Marine Harvest still reducing costs

Q1 resultes reported by the company shows that operating profit before restructuring costs and fair value adjustment of the biomass (adjusted EBIT) totalled NOK 588.8 million in the first quarter 2007, while operating revenues totalled NOK 3,802.7 million. Total restructuring costs of NOK 43.7 million were booked in the quarter. - The costs have been too high in Q1/07. As the merger has now been completed all operational attention will be given to operational excellence and synergy extraction. Both the board and the management expect to see a decreasing cost level over the coming years. The underlying picture is mixed between business units and regions and will continue to be mixed for a period, says CEO Atle Eide. - In Chile, we as the rest of the industry have biological challenges which are critical to the future development of the industry. In the UK we`ve decided to take significant actions to strongly improve our profitability going forward. At the same time the results for the other businesses, in particular Norway, Canada, Ireland and VAP, are good. With integration well under way, our abilities to solve the challenges ahead and continued strong markets, I remain optimistic with respect to continued solid performance through 2007. I am proud of the pace and the integrity set fourth by the organisation in the integration process, Eide says. Operating revenues in the first quarter of 2007 totalled NOK 3,802.7 million. This is an increase of NOK 94.8 million from the same period previous year. The main contributors to the revenue increase are Chile, Norway and VAP. EBIT before fair value adjustment to the biomass totalled NOK 545.1 million in the first quarter. Adjusted EBIT ended at NOK 588.8 million (14.5%) for the period. Marine Harvest has paid all scheduled instalments in 2007 and completed the refinancing of the group. At the end of the first quarter of 2007 Marine Harvest had net interest-bearing debt of NOK 6,710.0 million. The net interest bearing debt was reduced by NOK 688.6 in the period. Marine Harvest had an equity ratio of 54.7 per cent by the end of the first quarter. Business units Marine Harvest divides its operations into five business units: Marine Harvest Norway, Marine Harvest Chile, Marine Harvest Canada, Marine Harvest UK and Marine Harvest VAP (Value Added Products) and has in addition several operating companies in Ireland, Faroes, Japan, China, Taiwan, Korea and Singapore. Marine Harvest Norway generated operating revenues of NOK 1,408.5 million in the first quarter 2007. Adjusted EBIT totalled NOK 303.8 million. A total of 37,528 tonnes (HOG) was harvested during the quarter, leading to an EBIT/kg (HOG) of NOK 8.09. Marine Harvest Chile generated gross operating revenues of NOK 1,161.6 million in the first quarter 2007. Adjusted EBIT totalled NOK 194.5 million. A total of 26,104 tonnes (HOG) was harvested during the quarter leading to an EBIT/kg of NOK 7.45. Marine Harvest Canada generated gross operating revenues of NOK 413.8 million in the first quarter 2006. Adjusted EBIT totalled NOK 110.2 million. A total of 11,528 tonnes (HOG) was harvested during the quarter leading to an EBIT/kg (HOG) of NOK 9.56. Marine Harvest UK generated gross operating revenues of NOK 263.7 million in the first quarter 2007. Adjusted EBIT totalled NOK 19.4 million. A total of 7,005 tonnes (HOG) was harvested during the quarter leading to an EBIT/kg (HOG) of NOK 2.76. Marine Harvest VAP generated gross operating revenues of NOK 897.5 million in the first quarter 2007. EBIT before restructuring costs totalled NOK 18.5 million (2.1%) Other entities including corporate overhead generated gross operating revenues of NOK 227.6 million in the first quarter 2007. EBIT before fair value adjustment of the biomass was negative NOK 57.6 million. A total of 84,159 tonnes (HOG) was harvested during the first quarter. Given the current status of the ongoing integration process, Marine Harvest is satisfied with the results for the first quarter and expects a strong demand for seafood going forward. It is also expected a continuous lower cost level as integration are completed and synergies realized. However, the biological situation in Chile represents a challenge for the industry in the region as well as the company and an industry effort is required to solve the issues. Marine Harvest is working broadly to implement corrective actions, both internally and in cooperation with the other players in the region, to secure stable production and profitability also in Chile over the years to come.