GRIEG Seafood has announced it is undertaking a strategic review of its Shetland operations with the aim of selling up “when the timing is right”.
The company says it will instead increase its focus on farming in Norway and Canada.
It is not known how a potential sale of operations in the isles could impact Grieg’s 200 employees in Shetland.
The company said it has nine active farm sites in Shetland in Scalloway, Gonfirth and Whalsay, with some at Setterness currently fallowed after finishing harvesting.
It opened a new salmon hatchery in Girlsta in 2015, while it has an office and processing plant at Gremista in Lerwick.
The company has already confirmed plans to cease salmon farms in Skye, which are run by Grieg Seafood Shetland, after the current harvest is completed.
If Grieg sells its Shetland interests then the Norway based company would no longer have any operations in the UK.
Grieg Seafood ASA CEO Andreas Kvame said Covid-19 has “severely impacted” all of the company’s operations.
Its Shetland sites have also suffered in recent years from issues like sea lice and gill diseases.
“We have seen steady improvements in fish health and survival over the last years on our farms in Shetland,” Kvame said.
“I am both thankful for and impressed by the efforts of Grieg Seafood Shetland’s employees.
“At the same time, the Covid-19 pandemic has severely impacted all of our markets. In light of these circumstances, we have to prioritise resources and investments and make some tough decisions.
“For Grieg Seafood’s total set-up as of today, we see the largest potential for sustainable growth in our Norwegian and Canadian regions.”
The strategic review is expected to be completed at some point next year, although there is no defined timescale.
However, in a presentation to investors Grieg said future projections were assuming Shetland assets would be divested in the second half of the 2021 financial year.
The company added that it does not know what the final outcome will be, but it said it “aims to sell its Shetland operations when the timing is right”.
“We regret that this process brings uncertainty for our employees and also to the local communities in Shetland,” Kvame said.
“Whatever the outcome of the review will be, I am confident that our Shetland farms and operations will continue to contribute significantly to Shetland’s economy in the future.”
Grieg Seafood Shetland said in a statement that it has been a “challenging year, and we are proud of all our hard-working employees who showed diligence and care in meeting those challenges head on”.
It said stressed that salmon farming in Shetland has gone through similar structural changes before and “has come out the other end”.
“We are confident that whatever happens, salmon farming will be a major economic asset and employer in Shetland for the future,” a company spokesperson said.
“We acknowledge that this does create uncertainty for all Grieg Seafood Shetland employees. We will be communicating all changes and any further decisions with them on a regular basis, starting with an all-staff meeting today”.
Managing director of Grieg Seafood Shetland Grant Cumming said the staff have “worked hard to improve over the last years, and I am proud to say that we are seeing fish health and welfare improvements in our Shetland operations”.
“Grieg Seafood regrets that this review brings uncertainty to them, and the company aims to complete the process as quickly as possible,” he added.
Operations in Shetland will go on as normal until the review is completed.
In its presentation to investors Grieg said that it will continue with necessary measures to lift profitability in Shetland in the meantime.
It said that ceasing operations in Skye will “improve utilisation of resources on Shetland farms”.
Latest figures show that for the third quarter of 2020 Grieg, across its global operations, had earnings before interest and taxes of minus £16 million.
“In 2020, we have not been able to deliver on our ambitions,” Kvame said.
“Grieg Seafood has a clear goal of creating value and we are taking decisive action and implementing measures to improve our performance the coming years.
“We will reduce cost per unit in all regions supported by cost effective and sustainable farming methods and profitably grow our salmon production by around 45 per cent towards 2025.”
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