Analytical information

Our ambition is to be open and transparent towards all stakeholders. That is the only way we can earn their trust. Through sharing of honest and relevant information about our operations and the salmon farming industry, we aim to contribute to an improved understanding and correct pricing of our shares.


Creating shareholder value is a prerequisite for company growth and survival. Return on Capital Employed (ROCE) is our ultimate financial performance indicator. We also believe there is an interdependency between sustainability and financial results. We need good financial results to develop our operations sustainably, but also sustainable operations to safeguard our long-term financial results and performance. This lays the foundation for our strategy – to create stakeholder value through sustainable production of Atlantic salmon at the lowest possible cost.



With ROCE as the starting point, we break down our performance based on the profitability of our product (EBIT per kg before fair value adjustment) and the development in invested capital (fixed assets and working capital). Our EBIT performance is driven by a multitude of operational factors affecting revenue and costs. Producing salmon takes two to three years from egg to harvest, and the costs of a harvested fish is accumulated through the production period, and do not impact the profit and loss statement (apart from fair value adjustment) before the fish is harvested. Although EBIT per kg (before fair value adjustment) is an important external benchmark measure for our regions, our operational focus is not on the cost of the harvested fish, but on the development of the cost drivers affecting our production volume and cost of salmon to be harvested in the future.



How much salmon we harvest depends on the number of smolt put to sea, and how well that fish performs in terms of growth and survival. In line with our growth ambitions, we transferred approximately 26 million smolt to sea in 2018. Fish growth and survival rates can be affected by innumerable factors in sea, but certain factors are of key importance:


  • Seawater temperatures
  • Seawater conditions
  • Diseases and health issues
  • Sea lice


We strive to produce the highest quality salmon at a competitive price, overcoming the challenge of the factors above. By effectively preventing and combatting sea lice and health issues, and understanding our salmon’s behavior, we work continuously to improve survival and growth rates.

Our total production volumes are limited by our farming licenses, which contain restrictions (Maximum Allowed Biomass, MAB) on the amount of live biomass we can have in sea at any time. In Shetland and British Columbia, the limitations are only imposed on a per site basis, while the Norwegian system also introduces limitations on defined areas and per company. Effective utilization of farming licenses, equipment, and personnel requires sophisticated and detailed planning of stocking and harvest across sites and regions.



Diseases, winter sores and other biological issues may affect the quality of our product. Salmon quality categories are relatively standardized. We categorize the quality of our salmon as superior, ordinary or production grade. "Superior" quality salmon has a positive overall impression with good meat quality and no exterior damage or faults. Downgraded salmon has from minor to significant external and/or internal faults or damage and is therefore lower priced. In Norway, downgraded salmon is priced according to standard rates of deductions. For salmon classified as "ordinary", the standard deduction is NOK 1.50-2.00 per kg GWT. For salmon classified as "production grade", the deduction is NOK 5.00 -15.00 per kg GWT, depending on the extent of faults and damages. In other countries, the price deductions compared to "superior" salmon are less standardized, but the same principles apply. As other companies in the salmon farming industry may use other quality categories and criterias for grading their salmon, the quality share may not be comparable between the companies.



Our main product, whole gutted salmon, is largely traded as a commodity, and the prices achieved largely reflect the general market price. Our achieved prices will, to some extent, deviate from the market price, based on the quality, sales contracts, and our ability to place our salmon effectively in the market. Our ambition is to sell our salmon at or above market prices, and we measure our relative price achievement as achieved price divided by the relevant reference price.

There are several reference prices for salmon available. In Norway, Fish Pool ASA provides historic price information as well as future salmon derivative prices FCA Oslo. In the US, Urner Barry provides reference prices for North American salmon in Seattle, and Chilean salmon in Miami. Market prices are correlated across regions, but significant short-term variations between markets are not uncommon.


The cost of inputs of producing a live salmon from roe to harvest is the main portion of total costs in our operations. In addition, the cost of harvesting and processing our salmon, as well as general administration, make up our total operational cost.

We track our performance, both internally and externally, through the cost of harvested salmon per kg. Most important is tracking the cost drivers influencing the cost of salmon to be harvested in the future, namely growth and survival.



A vast number of factors can affect salmon survival rates, for example diseases, algal blooms, water conditions, predation, and sea lice treatment. In recent years, approximately one out of five of the smolt stocked have been lost during the seawater growth phase throughout the industry. The number of fish lost per generation varies immensely across locations and regions. For salmon generations fully harvested in 2018, our survival rates showed wide variations between regions. Grieg Seafood Finnmark produced a survival rate as high as 96 % (calculated according to GSI definition), with the total survival rate in Grieg Seafood being 91 % in 2018. Accounting wise, we expense mortality exceeding a threshold level, deemed to be extraordinary, either by month or for the generation to date. Costs associated with "normal" mortality is kept in the book value of the remaining inventory, contributing to an increased cost when the fish is harvested and sold.



Our profitability is influenced by how quickly the salmon grows, and how efficient feed is converted into fish. Water temperatures, biological conditions, farming practices, and fish survival are key drivers for salmon growth. Higher seawater temperatures increase growth, but also increase biological risks in the form of diseases and algal blooms. This may again result in lost feeding days, lower growth and reduced survival. Through introduction of improved sensor technology, use of advanced image analysis and other technologies, we continuously improve at making better-informed decisions concerning feeding and protective measures.


Efficient conversion of feed is crucial to achieve our future cost targets. Feed accounts for approximately 40 % of our total cost per kg harvested fish. Strong and healthy fish, combined with high feed quality and good feeding practices, is key in achieving low production costs. We measure our farming performance through feed conversion rates (amount of fish feed used to produce one kg of live salmon) and relative growth indexes (achieved growth compared to own and feed supplier expectations). Salmon growth, survival rates, and in turn EFCR (economic feed conversion rate), are strongly connected to fish health, disease, and sea lice. Treatments, starvation, and reduced appetite impact growth negatively, and reduce harvest volumes and increase cost per kg harvested fish.



Our cost base consists mainly of feed, smolt, salaries, treatments, administration, well boats, harvesting costs, and depreciation. In recent years the industry has faced acute challenges with sea lice and diseases. This has caused an increase in costs both related to direct treatment, and in increased investments in equipment and technologies. This development has had a noticeable effect on the breakdown of the cost factors in the industry. In terms of total production costs per kg however, the reduction in harvested volumes, either due to lower survival rates, or lowered average harvest sizes, has had a significantly larger impact than the direct costs. As production costs per kg has increased the recent years, the directly variable cost of feed has become a smaller part of the total incurred costs per kg produced salmon. At the same time, other costs such as salaries, health costs, and maintenance, have become a larger share of the total.


Over the past years we have seen an increase in total costs across all our farming regions. In addition to an increase in health costs related to disease and sea lice treatments, the smolt cost and depreciation have increased due to expansion of our smolt facilities and various technological equipment. In Shetland we have experienced issues of reduced mortality, low harvest volume and in turn high costs per kg. Excluding Shetland our cost per kg of harvested salmon was reduced from 2017 to 2018, and we see a positive trend going into 2019. In Norway, Grieg Seafood has reduced the gap in production costs to the other large producers and are on track to the ambition of producing at an industry average of costs by 2020.


We believe that the figures in our financial statements only partially reflect the underlying performance of our operations. We therefore continuously work to develop key operational performance indicators and alternative performance measures that we believe better describe our performance. The APMs listed below have been consistently applied over time with one exception: the calculation of net interest-bearing debt for covenant purposes. From the first quarter of 2016, we removed Bremnes Fryseri AS' (non-controlling interest) share of bank in Ocean Quality AS from the calculation.