Royal Greenland achieves the best interim result ever
After a very challenging 2020, affected by the Covid-19 pandemic, Royal Greenland has made a strong recovery. The interim result for 2021 shows a profit of DKK 120 million, making it the best interim result ever.
Royal Greenland has only achieved a better interim result on one previous occasion. This was the record year 2019, when the interim result was DKK 228 million including a profit of DKK 141 million from the sale of two trawlers. The profit of DKK 120 million for the first half 2021 is due to a revenue increase of 19%, which also exceeded the 2019 result. 2019 provides a better basis for comparison than 2020, which was severely affected by the Covid-19 pandemic and the ensuing lockdowns. The final result for the year is expected to reach a level of DKK 150-200 million. This is subject to uncertainty, however.
The interim profit from ordinary operations before the sale of trawlers increased by DKK 136 million, and compared to 2019 as a “normal year”, the result improved by DKK 33 million.
The positive development is driven by snow crab and cold-water prawns as the core species, as well as the pelagic activities, which made strong progress in 2021. In addition, the company’s cost level has now been adjusted to the Covid-19 situation.
The activities in Atlantic Canada in particular had a major impact on the positive result. Despite higher raw material prices, an early start to the season, together with attractive market conditions in North America and Japan, resulted in improved earnings for snow crab. The improved market conditions also affected crab activities in Greenland.
In China, the market and logistics conditions were severely affected by the pandemic. Sales of shell-on prawns were affected in Q1, but improved in Q2, however, returning to a more normal level in volume terms. Sales prices for shell-on prawns are rising. We succeeded in increasing sales in Russia, to compensate for the lower sales in China.
Concerning the market for cooked & peeled prawns, the pandemic has affected sales to the food service segment in particular, in Royal Greenland’s largest markets, the UK and Europe. These markets were strongly affected by the lockdowns. Prices for cooked & peeled prawns are improving, however, in terms of both sales and prices.
The new pelagic trawler "Tasiilaq", which was acquired in November 2020, has utilised the allocated capelin quota effectively. Fishing for blue whiting also reached a good level. The prospects for the capelin quotas in the coming years are favourable.
For Greenland halibut and cod, sales in the first half-year are still affected by difficult market conditions as a consequence of the pandemic. For both categories, sales prices have not been re-established at the usual levels. The most important markets for Greenland halibut are in Asia, where fortunately the markets are gradually normalising.
Even though many restrictions are gradually being lifted in most of our markets, Covid-19 continues to be a major concern. Compared to 2019 as a "normal year", revenue excluding snow crab has dropped by 17%.
Food service sales are thus at index 71 compared to 2019, while the retail segment is at index 89. The positive development in the industrial segment is due to snow crab sales primarily to North America.
Royal Greenland’s net profit for H1 amounts to DKK 58 million, compared to DKK (39) million for the same period last year. As a consequence of increasing activity and lower stock levels, working capital was reduced by DKK 131 million. Interest-bearing debt increased by DKK 169 million compared to the same period last year.
Expected performance of the company
As the vaccine programmes are rolled out and the restrictions in various countries are lifted, the markets are expected to continue to normalise, with positive development in sales of our wild-caught, high-quality products.
Our focus is naturally on re-establishing the core activities' sales and earnings levels, but also on getting back on track with our strategic ambition to maximise the value of existing resources, and to achieve growth from supplementary core activities.
The first half of 2021 has provided a good starting point, due particularly to an early start to the snow crab season in Atlantic Canada. We expect a general normalisation of market conditions during Q3 and Q4, which is important as this period includes the major sales season for cold-water prawns and Greenland halibut, with sales related to Chinese New Year, as well as Christmas and New Year in the western world.
The profit on ordinary operations before tax is not expected to be back at the 2019 level, but is expected to improve significantly to a level of DKK 150-200 million.
The general course of the global economy, including the market consequences of Covid-19 and Brexit, still constitute very significant uncertainties, however.
Liquidity and financial preparedness remain strong.
You can read the full 2021 interim report here
For further information, please contact CEO Mikael Thinghuus on mobile (+45) 50 89 30 00.