Record margins for Salmar

All the Group's segments (Central Norway, Northern Norway and Scotland) achieved record high margins during the quarter. The Group's performance can be ascribed to a combination of high salmon prices and continued satisfactory biological developments. Relatively low sea temperatures throughout 2010 have affected growth rates and put some pressure on production costs.

The SalMar Group generated gross operating revenues of NOK 659.5 million in the second quarter 2010, compared with NOK 456.3 million in the same quarter in 2009. The Group made an operating profit before fair value adjustment of the biomass of NOK 173.4 million, compared with NOK 102.2 million in the corresponding quarter in 2009. This resulted in an operating profit per kg gutted weight of NOK 15.62 for SalMar Central Norway and NOK 16.05 for SalMar Northern Norway.

SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farming facilities in mainland Scotland, the Orkneys and Shetland. The business generated gross operating revenues of NOK 247.6 million in the second quarter 2010, and made an operating profit before fair value adjustment of the biomass of NOK 79.7 million, compared with NOK 42.4 million in the corresponding quarter in 2009. The margin per kg gutted weight in the quarter came to NOK 12.69. This is a record result, both with respect to overall operating profit for a quarter and operating profit per kg gutted weight.

Commenting on the results, CEO Leif Inge Nordhammer said that in terms of profits the second quarter 2010 was yet another record quarter for the SalMar Group. "Every segment delivered the highest operating profit per kg gutted weight they have ever achieved. The record high price of salmon during the quarter is a strong part of the reason for the record margins, but our uncompromising focus on the biomass and operational efficiency is a precondition for achieving the results that we have delivered. It is particularly pleasing to see that SalMar Northern Norway has delivered another strong quarter, and has gained a biological platform which bodes very well for the second half of the year. The relatively low sea temperatures we have seen in Norway so far this year have not given us optimal feeding and growth conditions, and this has had a negative effect on production costs.

"The salmon market is still very strong, and so far in 2010 both salmon prices and export volumes have been at record levels for the time of year. The global supply of salmon is expected to fall by around 5 per cent in 2010. Combined with a continued strong demand in our most important markets, this should result in salmon prices stabilising at a relatively high level for a long time to come."

Including its 50 per cent shareholding in Norskott Havbruk AS, the SalMar Group harvested some 14,200 tonnes gutted weight, with 9,100 tonnes being harvested in central Norway, 2,000 tonnes in northern Norway and 3,100 tonnes in Scotland/Orkneys/Shetland.

SalMar's key figure for profit performance under IFRS is EBIT (operating profit) before fair value adjustment of the biomass. Adjustment of the fair value of the biomass results from the requirement to value biological assets (the biomass) at fair value instead of cost price. SalMar reports EBIT before fair value adjustment of the biomass in order to show the underlying performance of its operations during the period.

Despite the low sea temperatures in parts of Norway this year, SalMar is maintaining its overall harvesting estimate for 2010 at around 85,000 tonnes gutted weight, distributed thus: approx. 56,000 tonnes for SalMar Central Norway and 17,000 tonnes for SalMar Northern Norway, while Norskott Havbruk aims to harvest approx. 24,000 tonnes, of which SalMar's share is 50 per cent, ie 12,000 tonnes.

The Group's strategy for dealing with salmon lice continues has been successful.The measures implemented, including the use of wrasse, have given satisfactory results.

SalMar considers the immediate outlook to be very bright. Despite historically high salmon prices, the company is experiencing strong demand. Combined with the expected fall in exports of Atlantic salmon from Chile, this will provide - in SalMar's view - grounds for good salmon prices for a long time to come. At the same time, the Norwegian fish farming industry has considerable growth potential.