SalMar ASA

Earnings Release • Nov 16, 2016

SalMar ASA - Results for the third quarter 2016

SalMar ASA - Results for the third quarter 2016

SATISFACTORY RESULT DRIVEN BY STRONG PRICES

A persistently tight salmon market contributed to strong salmon prices in the

third quarter 2016 as well. The high prices have resulted in further revenue

growth and continued good results for SalMar. Overall, the Group achieved an

operating profit of NOK 19.46 per kg harvested fish in the third quarter this

year, up more than NOK 10 per kg from same period last year.

"The third quarter was operationally challenging for the SalMar Group," says CEO

Trond Williksen. "Biological challenges, particularly those associated with lice

management, have a negative impact on cost levels and operational efficiency.

Over time, SalMar has implemented a number of measures to deal with the

biological challenges. These include changes in operational plans, greater use

of cleaner fish, investments in non medicamental delousing equipment and

increased well-boat capacity. Taken together, this has helped ensure that the

challenging biological situation has been managed satisfactorily through the

quarter. On the other hand, a tight salmon market contributed to continued high

salmon prices and strong earnings in the quarter. The prospect of limited supply

leads to expectations of continued good margins in coming quarters."

SalMar generated gross operating revenues of NOK 2.26 billion in the quarter, up

from NOK 1.88 billion in the corresponding period last year. The Group harvested

a total of 29,600 tonnes of salmon, compared with 35,400 tonnes the same period

last year. Operational EBIT totalled NOK 576.3 million, up from NOK 333.7

million in the third quarter 2015. In the second quarter this year, SalMar's

Operational EBIT came to NOK 731.8 million, on the basis of 32,200 tonnes of

salmon harvested.

The salmon lice situation for the Fish Farming Central Norway segment remains

challenging. Profitability is affected by direct costs associated with

delousing, as well as indirect costs deriving from increased mortality and

reduced growth. Nevertheless, the challenging biological situation has been

handled well during the period, which contributed to satisfactory production

results in a demanding region. In the third quarter, moreover, SalMar chose to

bring forward the harvesting of some of the planned volume, out of consideration

for fish welfare. This has resulted in a slightly lower average harvested weight

during the period.

The biological situation for the Fish Farming Northern Norway segment is

satisfactory. Although SalMar has experienced somewhat higher lice numbers in

southern parts of Troms County, the biological situation in the rest of the

region is good. SalMar has strengthened its capacity to deal with any increased

lice numbers, partly through investments in non medicamental delousing equipment

and increased well-boat capacity. Fish farming in Northern Norway in general is

governed by the region's current zoning structure. In the third quarter this

resulted in an unfavourable distribution of the harvested volume in relation to

price developments in the period, as well as to some premature harvesting to

comply with the limits for maximum allowable biomass (MAB) at certain sites.

SalMar has reduced its harvesting estimate for 2016 as a whole by 8,000 tonnes.

4,000 tonnes can be attributed to reduced fish growth and increased mortality as

a result of the biological situation in Central Norway. The remaining 4,000

tonnes is due to the decision to postpone the harvesting of some volumes from

2016 to 2017 as part of the Group's efforts to optimise production in Northern

Norway. The new estimate for 2016 as a whole is therefore 118,000 tonnes.

The Sales and Processing business's financial performance is still affected by

the challenging biological situation experienced in the fish farming segments.

In addition, the business's results were negatively affected by the fact that

49 per cent of the harvested volume was sold on contract at prices well below

the average spot price for the period. As a result of the reduction in the

overall volume to be harvested, the relative share sold on contract will

increase. For the fourth quarter 2016, the contract rate is expected to be

around 55 per cent. However, contract prices for the fourth quarter are higher

than the average contract prices for the first nine months of the year. For

2017 as a whole, the contract rate is just under 30 per cent.

Based on estimates of the standing biomass, the overall supply of Atlantic

salmon is expected to fall by just over 150,000 tonnes in 2016, a decrease of 7

per cent. For 2017 as a whole, the total supply of Atlantic salmon is expected

to increase by around 3 per cent, compared with 2016 as a whole. This indicates

that the salmon market will remain tight, with the prospect of good prices in

2017 as well. SalMar therefore expects strong results in the coming quarters.

SalMar expects to harvest around 128,000 tonnes in Norway in 2017 as a whole.

Norskott Havbruk (Scottish Seafarms) is expected to harvest approx. 26,000

tonnes in 2016 and around 30,000 tonnes in 2017.

For further information, please contact:

CEO Trond Williksen

Tel: + 47 916 30 173

Email: trond.williksen@salmar.no

CFO Trond Tuvstein

Tel: + 47 918 53 139

Email: trond.tuvstein@salmar.no

See also www.salmar.no for more information about the company.

This information is subject to the disclosure requirements stipulated in section

5-12 of the Norwegian Securities Trading Act.