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Strong Prices Create Good Second Quarter Results for Cermaq

21 July 2014

NORWAY - Cermaq's EBIT pre fair value and non-recurring items was NOK 123 million in the second quarter of 2014 versus a comparable pro forma EBIT of NOK 137 million in the second quarter of 2013.

Strong prices have helped create satisfactory results in Norway and Canada, while earnings in the Chilean operation were hampered by high costs.

"A continued strong market made this a reasonable quarter for Cermaq in Norway and Canada," said CEO Jon Hindar.

"Chile had weak results for Atlantic salmon and trout as cost continued to be high. This is related to challenging growing conditions during 2013 and high mortality due to the SRS bacteria. The increase in ex-cage cost for Atlantic salmon this quarter versus first quarter is reflecting harvesting underperformance. At the same time the underlying biological development of the biomass is improving. This development makes us uphold our target of reaching an ex-cage cost for Atlantics of $3.8 per kg in 2015, as communicated at our capital markets day in November 2013," Mr Hindar continued.

Group volumes sold in the second quarter were 26.5 thousand tonnes, some 6,000 tonnes below estimate due to market timing. Harvest volume was is in line with production plans and expected sales volume for 2014 is 158,000 tonnes, marginally up from previous estimate of 157,000 tonnes.

Cermaq Chile's earnings in second quarter improved versus the previous year. The EBIT pre fair value was NOK 5 million whereas EBIT for the same quarter last year was a loss of NOK 6 million.

EBIT per kg for Atlantic salmon and trout was a loss of NOK 0.6 and NOK 1.0 respectively. Coho continues to perform well and came in at NOK 7.5 per kg. Ex-cage cost for Atlantic salmon was $4.7 per kg in the first half of 2014. This is an increase of $0.2 compared to full year 2013. On a constant feed price basis the cost declined by $0.2 per kg in the same period.

The sanitary situation in Cermaq’s Chilean operations is developing in a positive direction. Sea lice levels are lower than in the same period in 2013 and 2012, and harvest weights have further increased. Use of antibiotics was reduced compared to the first quarter due to less severe SRS outbreaks and more effective treatment. Still, SRS remains a concern, also due to resulting mortality on large fish. Cermaq’s antibiotics usage remains significantly below industry average.

Cermaq Norway delivered an EBIT pre fair value of NOK 81 million versus NOK 122 million last year. EBIT for Nordland was NOK 11.0 per kg and NOK 8.8 per kg for Finnmark. Cermaq Canada reported an EBIT pre fair value of NOK 52 million, a reduction of NOK 2 million compared to previous year. EBIT per kg was NOK 11.8.

Net interest bearing debt was NOK 2.1 billion and equity ratio is 53 per cent. EBIT pre fair value was NOK 167 million and includes a gain of NOK 44 million from the sale of a grain silo.

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