SalMar's offshore fish farm.

A Satisfactory Quarter for the SalMar Group

All SalMar ASA's business areas posted satisfactory results in the first quarter 2018.

Overall price achievement in the quarter was good and contributed to revenue growth and further strong earnings for the SalMar Group. Operational EBIT totalled NOK 708.1 million in the quarter, up from NOK 670.7 million in the same period last year.

Olav-Andreas Ervik.

"The first quarter was somewhat mixed for the SalMar Group. Price achievement in the quarter was good and, operationally, all the Group's business areas posted satisfactory results. However, higher underlying costs for fish harvested in Northern Norway and lower activity in the Sales and Processing segment had a negative effect on their performance. Our goal is to be the world's best aquaculture company, and having the lowest costs has always been SalMar's clear objective. We are therefore continuously working to control and reduce costs without compromising the welfare of our salmon," says SalMar's CEO Olav-Andreas Ervik.

SalMar generated gross operating revenues of NOK 2.5 billion in the quarter, up from NOK 2.4 billion in the corresponding period in 2017. The Group harvested 31,900 tonnes of salmon in the first quarter this year, compared with 26,300 tonnes in the first quarter last year. EBIT per kg came to NOK 22.21 in the quarter, down NOK 3.29 per kg from the same period in 2017. The market price of salmon was NOK 5.52 per kg lower in the first quarter 2018 than in the first quarter 2017.

SalMar's Ocean Farm 1 – the world’s first offshore fish farm – is located in Frohavet. Based on world-class Norwegian aquaculture and offshore technology, Ocean Farm 1 aspires to address central issues related to sustainable growth in the aquaculture industry.

Biological developments in the Fish Farming Central Norway segment were satisfactory in the quarter, despite low sea temperatures. The bulk of the volume harvested in the period were fish transferred to the sea in the autumn of 2016. Out of consideration for fish welfare, some stocks were harvested earlier than planned in the quarter. This negatively affected the production cost of the fish harvested. Overall, the segment kept developments in the cost of its harvested fish in line with previous quarters. The Central Norway segment's costs are expected to improve in coming quarters.

SalMar is one of the world’s largest and most efficient producers of farmed salmon.

Fish Farming Northern Norway posted satisfactory results in the first quarter 2018. The fish harvested in the quarter had a higher production cost due to frequent delousing treatments in the autumn of 2017. The harvesting out of these fish will also affect the segment's overall costs in coming quarters. Over time, SalMar has built up a robust lice treatment capability and is well equipped to handle any challenges that may arise going forward.

The Sales and Processing segment posted strong price achievement in the quarter, but its earnings were affected by seasonally low levels of activity in the secondary processing area. Furthermore, fixed-price contracts, which accounted for 39 per cent of the volume harvested in the period, made a negative contribution in the quarter. The segment made an operating loss of NOK 15.3 million in the quarter, compared with loss of NOK 61.3 million in the same period last year. As at mid-May, the contract rate for the second quarter 2018 stands at around 50 per cent. For the remaining volume to be harvested in 2018, the contract rate is 36 per cent.

Based on estimates of the standing biomass at the close of the first quarter 2018, the global supply of Atlantic salmon in 2018 as a whole is expected to increase by 4 per cent. Combined with expectations that demand will remain consistently high, this indicates a balanced salmon market, with the prospect of continued strong earnings.

SalMar expects to harvest around 143,000 tonnes in Norway in 2018 as a whole, with Fish Farming Central Norway accounting for 96,000 tonnes and Fish Farming Northern Norway for 47,000 tonnes. Norskott Havbruk (Scottish Seafarms) and Arnarlax expect to harvest 26,000 and 8,000 tonnes respectively in 2018.

SalMar Q1 2018 report

SalMar has established a fully integrated system for farming, processing, sales and distribution of farmed salmon and is thus in control of the total value chain.

About SalMar

SalMar ASA is a Norwegian fish farm company and one of the largest producers of farmed salmon. Company's main activities include marine-phase farming, broodfish and smolt production, processing and sale of farmed salmon.

Source: SalMar

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Address:	Industriveien 51,
City:	Kverva
State/ZIP:	(NO-7266)
Country:	Norway
Phone:	+47 7244 7900
Fax:	+47 7244 7901
E-Mail:	Salmar@salmar.no
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