Lerøy Seafood Group reached a turnover NOK 2,304 million (Photo: Lerøy Seafood Group)

COMPANY OF THE WEEK: Lerøy Seafood Reports Positive Quarter In a Challenging Market

Lerøy Seafood Group, the leading exporter of seafood from Norway, has reported a turnover of NOK 2,304 million in the third quarter of 2011, an increase from NOK 2,264 million for the same period in 2010.

The Group's operating profit before fair value adjustment of biomass was NOK 206.7 million in the third quarter of 2011, compared with NOK 424.2 million in the third quarter of the previous year.

The decline in operating profit before fair value adjustment of biomass is attributed to substantially lower prices achieved for the Group's main products - salmon and salmon trout - together with higher production costs.

In the next few years higher growth in the global supply of Atlantic salmon is expected compared with the last two years

As a result of the Group's long-term industrial market strategy, the prices achieved for salmon and salmon trout will naturally deviate from the spot market prices. Realised contract prices have been higher than prevailing spot prices in the quarter under review.

The Group's share of contracts was 38 percent in the third quarter of 2011 and will, based upon the current contract situation, be around 35-40 percent for 2011 in total. Committed contract prices for the fourth quarter of 2011 are higher than prevailing spot prices.

This indicates that the Group can expect to achieve higher realised prices than current spot prices also in the fourth quarter.

As a result of considerably lower volumes and prices, the associated company Norskott Havbruk (owner of the Scotland-based Scottish Sea Farms Ltd) achieved lower net earnings in the third quarter of 2011 compared with the third quarter of 2010. Income from associated companies before fair value adjustment of biomass therefore declined from NOK 23.4 million in the third quarter of 2010 to NOK 8.0 million in the third quarter of 2011.

The Group's profit before tax and fair value adjustment of biomass in the third quarter of 2011 was NOK 190.3 million as against NOK 431.1 million in the third quarter of 2010.

Lerøy's core activities are distribution, sale and marketing of seafood, processing of seafood, production of salmon, trout and other species, as well as product development

Key Figures

• 36.0 thousand tons gutted weight of salmon and salmon trout harvested (Q3 2010: 31.0)
• Turnover NOK 2,304 million (Q3 2010: 2,264)
• EBIT/kg all inclusive NOK 5.7 (Q3 2010: 13.7)
• Profit before tax and before fair value adjustment of biomass NOK 190.3 million (Q3 2010: 431.1)
• Spot prices for whole superior salmon have seen a decrease of 32.0 percent compared with Q3 2010
• Net interest-bearing debt was NOK 1,598 million (NOK 1,032 million at 30 September 2010)
• Equity ratio 50.9 percent

Market Situation/Outlook

A higher growth in the global supply of Atlantic salmon in the next few years compared with the last two years is expected. Development in demand is good, and lower prices provide grounds for optimism as to continued positive development in demand.

Good demand together with expectations for improved productivity in the Group's production facilities, including improved biology, provides justification for the Board's positive attitude to the Group's development.

The Board of Directors currently anticipates a considerably poorer result for the Group in the fourth quarter of 2011 than was achieved in the fourth quarter of 2010.

About Lerøy Seafood Group

Lerøy Seafood Group is the leading exporter of seafood from Norway and is in business of meeting the demand for food and culinary experiences in Norway and internationally by supplying seafood products through selected distributors to producers, institutional households and consumers.

The Group's core activities are distribution, sale and marketing of seafood, processing of seafood, production of salmon, trout and other species, as well as product development.

The Group operates through subsidiaries in Norway, Sweden, France and Portugal and through a network of sales offices that ensure its presence in the most important markets. The Group's task is to satisfy the customer's requirements for cost-effective and continuous supplies of a wide range of high-quality seafood products.

Source: Lerøy Seafood Group

Margaret E.L. Stacey
Editor Companies and Products
[email protected]
www.seafood.media

Address:	Thormøhlens gate 51 B
City:	Bergen
State/ZIP:	(NO-5006)
Country:	Norway
Phone:	+47 55 21 36 50
Fax:	+47 55 21 36 32
E-Mail:	[email protected]
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