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Robust Demand for Salmon Driving Morpol's Volume Growth

NORWAY - Morpol's consolidated operating revenue in Q2 2012 amounted to EUR 113.0 million, which was comparable to operating revenue generated in the same period last year (lower by EUR 0.7 million).

Operating EBIT for the quarter amounted to EUR 6.2 million (5.5 per cent margin), which was EUR 2.4 million lower versus the same period last year.

The group's net interest bearing debt (NIBD) was EUR 144.4 million at the end of Q2 2012 (EUR 28.3 million decrease compared to year end and EUR 41.9 million decrease compared to the end of Q2 2011). The equity ratio was 42.5 per cent at quarter end compared to 41.3 per cent at the quarter end prior year.

Processing

Revenue in processing was EUR 90.4 million compared to EUR 89.4 million prior year. Slightly lower unit sales prices to customers impacted revenue negatively. However, volumes were up strongly in comparison to Q2 2011. The quickly reducing consumer sales prices are stimulating demand.

Sales volume increased in Q2 2012 by 20 per cent overall compared to the same quarter in 2011. A different product mix impacted positive the average sales price. Sales of the principal category, Cold Smoked Salmon decreased by 1.6 per cent in volume but sales of Specialty products had strong growth with a 37.1 per cent increase in volume, Other Products by 35.9 per cent and By-products by 30.9 per cent.

Morpol's sales of Cold Smoked Salmon lagged behind market growth due to the company's decision during Q1 2012 to resist reducing sales prices entering Q2 as the company expects higher raw material prices going forward. As a consequence volume growth in this category was impacted.

Processing generated an operating EBIT of EUR 5.7 million in Q2 2012 (EUR 2.4 million same period last year). Raw material purchase unit prices were significantly lower than prior year, but up versus the previous quarter. The operating EBIT margin in Q2 2012 increased to 6.3 per cent compared to 2.7 per cent prior year.

Salmon farming

Revenue in salmon farming in Q2 2012 was EUR 37.1 million (EUR 34.6 million in same period last year). The 27 percent drop in market prices for salmon in Q2 2012 vs. Q2 2011 was compensated by a 24 percent increase in volumes sold. Of the total revenue, EUR 14.0 million was transferred internally for further processing and sales.

Salmon farming operating EBIT in Q2 2012 was EUR 2.6 million (EUR 7.1 million), resulting in an operating EBIT margin of 7.1 per cent (Q2 2011: 20.4 per cent). The farming operation in the UK - Meridian Salmon Group - generated an operating EBIT of EUR 2.1 million. Sales volumes in the quarter were 6,740 metric tonnes gutted fish equivalent returning an EBIT/kg of EUR 0.3. The Norwegian farming operation - Jkelfjord Laks - generated an operating EBIT of EUR 0.5 million, returning an EBIT/kg of EUR 0.5.

"We are heading in the right direction," CEO Jerzy Malek said. "Good performance from processing and farming delivered an Operating EBIT margin of 5.5 per cent in the quarter. A demand surge for smoked salmon and Morpol's strategy of diversifying our product portfolio will ensure continued growth for the Company."

Lucy Towers

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