SalMar ASA

Earnings Release • Feb 15, 2017

SalMar - Results for the fourth quarter 2016

SalMar - Results for the fourth quarter 2016

SATISFACTORY RESULT DESPITE BIOLOGICAL CHALLENGES

The steady rise in the price of Atlantic salmon seen in recent periods continued

in the fourth quarter 2016, with spot prices reaching record levels. However,

earnings in the quarter were negatively affected by a high contract rate and the

challenging biological situation in Central Norway. Despite this, Operational

EBIT in the quarter came to NOK 21 per kg, up NOK 11 per kg on the corresponding

period last year.

"For the SalMar Group, results in the fourth quarter were mixed," says SalMar's

acting CEO Gustav Witzøe. "Fish Farming Northern Norway performed very well,

while the results posted by Fish Farming Central Norway were affected by the

biological situation. SalMar has implemented a number of measures to deal with

the situation, and fish welfare has been well protected throughout the quarter.

Investments in non-medicinal delousing equipment and the improved availability

of lumpfish have also strengthened the segment's preparedness and response

capacity. However, measures to deal with the lice situation are costly, and a

challenging biological situation over time has significantly affected the

segment's production costs. Nevertheless, the situation is better than it was in

the same period in 2015."

Witzøe also says the Sales and Processing operating loss is largely attributable

to the fact that 60 per cent of its volume was sold under contract at prices

well below the average spot price in the period. "In addition," he adds,

"because Norway has not implemented the EU regulations on organic farming,

Norwegian salmon producers cannot label their organically farmed fish as such

when selling it in EU markets. This is creating a challenging market situation,

with a corresponding loss of price premium. SalMar hopes a solution will quickly

be forthcoming now that both the Norwegian and Icelandic authorities have agreed

to implement the EU regulations."

Gross operating revenues totalled just under NOK 2.5 billion in the quarter, up

from approx. NOK 2.0 billion in the corresponding period in 2015. SalMar

harvested 26,500 tonnes of salmon in the quarter, 11,600 tonnes less than in the

same period the year before. Operational EBIT came to NOK 557.0 million, up from

NOK 374.3 million in the fourth quarter 2015.

Although the lice situation for fish farmers in Central Norway remains

challenging, SalMar has invested heavily in non-medicinal delousing equipment in

recent quarters. This, combined with improved access to lumpfish, has improved

the segment's preparedness and response capacity. The last portion of the

generation transferred to the sea in the spring of 2015 (S15) was harvested out

during the quarter. These fish came primarily from sites encountering biological

challenges, with correspondingly high production costs. The biological situation

for fish transferred to the sea in the autumn of 2015 is better. Costs are

therefore expected to be lower in the first quarter 2017. To optimise production

of the segment's standing biomass, SalMar has elected to push back the

harvesting of some volumes from 2016 until 2017.

The biological situation for the Fish Farming Northern Norway segment is less

demanding, and output in the fourth quarter was good. Effective operations

combined with high salmon prices have contributed to the segment's record

results. Going forward, the segment's overall costs are expected to remain

stable.

The Sales and Processing segment made an operating loss in the fourth quarter

2016, largely because 60 per cent of the volume was sold under contract at

prices well below the average spot price for the period. The biological

situation at the fish farms also has a negative impact on this segment's

operating efficiency.

Based on estimates of the standing biomass at the close of 2016, the global

supply of Atlantic salmon is expected to grow by 2 per cent in 2017. Combined

with strong consumer demand, this indicates that the salmon market will remain

tight, with the outlook for continued high salmon prices and strong earnings.

For 2017 as a whole, SalMar expects to harvest 131,000 tonnes in Norway, up from

115,600 tonnes in 2016. Norskott Havbruk (Scottish Seafarms) expects to harvest

30,000 tonnes, compared to 28,000 tonnes in 2016.

Based on the Group's results for 2016, SalMar's Board of Directors is

recommending a dividend payout of NOK 12 per share.

The complete report for the fourth quarter 2016 is attached.

For further details, please contact:

CFO Trond Tuvstein

Tel: + 47 918 53 139

Email: trond.tuvstein@salmar.no

Runar Sivertsen, Head of Investor Relations

Tel: + 47 960 97 000

Email: runar.sivertsen@salmar.no

This information is subject to the disclosure requirements stipulated in section

5-12 of the Norwegian Securities Trading Act.