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Grieg Seafood ASA Q1 2014: Strong market and high salmon prices

Highlights - first quarter 2014

* First quarter results driven by strong salmon prices.
* EBIT before fair value adjustment of biomass was NOK 140m against NOK 51m
in 2013.
* Seawater production up on last year due to higher water temperatures and
improved fish health status.
* Substantially lower costs in Scotland and some improvement in Finnmark.
* As previously reported, the first quarter results include an extraordinary
charge related to write-down of smolt in Canada and storm damage in the
south of Norway. This affects the results in the quarter negatively with
NOK 26m.
* Grieg Seafood Finnmark nominated to be awarded four new green licences
(April 2014).

Results first quarter 2014
The Group's EBIT before fair value adjustment of biomass was NOK 140.1m,
against NOK 51.1m in 2013. The harvested volume in this year's first quarter
was 13 095 tons, marginally down on the corresponding period last year and
slightly more than previously guided.

The improved performance is due to higher salmon prices and improved
operations. As reported in connection with presentation of the accounts for
the fourth quarter of 2013, this year's first quarter accounts include a
write-down of smolt in Canada, while the results for Rogaland were also
exceptionally weak due to storm damage affecting one of the sites. The total
negative effect of these incidents amounts to NOK 26m.

Production costs in the first quarter were substantially lower in Scotland and
slightly lower in Finnmark compared with the same period last year.
Underlying production costs in both Rogaland and Canada were higher than the
corresponding figures in 2013, also after adjusting for the negative events
in this quarter. In general, the increasing underlying costs in salmon
farming are due to higher feed costs and higher health, treatment and
contingency costs.

The winter in Norway this year was characterised by unusually high seawater
temperatures and as a result production was notably higher than in the same
period last year. However, the unusual weather conditions in the first
quarter were both challenging and negative for Rogaland and Scotland, with
many storms and consequently lost feeding days, despite the higher seawater

The global supply of salmon increased by slightly more than 4% in the first
quarter, which was somewhat more than expected. At the same time demand has
been good, resulting in record high prices.

The first quarter profit before tax and fair value adjustment of biomass was
NOK 118.8m, against NOK 24.6m in the same period last year. The profit before
tax incl. fair value adjustment of biomass was NOK 72.1m MNOK. The cash flow
from operations increased from NOK 107m in the first quarter of 2013 to NOK
130m in the first three months of 2014. At the end of the first quarter the
Group's equity ratio stood at 44% while net interest-bearing debt amounted to
NOK 1 380m.

Group operating income in the first quarter totalled NOK 623.6m, an increase
of 20.6% on the same period last year. Prices were 27.2% higher, while
volumes were 4.5% down on the first quarter of 2013.

For Grieg Seafood, the price increase has been weaker than the average
increase in spot market prices. In addition to the somewhat negative effect
of contracts, this was also brought about by the negative effect of emergency
harvesting in Rogaland, weaker price realisation in Scotland and a lower
superior quality share in Canada.

At the AGM to be held on 11 June 2014 the Board of Grieg Seafood will ask the
General Annual Meeting for authorisation to set the dividend for 2013.

The Group's EBIT before fair value adjustments of biomass and including
previously reported extraordinary charges relating to the incidents in
Rogaland and Canada, was NOK 10.70 per kg (NOK 3.72 per kg). Rogaland
achieved an operating profit of NOK 9.52 per kg (NOK 8.05 per kg). The result
in Rogaland is negatively affected by storm damage on one site amounting to
NOK 7.95 per kg. Finnmark achieved an operating profit of NOK 15.94 per kg
(NOK 4.93 per kg). The operating profit in Scotland reached NOK 10.08 per kg
(loss of NOK 2.93 per kg), while Canada reached a loss of NOK 5.44 per kg in
Q1 2014 against a profit of NOK 2.57 per kg in Q1 2013. The result in Canada
was negatively affected by smolt write-downs amounting to NOK 8.6 per kg.
Ocean Quality achieved an operating profit of NOK 6.2m (0.8%) against NOK
8.7m (1.5%) in the same period in 2013.

The market in the first quarter was strong with record high prices, despite
the global supply being slightly higher than had been expected. This
indicates that the global demand for salmon remains strong.

The winter of 2014 was unusually mild, with higher seawater temperatures and
better growth than normal. This will result in some increase in expected
harvested volumes, and we expect a higher increase in harvest volumes,
especially in Norway for the rest of the year, than in the first quarter. It
is likely that this will lead to some decline in salmon prices compared with
the record high prices in the first three months of the year. Nevertheless,
the increase in supply during the rest of the year is not expected to be high
compared with the historic long-term growth in demand. Due to the low overall
level of unutilised production capacity there is less scope for strong
supply-side growth now than previously, which means that the market prospects
are again good for 2015.

When fully utilised, the new green licences in Norway will mean a 4-5%
increase in salmon production in Norway. This is not expected to have large
effect until 2015.

Grieg Seafood expects to harvest 69 000 tons in 2014. This is as previously
guided, but with a slightly different regional distribution. The harvest
volume in the second quarter is expected to be 17 500 tons, compared with 14
398 tons in the same period last year, with Scotland accounting for most of
the increase.

Cost levels in Rogaland were unusually high in the first quarter and are
expected to fall in the period ahead. Costs in BC are also expected to
gradually normalise as the underlying production increases. The required
smolt stocking to re-establish a harvest volume in the order of 15 000 tons
in BC was completed in May 2014.

The Group's four applications for green licences in Finnmark have achieved
positive nomination, giving Grieg Seafood further organic growth potential in
the period ahead.

For further information, please contact:

- CEO Morten Vike (cell phone: +47 994 911 65)
- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

For more information, please seewww.griegseafood.com.

This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.

GSF Q1 2014 report
GSF Q1 2014 presentation


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Grieg Seafood ASA via Globenewswire


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