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Falling prices and poor health pull down financial performance

OSLO - Cermaq has announced a second quarter EBIT pre fair value of NOK 196.0 million compared to EBIT of NOK 329.2 million for the second quarter 2006.

CEO Geir Isaksen said that the significantly lower prices in the main salmon markets reduced Mainstream's result. EWOS, however continued it`s improvement through higher volumes.

"In the second half of the year the Group will focus on improving biological performance in farming in Chile and continue delivering high standards of customer service in feed," he added.

The Mainstream Group reported a second quarter 2007 EBIT pre fair value of NOK 131.4 million compared to NOK 309.2 million in the same period in 2006, excluding exceptional costs. Volumes were seven percent lower. Average salmon prices expressed in NOK were 16 percent lower than in the second quarter 2006, explaining approximately 68 percent of the drop in EBIT in farming against second quarter 2006. Costs per kg were higher compared to quarter 2 2006 due to higher feed costs and health and sanitary conditions in Chile.

Key trends and performance

  • Production costs in Chile remained at high levels compared to 2006 due to the health and sanitation problems reported earlier. But they did stabilise compared with those seen in quarter 1 2007.

  • Volumes from Mainstream Chile in the quarter were lower than expected due to delayed harvesting and slower sales of frozen inventory. Achieved prices rose slightly for atlantics, but fell for coho and trout. Costs of production per kilogram were higher due to lower growth, sea lice infestation at some sites and a higher feed costs.

  • Mainstream Canada delivered another strong quarter with good biological results and cost levels. However, falling prices reduced the overall result.

  • Mainstream Scotland suffered high costs on trout due to higher mortalities and lower prices.

  • Mainstream Norway`s profitability fell compared to the same period 2006 due to significantly lower prices despite good cost and biological results.

EWOS buoyant
The EWOS Group achieved an EBIT pre fair value of NOK 78.3 million in the second quarter 2007, compared to NOK 41.2 million in the second quarter 2006. Volumes were up in the quarter by 17 percent due to market growth, there was no significant change in market share. Raw material costs overall were stable compared to the first quarter and margin was maintained due to higher sales of functional feeds and higher volumes.

For more details visit: www.Cermaq