Highlights - fourth quarter 2013
  • A strong market and historically high prices, especially at the end of the quarter.
  • EBIT before fair value adjustment of biomass was NOK 87m in Q4 2013 against NOK -48.9m in Q4 2012 (NOK -140.4m after write downs in Q4 2014).
  • The turnaround in Shetland has resulted in a greatly improved profitability.
  • The results in BC continue to reflect low production following the furunculosis outbreak in the smolt facility in 2012.
  • A high share of harvesting early in the quarter effects results in Norway negatively with more than NOK 2 per kg.
  • EBIT charged with one-off items of NOK 28.3m in Q4 (NOK 1.8 per kg).
  • Harvested volume of 15,995 tons, with 1,800 tons delayed until 2014.

Results fourth quarter 2013
The Group's EBIT in the fourth quarter before value adjustment of biomass was NOK 87m, against NOK -48.9m in 2012. EBIT before fair value adjustment of biomass for the year as a whole, was NOK 350.6m against NOK -99.6 m in 2012. Excluding one-off costs in the quarter, EBIT before value adjustment of biomass reached NOK 115.3m. Comparable EBIT per kg increased from NOK -2.43 in 2012 to NOK 6.95 in 2013. EBIT per kg in Norway was NOK 8.2 per kg. The improved results compared with 2012 are due to the sharp rise in prices in 2013, while the underlying production cost level is somewhat higher. 

The positive market trend continued into the fourth quarter, with strong demand and a low increase in global supply. Prices increased sharply, reaching historically high levels in the last part of the quarter.

The turnaround in Shetland has improved the biological situation, reduced production costs and improved the results. In BC the results are still exceptionally weak, reflecting low production following the outbreak of furunculosis in 2012. Production was also lower and costs higher in the south of Norway due to low seawater temperatures at the start of the year, which the situation in the north of Norway has been as expected.

High share of total harvest in the first part of the quarter in Norway (81%) affected results in Norway negatively with more than 2 NOK per kg. The results include one-off costs totalling NOK 28.3m in the quarter, related to write-downs of smolt in BC and on Shetland, as well as an increase in provisions under options schemes due to an increase in the share price.

Knut Utheim has been employed as COO Farming and will take up the new position as of 1 April 2014. Knut Utheim has an extensive experience within salmon farming from Stolt Seafarm and Marine Harvest, and has for the last 9 years held the position as regional director for Marine Harvest Central Norway.

The Grieg Seafood Group had a net cash flow of NOK -75.6m from operations in the fourth quarter of 2013. Increase in working capital amounts to NOK 188.1m, most of which relates to increase in biomass at sea. Investments in fixed assets in the fourth quarter alone amounted to NOK 58m. Net interest-bearing debt totalled NOK 1 445m at year-end 2013, a reduction of NOK 85m compared with the year-earlier figure. At the same time the equity ratio was 43%, compared with 37% at the end of 2012. 

The board of Grieg Seafood will decide on a possible dividend proposal when approving the final accounts for 2013.

The Group's EBIT before fair value adjustments of biomass and one-off items was 6.95 NOK/kg (-2.43 NOK/kg). Rogaland achieved an EBIT of 6.98 NOK/kg (2.59 NOK/kg), while Finnmark had an EBIT of 7.98 NOK/kg (-2.01 NOK/kg). The EBIT before one-off costs in Shetland reached 7.98 NOK/kg (-3.58 NOK/kg), while in Canada the EBIT before one-off costs 1.02 NOK/kg in 2013 compared to -6.18 NOK/kg in 2012. The Norwegian sales company, Ocean Quality AS, reached an EBIT of NOK 2.8m (0.4%) compared to NOK 4.8 (0.8%) in the same period in 2012.

Outlook
The strong market that characterised the fourth quarter has continued into 2014, with record-high salmon prices, and the market is expected to remain strong in the period ahead. Supply side growth is likely to be especially low in the first half of 2014. Even though volumes are expected to be higher during part of the autumn, the expected total growth in supply in 2014 is still lower than the historical growth in demand. Given the current good forecasts for 2015, the prospects for market balance in the current year are also good.

Grieg Seafood expects a harvested volume of 69,000 tons in 2014, in accordance with current production plans. This is an increase of 10,931 tons (18.8%) from 2013. As part of this, volumes have been transferred from 2013 to 2014. However, the harvested volume has been negatively affected by the early harvesting of one site in Rogaland at the start of 2014. 

The harvested volume in BC will still be unusually low in 2014 and the underlying production is not expected to pick up until the second half of the year. This means that fixed costs per kilo will remain at an abnormally high level. The harvested volume in BC is likely to reach a level of around 15 000 tons in 2015.

The Board is pleased that the turnaround in Shetland is showing results, and further improvements are expected in the period ahead.

Grieg Seafood has decided to terminate all production of trout and Pacific salmon, and focus our business around production of Atlantic salmon in all regions.

Shetland's sales activities have been transferred to Ocean Quality, as part of the process to gather all sales activities globally in one unit. The appointment of a new COO Farming will contribute to greater capacity, focus on realising synergies and improvements across all of the Group's farming regions.

Grieg Seafood has unexploited production potential under its existing licences, in addition to the potential growth represented by new licenses which includes the potential allocation of green licences in Norway. Grieg Seafood's strategic priority in the period ahead will be to increase the production under existing licences in Norway and to complete the ongoing turnarounds in both Shetland and BC.


For further information, please contact:

- CEO Morten Vike (cell phone: +47 994 911 65)
- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

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