -75m. Our main focus in the report will, in addition to the operational performance, be towards its volume guidance for Q4/20 and 2021. We stick to our Hold rating, while lowering our target price to NOK 100 (110).
Grieg Seafood’s Q2/20 report came in well below expectations, mainly due to weaker than expected performance in Rogaland and Shetland. The 2020 volume guiding was lowered by 5’t, and we have lowered our 2020 and 2021 estimates by 26% and 8% respectively. We have updated our supply model, still pointing to a healthy market balance next year. We do however prefer other stocks in the sector, and stick to our Hold rating and NOK 110 TP.
Q2/20 EBIT of NOK 3m (Arctic: NOK 95m, Cons.: NOK 64m)
2020 volume guidance lowered by 5’t to 95’t
Dividends postponed (expected)
Estimates likely to be revised lower by ~15-20%
Grieg Seafood will report its Q2 figures on 18 August and we now expect an adj. EBIT of NOK 95m (112) versus consensus at NOK 55m. Our full-year estimates are virtually unchanged in this preview as we have not made any changes to our price assumptions. Grieg Seafood still trades below its peers but we stick to our Hold rating as we believe a discount is appropriate short to medium-term.
Grieg Seafood reported an underlying Q1/20 EBIT of NOK 240m – in line with its profit warning. The company reiterated its FY/20 volume guiding of 100’t, and our volume assumptions are unchanged. We have however raised our cost assumptions, and our FY/20 and FY/21 estimates are lowered by 11% and 2% respectively. We still see downside risk to our price assumptions near-term, and we stick to our Hold rating and NOK 110 target price.
Q1/20 EBIT of NOK 240m – in line with trading update guidance
FY/20 volume guidance reiterated at 100’t (unchanged)
No dividends (expected), potential postponement of NOK 2-300m CapEx
Estimates to be lowered by ~ 10-15% (costs)
Q1/20 harvesting volume of 18,362 tonnes (16,800)
Biological challenges in Finnmark – EBIT/kg of a modest NOK 4.56 (12.54)
Trading update implies EBIT of NOK 252m (Arctic: 283m, Cons: 372m)
Could imply further upside risk to Q2/20 cost assumptions
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