Strong start to the year for Morpol

Morpol's consolidated operating revenue in Q1 2012 amounted to EUR 119.2 million, which was EUR 7.9 million lower than in the same period last year. The decrease was mainly due to a drop in processing revenues in Q1 2012 by EUR 5.5 million (5%) due to lack of revenues from contract processing. Sales volumes excluding contract processing were slightly lower in comparison to Q1 2011. In addition external salmon farming revenues in Q1 2012 was lower by EUR 2.8 million (12%) due to increase of internal sales being eliminated at the consolidated level. Despite lower salmon raw material price total revenues in the salmon farming segment were stable due to a 50% increase in volumes sold in comparison to Q1 2011.

The group's net interest bearing debt (NIBD) was EUR 150.6 million at the end of Q1 2012 (EUR 22.1 million decrease compared to end of 2011)

Processing

Revenue in processing was EUR 98.0 million compared to EUR 103.5 million prior year. The decrease in processing revenues in Q1 2012 by EUR 5.5 million (5%) was primarily due to no revenues from contract processing vs Q1 2011. Volumes excluding contract processing were slightly lower in comparison to Q1 2011. Lower unit sales prices to customers also impacted revenue. Operating EBIT for processing in the Q1 2012 was EUR 8.8 million (9% margin) versus a loss of EUR 0.1 million the previous year. Raw material purchase unit prices were significantly lower than prior year.

Sales volume decrease

Sales volume excluding Contract Processing decreased in the Q1 2012 by 3 percent overall compared to the same quarter in 2011. Sales of the principal category, Cold Smoked Salmon increased by 1 percent in volume and sales of Specialty products had strong growth with a 42 percent increase in volume.

The reduced consumer prices had a positive impact on sales for Cold Smoked Salmon in Germany, the UK and Italy, although the high prices in France led to continued market contraction. Morpol's strategy in France however delivered positive results as sales volume growth of cold smoked salmon during Q1 2012 in this market was +25% versus the same period in the previous year.

Salmon farming

Revenue in salmon farming in Q1 2012 was EUR 31.6 million (EUR 31.6 million in same period last year). The significant drop in salmon prices in Q1 2012 vs Q1 2011 was compensated by a 50% increase in volumes sold. Of the total revenue, EUR 10.8 million was transferred internally for further processing and sales.

Salmon farming Operating EBIT (pre fair value and PPA adjustment) in the first quarter was EUR 2.3 million (EUR 8.1 million in the same period last year), equivalent to a EUR 0.3/kg. Salmon farming sales volumes were 7,622MT in first quarter.

Comment from the CEO

"I am satisfied with the performance", CEO Jerzy Malek comments. "Processing delivered an Operating EBIT margin close to 9%, which is good considering the increasing raw material costs and decreasing consumer prices for our products. Salmon farming performance was acceptable with an Operating EBIT of 7%. We remain well positioned for good performance going forward following our significant investments in processing and farming."