Increased their ownership in Icelandic operator Arnarlax to 54% and further to 62% in April

SalMar achieves highest ever first-quarter Operational EBIT and harvest volume

NORWAY
Thursday, May 23, 2019, 12:40 (GMT + 9)

SalMar ASA posted an Operational EBIT of NOK 806.2 million (USD  91.8 million) in the first quarter 2019, compared with NOK 708.1 million (USD 80.6 million) in the same period last year.

SalMar increased its shareholding in the Icelandic aquaculture company Arnarlax from 42 per cent to 54 per cent during the quarter. In April, the Group increased its shareholding further, to 62 per cent, by means of a compulsory share purchase offer. Arnarlax has been consolidated into SalMar's financial statements for February and March. Combined with a higher volume harvested in Northern Norway, this contributed to the Group's highest ever first-quarter Operational EBIT and harvest volume.

"We continue to deliver good financial results. During the period, we also increased our shareholding in the Icelandic aquaculture company Arnarlax. As an industrial owner, SalMar will contribute to the sustainable development of fish farming on Iceland," says SalMar's CEO Olav-Andreas Ervik.

SalMar's gross operating revenues ended at NOK 3.0 billion in the quarter, up from NOK 2.5 billion in the first quarter 2018. The Group harvested 35,500 tonnes, compared with 31,900 tonnes in the corresponding period last year. SalMar made an Operational EBIT of NOK 22.71 per kg in the first quarter, a year-on-year increase of NOK 0.50 per kg.

After several quarters of strong biological performance and a significant drop in production costs, Fish Farming Central Norway's first-quarter results had a rise in production costs. Outbreaks of disease at certain sites led to premature harvesting and, consequently, higher production costs. In the second quarter 2019, SalMar expects the segment to have a higher volume and somewhat lower costs compared with the first quarter.

Fish Farming Northern Norway harvested a large volume of fish in the quarter. The segment's results were affected by biological challenges, including the harvesting of fish from the ISA zone where additional infection-prevention measures increased costs. SalMar expects the segment to have a lower volume and somewhat lower costs in the second quarter than in the first quarter.

Sales & Processing

The Sales and Processing segment posted a profit of NOK 14.3 million in the quarter. In the same period last year, the segment made a loss of NOK 15.3 million. Improvement in result is driven by fixed price contracts having a higher price point than for the corresponding quarter last year. Seasonally lower volumes have influenced the profit contribution from the harvesting and secondary processing activities.

Arnarlax (Iceland)

With effect from 1 February 2019, Arnarlax's results have been consolidated into the Group's financial statements, and the company is reported as a separate segment. Operational improvements on Iceland contributed to a positive financial result in the period, despite costs associated with high mortality caused by winter wounds. SalMar has great faith in the future of Arnarlax and salmon farming in Iceland, but it will take time before the segment is able to perform at the same level as the Group's operations in Norway.

As at 22 May, the contract rate stands at 25 per cent for the second quarter 2019 and 20 per cent for the year. Contract prices are slightly up from last year.

The global supply of Atlantic salmon is expected to grow by around 7 per cent in 2019. Combined with expectations of good demand, this indicates a balanced salmon market with the outlook for continued strong earnings.

SalMar maintains its expectations to harvest 155,000 tonnes in 2019, with 145,000 tonnes coming from the Norwegian segments and 10,000 tonnes from Iceland (Arnarlax). Norskott Havbruk (Scottish Seafarms) is expected to harvest 30,000 tonnes.

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