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Good Margins for SalMar Despite Low Salmon Prices

20 November 2014

NORWAY - SalMar has maintained strong earnings in the third quarter of 2014 despite the biological challenges and lower salmon prices. The company achieved an operational EBIT of NOK 438 million in the period, compared with 360 million in the corresponding period last year.

A 60 per cent share of the harvest volume on fixed price contracts affected profit.

Total revenues amounted to NOK 1.8 billion in the period, an increase of 110 million from the third quarter of 2013. Operational operating profit totaled NOK 438 million, up from NOK 360 million in the corresponding period last year.

Overall around 36,400 tonnes of fish were slaughtered in the period, so that EBIT per kilo ended at 12.01 dollars. In the third quarter of last year around 34,800 tonnes of fish were harvested, resulting in an EBIT per kg of NOK 10.36.

Average price of salmon in the quarter was 35.29 kroner per kilo, a decrease of NOK 5.00 per kilo from the previous quarter and down 3.59 kroner per kilo from the same period last year. High contract coverage of 60 per cent has helped to achieve good prices for the period.

"We deliver satisfactory results even in a period of lower salmon prices. We have improved the production costs of harvested biomass, and contract rate has been 60 per cent in the quarter. The result is influenced negatively by costs which related to keeping lice levels down," said SalMar CEO Leif Inge Nordhammer.

Operations in the region Mid-Norway and Rauma were most influenced by biological challenges.

Sales and processing operations achieved record results for the quarter with an operating margin of 5.7 per cent. The improvement is mainly driven by the high proportion of contract.

Volumes that in earlier periods were sold to Russia have now been re-allocated to new and existing markets.

SalMar has experienced good demand in all its core markets and expects the positive development to continue in 2014.

In the fourth quarter, SalMar expects to harvest around 37,000 tonnes of Atlantic salmon. In Norskott Aquaculture, the expected harvest volume for the full year of 2014 is around 27,000 tonnes, of which SalMar's share amounts to 13,500 tonnes.

For 2015, the harvest volume for SalMar's Norwegian operations is 137,000 tons. Scottish Sea Farms Ltd (Scottish Seafarms) expects to harvest a volume of 31,000 tonnes.

TheFishSite News Desk

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