Grieg Seafood — Earnings Release 2020

Aug 18, 2020

Grieg Seafood ASA: Q2 2020 results - Stable volume and cost in turbulent market

Grieg Seafood ASA: Q2 2020 results - Stable volume and cost in turbulent market

Highlights

* Harvest volume of 23 910 tonnes, up 10% from Q2 2019 (21 802 tonnes)

* Earnings impacted by low market prices due to effects of Covid-19, amounting

to NOK 211 million vs Q2 2019

* Margin in Finnmark still impacted by winter ulcers

* Continued cost reductions in BC. Shetland somewhat impacted by lower

survival rate

* Group total of 20 sites ASC certified at quarter end, 36% of net production

* Successful completion of senior unsecured Green Bond issue of NOK 1 billion

* Construction of RAS facility and approval of licenses in Newfoundland

according to plan

* First members of the new sales organization appointed

* New guidance of 95 000 tonnes (100 000) in 2020 due to reduced growth in

Finnmark caused by lower than average seawater temperatures in addition to

market adjustments

Covid-19

The Covid-19 pandemic continued to impact the market situation also in the

second quarter. The escalation of the pandemic and measurements taken by

governments around the world to address the situation, have caused uncertainties

for producers, processors and end consumers. Nevertheless, despite the

challenging circumstances, demand for Atlantic salmon remained strong and Grieg

Seafood has been able to maintain efficient operations throughout the quarter.

Financial results

The Grieg Seafood Group harvested 23 910 tonnes GWT in Q2 2019, compared to

21 802 tonnes in Q2 2019.

Average realized price during the quarter was down compared to the second

quarter last year, mainly driven by lower market price impacted by market

turbulence related to Covid-19, in addition to lower prices achieved on

downgraded volumes in Finnmark. The reduction is partly offset by the 10% higher

harvest volume.

Total revenues during the quarter amounted to NOK 1.4 billion, down from NOK

1.5 billion in the second quarter of 2019.

Farming cost during the quarter increased from the same quarter last year. The

increase is mainly related to negative currency effects and increased cost per

kilo in Rogaland due to lower harvest volume.

Group's EBIT before fair value adjustment of biological assets ended at NOK 3

million during the quarter, down from NOK 302 million in the second quarter of

2019, where reduced prices and increased costs amounts to some NOK 211 million

and NOK 95 million of the decrease respectively.

Commenting on the Group's performance, CEO Andreas Kvame, said:

"The second quarter of 2020 was impacted by the continuous effect of the Covid-

19 pandemic. Thanks to our fantastic employees, I am proud to state that Grieg

Seafood has been able to maintain efficient operations throughout the quarter.

Employee safety and wellbeing is our priority, and we have kept in place all HSE

measures implemented at the beginning of the pandemic to reduce the risk of

Covid-19 outbreaks as much as possible.

We have particularly seen disruptions in the US market due to Covid-19, which is

mainly supplied by our British Columbia region. However, lower prices in the US

have been matched by improved biology, lower costs and increased competitiveness

in BC.

In Finnmark and Rogaland, the underlying biology remains strong. However, due to

low seawater temperatures during the winter and spring, we have experienced

reduced growth in Finnmark. Based on this external factor in combination with

expectations of low market prices in the short term, we have decided to optimize

production, utilize our existing licenses and postpone some harvest to 2021.

In Shetland, cost has remained high during the quarter, due to few synergies

between our operations on the Shetland isles and Skye in Scotland.

In our new Newfoundland region, the first eggs were put into the hatchery in

July, according to schedule. First harvest is expected in 2022/23.

While we are in the middle of a pandemic, we have not set our commitments to

sustainability on hold. Reducing our environmental footprint and improving fish

welfare are key factors to achieve our financial and operational targets. Over

the last months, we received ASC certification on two new sites, and we

strengthened our greenhouse gas reduction target. With Brazilian soy in our

feed, we are also concerned about the increasing deforestation rates in the

country. We are committed to use our market power to push towards an end to soy-

related deforestation where we source soy, the Brazilian Cerrado biome."

