Leroy Seafood Group — Earnings Release 2014

Nov 12, 2014

Lerøy Seafood Group ASA: Q3 2014 Results

Lerøy Seafood Group ASA: Q3 2014 Results

A CHALLENGING QUARTER

In Q3 2014, Lerøy Seafood Group reported operating profit before fair value

adjustment of biomass of NOK 303 million in Q3 2014, compared with NOK 370

million in Q3 2013. As previously notified, the Group's share of Villa Organic

AS is reported as a wholly-owned interest from the start of Q3. The business

combination generated a gain of NOK 75 million. The result represents an

operating profit before biomass value adjustment of NOK 7.3 per kg, compared to

NOK 10.1 in Q3 2013.

* The third quarter has been challenging. Due to higher output costs and lower

prices realised, operating profit before biomass value adjustment for Lerøy

Seafood Group was down in Q3 2014 compared to Q2 2014, states CEO Henning

Beltestad. He continues;  - however, in total for the three quarters of

2014, Lerøy Seafood Group can record the highest turnover, highest operating

profit and highest profit figure before tax and biomass adjustment ever to

be reported at the end of Q3 in the Group's history.

In Q3 2014, Lerøy Seafood Group reported turnover of NOK 2,962 million, compared

with NOK 2,690 million in the same period in 2013. When compared with Q3 2013,

the Group increased its volume of harvested salmon and trout by 13%.

The Group has reported turnover of NOK 9,318 million by the end of the third

quarter, compared with NOK 7,535 million for the same period in 2013. Operating

profit before value adjustment of biomass as of Q3 2014 was NOK 1,353 million

compared with NOK 1,201 million for the same period in 2013. The profit figure

before tax and before value adjustment of biomass as of the third quarter of

2014 was NOK 1,423 million compared with NOK 1,181 million for the same period

in 2013.

Net interest-bearing debt at 30 September 2014 was NOK 2,207 million and the

equity ratio was 53%.

FARMING - A CHALLENGING QUARTER

The business combination with our share of Villa Organic has now been completed.

As a result, Lerøy Aurora has right of disposal to eight new licences with

effect from July 2014. In addition, Lerøy Aurora was awarded with a

demonstration facility licence, and now has a total of 26 licences. Moreover,

Lerøy Vest has been nominated for the acquisition of one new licence during the

governmental green licence allocation rounds.

Operating profit before biomass adjustment reported by the Farming segment fell

from NOK 310 million in Q3 2013 to NOK 154 million in Q3 2014. The Farming

segment harvested a total 41,499 GWT of salmon and trout in the third quarter,

up 13% from the same period in 2013. EBIT/kg fell from NOK 8.5 per kg in Q3

2013 to NOK 3.7 per kg in Q3 2014. The prices realised by the Farming segment

were considerably lower in Q3 2014 when compared with Q2 2014, although

contractual sales made a positive contribution in the quarter.

Lerøy Aurora reported an operational EBIT per kg of NOK 7.9 in Q3 2014. The

EBIT/kg figures reported by Lerøy Midt and Lerøy Sjøtroll for the same quarter

are NOK 5.7 and NOK 0.3 respectively.

* The increase in released from stock costs is partly attributed to the

unusually warm summer, and the costs per kg produced were higher than in Q1

and Q2 this year. In addition to the seasonal increase in supply, the ban on

imports to Russia only served to amplify pressure on prices for salmon and

trout, explains CEO Henning Beltestad.

* The ban on imports has had a particularly negative impact on trout, as trout

sales to Russia have historically represented about 50% of total sales for

trout producers in Norway. Lerøy Seafood Group is the largest producer of

trout in Norway. The Group is working hard to find alternative markets and

we are already seeing signs of success from our efforts, adds Henning

Beltestad.

VALUE ADDED PROCESSING/VAP - POSITIVE DEVELOPMENT

In recent years, Lerøy Seafood Group has invested significantly in increasing

its capacity for high value processed salmon and trout. The turnover for this

segment is up 34% from NOK 305 million in Q3 2013 to NOK 410 million in Q3

2014. The operating margin is up from 5.4% in Q3 2013 to 6.8% in Q3 2014.

* The Group is satisfied with the underlying developments achieved by the

Value Added Processing segment. We are confident that the segment's

unexploited capacity provides the potential for sustained growth, confirms

CEO Henning Beltestad.

SALES & DISTRIBUTION - POSITIVE DEVELOPMENT BUT SOME START-UP COSTS

The Sales & Distribution segment reported an increase in turnover from NOK

2,553 million in Q3 2013 to NOK 2,820 million in Q3 2014, undoubtedly the

highest turnover ever achieved in a third quarter. The operating margin in Q3

2014 was 2.0%, similar to the margin reported in Q3 2013. Operating profit was

up from NOK 52 million in Q3 2013 to NOK 56 million in Q3 2014.

* The Sales & Distribution segment reported a record high third quarter

turnover. We believe there is substantial potential for an increase in

activities and future earnings in this part of the value chain, comments

Henning Beltestad.

MARKET SITUATION AND OUTLOOK

The ban on imports set by Russia on 7 August of this year represents a

significant, short-term challenge for the Norwegian seafood industry, as it does

for the industry in Russia. The Group is working hard to increase sales to

alternative markets, but unfortunately there was little we could do to prevent

the import ban from having a negative impact on the prices realised by the Group

in the third quarter.

* We currently expect the market situation to gradually return to normal, due

to an underlying strong growth in demand, successful marketing initiatives,

but also as a result of a change in the global trade flows for salmon and

trout. Demand for high-quality seafood is high, and clear trends can be

identified that substantiate increased demand for fresh products, confirms

CEO Henning Beltestad.

The Group has currently estimated a total harvest volume of 166,000 GWT for

2015. The corresponding estimate including the share of volume in associates is

181,500 GWT.

Questions and comments may be addressed to the company's CEO, Henning Beltestad,

or to the CFO, Sjur S. Malm.

Lerøy Seafood Group ASA

Lerøy Seafood Group is the second largest producer of salmon and trout in the

world. The estimated volume for slaughter in Norway in 2014 is 159,000 GWT. When

taking into account the volume from associates, the estimated slaughter volume

is 178,500 GWT. Lerøy Seafood Group sells seafood to more than 70 markets

worldwide, and has more than 2,000 employees. The Group's headquarters are

located in Bergen. Lerøy Seafood Group is listed on the Oslo Stock Exchange,

with ticker LSG. Visit us at www.lsg.no for more detailed information.

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1870522]