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Cermaq Reports Operating Profit in Q2 of NOK 60 million

20 July 2012, at 1:00a.m.

NORWAY - Cermaq reported an EBIT pre fair value and biomass write-down for the quarter of NOK 60 million (NOK 318 million). Low salmon prices and operational challenges negatively impacted the result in Mainstream, while EWOS reports good results also in second quarter.

EBIT pre fair value and biomass write-down in second quarter 2012 was NOK 60 million compared to NOK 318 million in second quarter 2011. Mainstream accounts for most of the reduction mainly caused by significantly lower salmon prices.

The result for second quarter is below our expectations. Mainstream has experienced several operational challenges with negative impact for the farming results, says CEO Jon Hindar.The issues are however mainly solved during second quarter and we expect improved operations and reduced cost development in second half of 2012, continues Hindar.

EWOS reported an EBIT pre fair value of NOK 114 million in second quarter compared to NOK 128 million in same quarter last year. Volumes sold were 260 thousand tonnes of fish feed, an increase of 6 percent compared to second quarter 2011. Higher volumes came primarily from growth in Norway and Chile where volumes increased by 14 per cent and eight per cent, respectively.

EWOS continues its volume growth and contributes with a good result, says Jon Hindar. I am also impressed that the challenging capacity expansion project in EWOS Norway has been completed on time and budget and that the entity is able to meet expected volume growth during the peak season, continues CEO Jon Hindar.

Mainstream Chile reported an EBIT pre fair value loss of NOK 24 million (profit of NOK 33 million). EBIT pre fair value per kilogram, gutted weight, was negative NOK 4.7 (positive NOK 8.0). Apart from lower sales prices, seasonally low volumes and increased production cost from harvesting out two sites with slow growth and high feed conversion ratio impacted the results negatively. Potential quality problems with third party supplies have been indicated as a possible cause for the slow growth.

Mainstream Norway reported an EBIT pre fair value loss of NOK 3 million (profit of NOK 87 million). EBIT pre fair value per kilogram, gutted weight, was negative NOK 0.3 (positive NOK 12.4). The EBIT per kilogram for Nordland and Finnmark was NOK 0.7 (NOK 11.7) and negative NOK 0.9 (positive NOK 14.1), respectively. In addition to lower salmon prices, increased production cost from harvesting out three poor performing sites in Finnmark and severe algae bloom issues in Nordland contributed significantly to the second quarter results for Mainstream Norway.

Mainstream Canada reported an EBIT pre fair value of NOK 11 million (NOK 93 million), excluding the NOK 27 million biomass write-down from the IHN outbreak. The corresponding EBIT pre fair value per kilogram, gutted weight, was NOK 2.3 (NOK 14.8). The reduced profit was mainly caused by lower prices. Apart from the IHN outbreak, the biological performance in Canada has been good during the quarter.

"Mainstream has experienced a severe IHN outbreak, and addressed this incident with the urgency and immediate actions required, irrespective of the cost incurred. Mainstream Canada is currently looking into the possibility to obtain compensation from the federal government or its insurance provider," concludes Jon Hindar.

Outlook. Mainstream has reduced its expected sales for 2012 with 14 thousand tonnes, to 111 thousand tonnes, mainly from shifting sales pattern for Coho and trout. The reduced growth rate in feed in second quarter is expected to continue during second half of 2012.
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