Strategic priorities

Improving sustainability is key to increasing our profits. By focusing on

reducing our environmental impact and improving fish welfare, we aim to increase

harvest rates and reduce production cost.

We aim to provide our shareholders with a competitive return on capital invested

and have set a ROCE target of 12%. Our investments reflect our growth strategy:

digitalization, post-smolt, biosecurity and fish welfare, including continuous

evaluation of expansion opportunities

Digitalization in salmon farming includes applying advanced sensors, big data,

artificial intelligence and automation, to support better farming decisions.

Post smolt improves biosecurity, survival rates and allows for a more efficient

farming cycle, while expansion opportunities will allow for improved

flexibility, biosecurity and fish welfare.

With a strict focus on biosecurity and fish welfare, Grieg Seafood aims to

achieve strong biological performance through the implementation of a broad

range of technological and operational initiatives, including large smolt, GSF

Precision Farming and other preventive operational measures aimed at combating

sea lice and algae. The group targets an average survival rate in seawater above

93%.

Outlook

In the short term, operational efficiency and biosecurity are the top priorities

in Grieg Seafood.

The salmon market will continue to be impacted by the Covid-19 situation adding

uncertainty and putting pressure on prices in the short term. However, Grieg

Seafood see limited impact on operations due to the Covid-19 situation.

The contract share for the Norwegian operations will increase in the second half

of 2020 with prices well above current spot prices. Estimated contract shares

for the third quarter is 63 per cent and 5 per cent for Norway and the UK,

respectively, with full year estimates of 32 per cent and 8 per cent.

In 2019, a total of 25.2 million smolt with an average weight of 190 grams was

stocked to sea, with the aim of harvesting 100 000 tonnes in 2020. However,

during winter and spring low seawater temperatures in Finnmark have impacted

growth.

Due to the limited growth in combination with expected sluggish market prices in

the short term, Grieg Seafood has decided to postpone some harvest to 2021,

reducing expected harvest volume to 95 000 tonnes for 2020.

In the third quarter, expected harvest volume is 21 400 tonnes, with the

following area distribution:

* Rogaland:                  5 300 tonnes

* Finnmark:                  4 500 tonnes

* Shetland:                   5 600 tonnes

* BC:                               6 000 tonnes

Grieg Seafood maintains the long-term harvest volume target of 150 000 by 2025.

Results presentation

CEO Andreas Kvame and CFO Atle Harald Sandtorv will present the results by

webcast today, Tuesday 18 August at 08:00 CEST.

The presentation and subsequent Q&A will be held in Norwegian and can be

followed at www.griegseafood.com or at

https://channel.royalcast.com/webcast/hegnarmedia/20200818_1/

An English transcript of the presentation will be made available at

www.griegseafood.com within a few days after the presentation.

For further enquiries, please contact:

Andreas Kvame, CEO

Cell phone: +47 907 71 441

Atle Harald Sandtorv, CFO

Cell phone +47 908 45 252

About Grieg Seafood

Grieg Seafood ASA is one of the world's leading salmon farmers, targeting

95 000 tonnes of harvest (GWT) in 2020. Our farms are in Finnmark and Rogaland

in Norway, British Columbia and Newfoundland in Canada, and Shetland in the UK.

Our headquarter is located in Bergen, Norway. Grieg Seafood ASA was listed at

the Oslo Stock Exchange in June 2007. More than 800 people are employed by the

Company globally.

Sustainable farming practices are the foundation of Grieg Seafood's operations.

The lowest possible environmental impact and the best possible fish welfare

drive economic profitability. Towards 2025, we aim to harvest 150 000 tonnes, to

achieve cost leadership in each region and to evolve from a pure salmon supplier

to an innovation partner for selected customers.

To learn more, please visit www.griegseafood.com.

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.