Lerøy Seafood (Buy, TP: NOK100.00) - Higher spot price offset by US litigation settlement
We expect Q2 operating EBIT of NOK1,066m, 2% above consensus of NOK1,044m. Q2 spot prices surprised positively, but we believe the company’s low Q2 harvest volumes should mean a high contract share and so lower exposure to the spot price. Lerøy Seafood announced during the quarter a combined industry settlement of USD85m for civil anti-trust litigation in the US; we expect it to book related costs of NOK53m in Q2. We reiterate our BUY and NOK100 price target. The Q2 report is due at 06:30 CET on 24 August.Leroy Seafood Group is a supplier of seafood. Co.'s primary products are Atlantic salmon and trout. Co. reports within two main segments: Production and Sales and Distribution. The Production segment includes Co.'s activities within production and processing, mainly Atlantic salmon and trout. The subsidiaries in this segment are a main employer along the Norwegian coastline and other areas. The Sales and Distribution segment has a global reach, comprising sales, marketing, product development and distribution of both Co.'s own produced products as well as for external suppliers. Co. is also engaged in nationwide distribution of fresh fish on the Norwegian market.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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