Grieg Seafood — Earnings Release 2014

May 15, 2014

Grieg Seafood ASA Q1 2014: Strong market and high salmon prices

Grieg Seafood ASA Q1 2014: Strong market and high salmon prices

Highlights - first quarter 2014

* First quarter results driven by strong salmon prices.

* EBIT before fair value adjustment of biomass was NOK 140m against NOK 51m in

* Seawater production up on last year due to higher water temperatures and

improved fish health status.

* Substantially lower costs in Scotland and some improvement in Finnmark.

* As previously reported, the first quarter results include an extraordinary

charge related to write-down of smolt in Canada and storm damage in the

south of Norway.  This affects the results in the quarter negatively with

NOK 26m.

* Grieg Seafood Finnmark nominated to be awarded four new green licences

(April 2014).

Results first quarter 2014

The Group's EBIT before fair value adjustment of biomass was NOK 140.1m, against

NOK 51.1m in 2013. The harvested volume in this year's first quarter was 13

095 tons, marginally down on the corresponding period last year and slightly

more than previously guided.

The improved performance is due to higher salmon prices and improved operations.

As reported in connection with presentation of the accounts for the fourth

quarter of 2013, this year's first quarter accounts include a write-down of

smolt in Canada, while the results for Rogaland were also exceptionally weak due

to storm damage affecting one of the sites. The total negative effect of these

incidents amounts to NOK 26m.

Production costs in the first quarter were substantially lower in Scotland and

slightly lower in Finnmark compared with the same period last year. Underlying

production costs in both Rogaland and Canada were higher than the corresponding

figures in 2013, also after adjusting for the negative events in this quarter.

In general, the increasing underlying costs in salmon farming are due to higher

feed costs and higher health, treatment and contingency costs.

The winter in Norway this year was characterised by unusually high seawater

temperatures and as a result production was notably higher than in the same

period last year. However, the unusual weather conditions in the first quarter

were both challenging and negative for Rogaland and Scotland, with many storms

and consequently lost feeding days, despite the higher seawater temperatures.

The global supply of salmon increased by slightly more than 4% in the first

quarter, which was somewhat more than expected. At the same time demand has been

good, resulting in record high prices.

The first quarter profit before tax and fair value adjustment of biomass was NOK

118.8m, against NOK 24.6m in the same period last year. The profit before tax

incl. fair value adjustment of biomass was NOK 72.1m MNOK. The cash flow from

operations increased from NOK 107m in the first quarter of 2013 to NOK 130m in

the first three months of 2014.  At the end of the first quarter the Group's

equity ratio stood at 44% while net interest-bearing debt amounted to NOK

1 380m.

Group operating income in the first quarter totalled NOK 623.6m, an increase of

20.6% on the same period last year. Prices were 27.2% higher, while volumes were

4.5% down on the first quarter of 2013.

For Grieg Seafood, the price increase has been weaker than the average increase

in spot market prices. In addition to the somewhat negative effect of contracts,

this was also brought about by the negative effect of emergency harvesting in

Rogaland, weaker price realisation in Scotland and a lower superior quality

share in Canada.

At the AGM to be held on 11 June 2014 the Board of Grieg Seafood will ask the

General Annual Meeting for authorisation to set the dividend for 2013.

The Group's EBIT before fair value adjustments of biomass and including

previously reported extraordinary charges relating to the incidents in Rogaland

and Canada, was NOK 10.70 per kg (NOK 3.72 per kg). Rogaland achieved an

operating profit of NOK 9.52 per kg (NOK 8.05 per kg). The result in Rogaland is

negatively affected by storm damage on one site amounting to NOK 7.95 per kg.

Finnmark achieved an operating profit of NOK 15.94 per kg (NOK 4.93 per kg). The

operating profit in Scotland reached NOK 10.08 per kg (loss of NOK 2.93 per kg),

while Canada reached a loss of NOK 5.44 per kg in Q1 2014 against a profit of

NOK 2.57 per kg in Q1 2013. The result in Canada was negatively affected by

smolt write-downs amounting to NOK 8.6 per kg. Ocean Quality achieved an

operating profit of NOK 6.2m (0.8%) against NOK 8.7m (1.5%) in the same period

in 2013.

Outlook

The market in the first quarter was strong with record high prices, despite the

global supply being slightly higher than had been expected. This indicates that

the global demand for salmon remains strong.

The winter of 2014 was unusually mild, with higher seawater temperatures and

better growth than normal. This will result in some increase in expected

harvested volumes, and we expect a higher increase in harvest volumes,

especially in Norway for the rest of the year, than in the first quarter.  It is

likely that this will lead to some decline in salmon prices compared with the

record high prices in the first three months of the year. Nevertheless, the

increase in supply during the rest of the year is not expected to be high

compared with the historic long-term growth in demand. Due to the low overall

level of unutilised production capacity there is less scope for strong supply-

side growth now than previously, which means that the market prospects are again

good for 2015.

When fully utilised, the new green licences in Norway will mean a 4-5% increase

in salmon production in Norway. This is not expected to have large effect until

Grieg Seafood expects to harvest 69 000 tons in 2014. This is as previously

guided, but with a slightly different regional distribution. The harvest volume

in the second quarter is expected to be 17 500 tons, compared with 14 398 tons

in the same period last year, with Scotland accounting for most of the increase.

Cost levels in Rogaland were unusually high in the first quarter and are

expected to fall in the period ahead. Costs in BC are also expected to gradually

normalise as the underlying production increases.  The required smolt stocking

to re-establish a harvest volume in the order of 15 000 tons in BC was completed

in May 2014.

The Group's four applications for green licences in Finnmark have achieved

positive nomination, giving Grieg Seafood further organic growth potential in

the period ahead.

For further information, please contact:

- CEO Morten Vike (cell phone: +47 994 911 65)

- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

For more information, please see www.griegseafood.com.

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

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