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Strong Prices Drive Results for Cermaq in Q1 2014

23 April 2014

NORWAY - Norwegian aquaculture and fish processing company Cermaq's profit in first quarter 2014 was NOK 325 million compared to a comparable EBIT of NOK 78 million in first quarter 2013.

Strong prices led to improved earnings in all regions, and an all time high EBIT in Norway. Operating revenues were NOK 1.5 billion in first quarter versus comparable pro forma revenues of NOK 1.2 billion in the same quarter last year.

"A continued strong market made this a good quarter for Cermaq," said Cermaq CEO 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," Mr Hindar continued.

"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," Mr Hindar pointed 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 ten per cent 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 NOK 76 million whereas EBIT for the same quarter last year was a loss of NOK 48 million. EBIT per kg for Atlantics and Coho was NOK 1.7 and NOK 6.8 respectively, while trout came in at NOK 2.0. Ex cage cost for Atlantics was $4.6 per kg in first quarter 2014, down by $0.2 per kg compared to fourth quarter 2013. Cermaq’s 2015 ex-cage cost target is $3.8, in addition to a targeted improvement of $0.2 per kg 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 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 NOK 236 million versus NOK 85 million last year.

Cermaq Norway sold six per cent of its volume on fixed price contracts. EBIT for Nordland was NOK 18.5 per kg and NOK 17.6 per kg for Finnmark. Cermaq Canada reported an EBIT pre fair value and non-recurring items of NOK 30 million, an improvement from NOK 12 million the previous year. EBIT per kg was NOK 14.8 despite low volume in the quarter which increased fixed cost allocation.

Net interest bearing debt was NOK 1.9 billion and equity ratio 55 per cent.

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