CEO’s perspective

Andreas-Kvame_GSF_1243

A REAL EFFORT THAT PAID OFF

As 2015 went down in history as a challenging year for the entire aquaculture industry, 2016 arose with great opportunities for Grieg Seafood to demonstrate what we stand for and can achieve. For our shareholders, our employees and the excellent natural resource we are set to manage.

The organisation has cooperated exemplary at all levels, as our employees have given everything to realise our vision of achieving perfection together. Backed by the Board of Directors, the group has taken important steps during 2016. Under the slogan «time to step up», we have initiated programs to mobilise talent and motivation into becoming the best aquaculture company in our regions. As the CEO, I am proud to look back on 2016 and conclude that we have succeeded with our targeted efforts. The Board’s decision to return a NOK 3 dividend to our shareholders for 2016 is the best proof of our joint achievement.

Good sales figures

An important factor in our success is the strong global demand for the healthy and tasty salmon that we produce. On several indicators, 2016 marks an all-time high in Grieg Seafood´s history. All quarterly reports represent progress, and by the end of the year, the group reached an EBIT per kg at 18 NOK. The Norway region achieved even higher prices, proving our earlier statement that there´s more to gain in Norway. Certainly there still is. The global demand for healthy and nutritious food is not going to decrease, and Grieg Seafood has set a bold target to become the best provider of such food in our regions.

About 30% of our 2016 sales passed through fixed price contracts. This will increase in 2017. Fixed price contracts fit Grieg Seafood´s long-term sales targets and simultaneously make up a good strategy for Ocean Quality, the sales company for all our regions. The collaboration between Ocean Quality and the owner companies Grieg Seafood and Bremnes Fryseri has been very satisfactory in the past year.

The smolt strategy

The biological threats to fish in the sea prompt a highly professional response consisting of clever countermeasures based on local strategies. Our project to reduce the smolt cycle in sea from 24 to 18 months in our Shetland region is initiated. We expect that the project will improve sustainability and strengthen the company. By releasing larger smolts into the sea and thereby shorten the fish’s total stay in the sea, the biological threat will be reduced, the mortality rate will fall and production will increase. Another measure fulfilled with success is to make all regions self-supplied with smolt.

In the upcoming period, we will further emphasize the control and cost sides of the business, having defined a goal to make the operation even more efficient and profitable. Better control with biological risks, cost development, planning and smolt production are among our persistent success factors.

The human capital

Our employees make up the group´s most precious resource as they are the foremost representatives of our values; open, respectful and ambitious. On our route to become the leading group in our industry, each individual’s continuous effort is essential. Accordingly, the Board has adopted an additional cash bonus to suit every employee in addition to the existing 2016 bonus scheme. Our renewed effort for the welfare of the staff began in early 2016 when Grieg Seafood established the position for HR-director with special responsibility for developing human capital. This important work continued throughout the year and contributed to the great results. Overall, I consider that our employees have good incentives and heightened motivation to make 2017 an even better year than 2016. One of our tangible measures is a global HR strategy for all employees in the group.

Values and local involvement

With great pleasure, I can confirm that Grieg Seafood in course of 2016 has strengthened the group´s position and considerably increased its value in absolute terms. These results are, of course, partly owing to raw material prices. On the other hand, we have worked hard to restructure operations in all our regions, we have secured high harvest volumes, we have kept focusing on fighting sea lice, we have emphasized responsible fish health practices, and we have made a sincere effort to reduce production costs throughout the operations. These measures are available tools for Grieg Seafood to strengthen our market position. In 2017, we will work even harder and more collectively in order to continue our improvement.

In 2016, we have given priority to strengthening communities in our locations. We have supported First Nation activities in British Columbia, wild salmon projects in Finnmark, and wide variety of sports and activities for children and young people in all regions. Grieg Seafood is proud to have a community engagement, which helps communities and the group alike to create greater value for the future.

Improved Operations

Throughout 2016, the value of our fish and licenses demonstrated a positive development. In addition, we have obtained a higher production volume, our capacity and license utilisation has improved, and we have achieved good remarks on fish health and welfare. Grieg Seafood attaches great importance to environmental sustainability standards. In 2016, we have implemented four green licenses in Finnmark, and more are underway. The number of employees has been stable, and we experience a high degree both of thriving and mastering of tasks at all levels of the organisation.

Although there are many positive features to note from the market situation and fulfillment of previous targets, I want to remind everyone that salmon production always faces substantial risks. The risks relate to biology, price fluctuations, international trade conditions and changes in external conitions. Hence, our risk management procedures are under constant supervision, and in 2017, we will do everything in our power to preserve a stable and secure production platform. As CEO of Grieg Seafood, I have set some goals myself for next year: We will deliver better than budget, we will continue to grow a profitable and sustainable business, and we will work together to achieve perfection.