Leroy Seafood Group — Earnings Release 2014

Aug 21, 2014

Lerøy Seafood Group ASA: Q2 2014 Results

Lerøy Seafood Group ASA: Q2 2014 Results

Lerøy Seafood Group ASA:

Best second quarter and a record high first half for the Group

Lerøy Seafood Group reported operating profit before biomass value adjustment of

NOK 500 million in Q2 2014. This represents an operating profit per kg of NOK

12.2. By comparison, the operating profit before biomass value adjustment in Q2

2013 was NOK 462 million.

- We are delighted to report yet another strong quarter and half yearly result

for the Group. In total, the first half of 2014 will go down in the history

books with Lerøy Seafood Group's highest turnover, highest operating profit and

highest result before tax and biomass adjustment ever reported in a first half

year period, says CEO Henning Beltestad.

In Q2 2014, Lerøy Seafood Group reported turnover of NOK 3,177 million, compared

to NOK 2,513 million in the same period in 2013.  When compared with Q2 2013,

the Group increased its volume of harvested salmon and trout by 21%. This growth

in volume is the most significant factor behind the increase in turnover and

operating profit.

The Group has reported turnover of NOK 6,356 million for the first half of the

year, compared with NOK 4,845 million for the same period of 2013. Operating

profit before value adjustment for biomass for the first half of 2014 was NOK

1,051 million compared with NOK 832 million for the first half of 2013. The

profit figure before tax and before value adjustment for biomass for the first

half of 2014 was NOK 1,129 million compared with NOK 818 million for the first

half of 2013.

As previously notified, Villa Organic AS underwent a demerger in the summer of

2014, and Lerøy Seafood Group's shareholding in this company will be reported as

a wholly-owned Group holding from the second half of 2014.

Net interest-bearing debt at 30 June 2014 was NOK 2,050 million and the equity

ratio was 56%.

FARMING SEGMENT - A STRONG QUARTER

With the demerger of Villa Organic, Lerøy Aurora now has eight new licences at

its disposal. This will undoubtedly facilitate substantial growth for Lerøy

Aurora in 2015. Moreover, Lerøy Vest has been nominated for the acquisition of

one new licence during the governmental green licence allocation round.

Farming reported an increase in operating profit before biomass adjustment, from

NOK 400 million in Q2 2013 to NOK 421 million in Q2 2014. The increase in volume

is the most important factor behind the higher profit figure. Farming harvested

40,944 gwt of salmon and trout in the second quarter of 2014, up 21% from the

same quarter last year. EBIT/kg fell from NOK 11.9 in Q2 2013 to NOK 10.3 in Q2

The prices realised by Farming were substantially lower in Q2 2014 than in Q1 of

the same year, although the decline in prices realised is significantly smaller

than the decline in spot prices for the same period.

Lerøy Aurora AS reported an operational EBIT per kg of NOK 15.47 in Q2 2014. The

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

are NOK 9.9 and NOK 9.2 respectively.

- The high temperatures enjoyed during the spring and summer have allowed for

increased production, but have also presented several challenges. We will

harvest a significantly higher volume in 2014 than in 2013. At the same time, we

expect costs for the farming companies to be somewhat higher in the second half

of 2014 than in the first half, says CEO Henning Beltestad.

VAP SEGMENT - POSITIVE DEVELOPMENT

Lerøy Seafood Group has made substantial investments in increasing capacity for

high-quality processing of salmon and trout in recent years. The Group is now

working towards gradually filling up this new capacity. This, together with

product prices which to higher degree reflect the raw material spot prices are

the most important factors behind the increase in turnover. Turnover for this

segment is up 34% from NOK 294 million in Q2 2013 to NOK 395 million in Q2

2014. The operating margin for the same period saw a slight decline from 5.9% in

Q2 2013 to 5.3% in Q2 2014.

- The underlying development in the VAP segment is very good. The Group has good

progress in gradually exploiting the full potential of the investments made in

recent years, explains CEO Henning Beltestad.

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

The Sales & Distribution segment reported its highest turnover to date in a

second quarter. Turnover for this segment is up from NOK 2,371 million in Q2

2013 to NOK 2,999 million in Q2 2014. The operating margin in Q2 2014 was 2.1%,

marginally down from 2.3% in Q2 2013. However, the increase in turnover for this

segment generated a higher operating profit, up from NOK 54 million in Q2 2013

to NOK 64 million in Q2 2014.

- The margin reported by the segment remains lower than the target set by the

Group. However, in light of the start-up costs required for several fish-cut

facilities during the quarter, the Group is satisfied with developments and, not

least, the potential within this segment for the future, says Beltestad.

Market and outlook

Projections for the global supply of Atlantic salmon and trout are for limited

growth in the foreseeable future. At the same time, Russia - one of the largest

global markets for Atlantic salmon and trout - laid down a ban on import of

among others these two species of fish on 7 August of this year.

- Our contract portfolio and substantial industrial downstream activities have

afforded us a level of protection against the short-term outcome of the ban

introduced by Russia. At the same time, however, this represents a significant

challenge that will influence earnings not only for Lerøy but the industry as a

whole in the near future. We call on the politicians to adapt framework

conditions in order to minimise the most acute consequences of these trade

barriers, comments CEO Henning Beltestad.

The Group has currently estimated a total harvest volume of 163,000 gwt for

2014. The corresponding estimate including the share of volume in associated

companies 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 163,000 gwt. When

taking into account the volume from associated companies, the estimated

slaughter volume is 181,500 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#1850106]