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SalMar Reports Positive Q2 Results

NORWAY - The SalMar Group posted positive results for the second quarter of 2011 with an operating profit of NOK 112,0 million, despite lower than expected harvests in central Norway.

Once again SalMar Northern Norway and the segment Rauma posted very satisfactory results. Central Norway's result for the quarter was heavily influenced by a number of factors, including a low harvest volume which in turn yields a low capacity utilisation at the InnovaMar plant.

Also, approx. half of Central Norway's volume in the quarter was harvested and sold in June, a month with significantly lower salmon prices than in April and May. The marine-phase biomass is developing well, however, and will contribute to lower production costs in the second half.

The SalMar Group generated revenues of NOK 681.7 million in the second quarter 2011, compared with NOK 659.5 million in the corresponding quarter in 2010. The Group made an overall operating profit before fair value adjustment of the biomass of NOK 112.0 million, compared with NOK 173.4 million in the corresponding quarter last year.

Operating profit came to NOK 8.58 per kg gutted weight for SalMar Central Norway, NOK 16.39 for SalMar Northern Norway and NOK 14.8 for segment Rauma.

SalMar owns 50 per cent of Norskott Havbruk AS, which operates fish farms in mainland Scotland, the Orkneys and Shetland. The business generated sales revenues of NOK 170.0 million during the quarter and made an operating profit before fair value adjustment of the biomass of NOK 41.0 million. Profit per kg gutted weight came to NOK 9.41.

At the close of the quarter SalMar owned 23.29 per cent of P/F Bakkafrost, a listed Faeroe Islands fish farming company. Bakkafrost posted an operating profit of NOK 133.2 million in the second quarter, which corresponds to NOK 16.46 per kg gutted weight.

SalMar's share of the profit after tax and fair value adjustment of the biomass was NOK - 6.3 million. After the close of the quarter SalMar has acquired more shares in the company and now hold 24.80 per cent of the shares in Bakkafrost.

Commenting on the Group's performance, CEO Yngve Myhre said: "The second quarter was a mixed period for the SalMar Group. Both SalMar Northern Norway and segment Rauma continue to post very strong results."

"SalMar Central Norway's performance was affected by a number of factors, including a low harvest volume, which resulted in low capacity utilisation at the InnovaMar plant. Furthermore, around 50 per cent of SalMar Central Norway's volume was sold in the month of June, when salmon prices were at their lowest, at the same time as a not insignificant proportion of the quarter's volume derived from partner licences where earnings are not as high as in the Group's wholly owned licences."

"In light of these factors it is important to point out that the marine-phase biomass is developing well, and that we are maintaining our production guidance for 2011. This will lead to good capacity utilisation at the InnovaMar plant in the time ahead. We therefore expect that SalMar Central Norway will once again post margins in line with the best performing farmers in the second half of the year."

The SalMar Group, including 50 per cent of Norskott Havbruk AS, harvested some 13,630 tonnes gutted weight in the second quarter, with SalMar Central Norway harvesting 7,850 tonnes, SalMar Northern Norway 1,650 tonnes, segment Rauma 1,960 tonnes, while operations in Scotland/Orkneys/Shetland harvested 2,170 tonnes.

After the close of the quarter SalMar has acquired 100 per cent of the shares in Villa Miljlaks AS, which has operations in Romsdalsfjord. Villa Miljlaks has a total of three fish farming licences: two licences for the farming of organic salmon and one R&D licence. In addition the company operates an R&D licence on behalf of lesund University College.

SalMar considers the future outlook to be good. Despite the fact that salmon prices have now dropped below the levels seen over the past couple of years, SalMar expects that a steadily growing demand for salmon will help to keep prices at a level that will provide solid earnings for the most efficient fish farming companies.

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