May 1, 2014

Strong prices led to improved earnings of Cermaq in all regions and all-time high earnings before interests and taxes (EBIT) in Norway.

EBIT pre fair value was NOK325 million (US$55 million) in first quarter 2014 versus a comparable pro forma EBIT of NOK78 million (US$13 million) in first quarter 2013. Operating revenues were NOK1.5 billion (US$252.4 million) in first quarter versus comparable pro forma revenues of NOK1.2 billion (US$202 million) in the same quarter last year.

A continued strong market made this a good quarter for Cermaq, says chief executive officer Jon Hindar in a comment. "It was a good quarter also in terms of other factors than price. We saw a continued improvement in sanitary conditions in Chile where the efforts of the company, the industry, and authorities are starting to pay off, although significant work remains to be done. We have further seen that cost improvements in Finnmark are coming through".

Securing six "green" licenses in northern Norway and two new licenses in region XII in Chile creates room for organic volume growth in attractive farming areas, Jon Hindar points out.

Volumes sold in first quarter were 34,700 tonnes, a decrease of 8,400 tonnes versus same quarter last year, but some 7,000 tonnes above estimate. Expected sales volume for 2014 is 157,000 tonnes, compared to previous estimate of 152,000. The estimate increase is largely driven by good growing conditions in Nordland, Norway in first quarter and lower inventory building of Atlantics in Chile during the year. Total sales volume is expected to grow by 10% in 2014 compared to 2013.

Cermaq Chile's earnings in first quarter improved significantly versus previous year. The EBIT pre fair value and non-recurring items was NOK76 million (US$13 million) whereas EBIT for the same quarter last year was a loss of NOK48 million (US$8 million). EBIT per kilogramme for Atlantics and Coho was NOK1.7 (US$0.29) and NOK6.8 (US$1.14) respectively, while trout came in at NOK2.0 (US$0.34). Ex cage cost for Atlantics was US$4.6 per kilogramme in first quarter 2014, down by US$0.2 per kilogramme compared to fourth quarter 2013. Cermaq's 2015 ex-cage cost target is US$3.8, in addition to a targeted improvement of US$0.2 per kilogramme in achieved prices from better product quality. The activities implemented to secure the cost reduction proceed as planned.

The biology in Chile has improved in several areas, especially related to the sea lice level and increased harvest weight, while antibiotics usage has increased mainly due to treatment of Atlantics against Salmonid Rickettsial Septicaemia (SRS). Cermaq's antibiotics usage remains significantly below industry average however. The development in sea lice levels is encouraging since first quarter seasonally is challenging from a biological perspective due to higher sea water temperatures. In March, caligus load on Cermaq's Atlantics was the lowest since the end of 2011 and the average harvest weight was the highest in the company's history.

Cermaq Norway delivered an EBIT pre fair value of NOK236 million (US$40 million) versus NOK85 million (US$14 million) last year. Cermaq Norway sold 6% of its volume on fixed price contracts. EBIT for Nordland was NOK18.5 (US$3.11) per kilogramme and NOK17.6 (US$2.96) per kilogramme for Finnmark. Cermaq Canada reported an EBIT pre fair value and non-recurring items of NOK30 million (US$5 million), an improvement from NOK12 million (US$2 million) the previous year. EBIT per kilogramme was NOK14.8 (US$2.50) despite low volume in the quarter which increased fixed cost allocation. Net interest bearing debt was NOK1.9 billion (US$320 million) and equity ratio 55%.

Cermaq is one of the world's leading companies in farming of salmon and trout, with operations in Norway, Chile and Canada. In 2013 the farming business had sales of NOK5.1 billion (US$858 million), and a total harvested volume of 142,300 tonnes. Cermaq's feed business unit EWOS was sold in 2013.