Cermaq Brought Down by Fish Disease

Cermaq reports a forth quarter EBIT pre fair value loss of NOK 35 million. The result is further hit by exceptional costs of NOK 158 million related to ISA in the Chilean farming operation, and a negative EBIT impact of NOK 24 million in the Finnmark region in Norway related to diseased fish.

The feed business improved the underlying margin, and the farming operations in Canada and the Nordland Region in Norway performed according to expectations.

Cermaq’s operating revenues were NOK 3 053.9 for the quarter (Q4 2007: NOK 2 221.9 million). The increase in revenues is mainly due to higher volumes and sales prices in EWOS. Revenues from Denofa, not consolidated in 2007, and higher prices in Mainstream also contributed to the higher revenue.

"The disease situation for the Atlantic salmon in Chile became worse than expected in Q4 2008, and has incurred heavy losses on Mainstream Chile", says Cermaq CEO Geir Isaksen. "The losses will continue in Q1 this year, and we expect a negative result for Mainstream Chile also in 2009. New regulations and improved methods and routines will lead to better sanitary conditions in Chilean salmon farming going forward, but it will take a long time to rebuild the production. We will be cautious and not increase the volumes of Atlantic salmon until we can be more certain of the sanitary environment"

The Mainstream Group reported a forth quarter EBIT pre fair value loss of NOK 135.7 million compared to a profit of NOK 11.0 million in the forth quarter 2007. Volumes were down 13.2 percent due to lower sales volumes of all species in Chile, whereas the other farming regions performed better than Q4 2007.

The result in Mainstream Chile was heavily impacted by ISA costs, including write downs of NOK 111 million on live stocks and NOK 47 million on frozen stocks.

Prices on Chilean Atlantic salmon have been under pressure as U.S market is flooded with high volumes of Chilean low size fish due to the ISA situation. Canada, which has performed with good profitability, is well positioned to take advantage of Chilean industry supply decrease in 2009. In Norway the Nordland performance in Q4 and in 2008 was very good, whereas Finnmark has had major challenges from Pancreas Disease (PD) in 2nd Half 2008. Scottish operations were stable.