Highlights - Second Quarter and First Half 2014

• EBIT before fair value adjustment of biomass was NOK 123.8m in the second quarter (NOK 133.7m in 2013).
• EBIT before fair value adjustment of biomass was NOK 263.9m in the first half-year (NOK 184.8m in 2013).
• Underlying reduction in cost levels in both Scotland and Canada, and stable development in Norway.
• Generally good seawater production in all regions in second quarter. Challenging environmental and health conditions in Rogaland and Canada in July.
• Weak price realization in second quarter, negatively affected by a harvesting profile with a high proportion of the harvest taking place late in the quarter (Norway and Scotland) and Pacific salmon in Canada.
• The market remains firm with demand at a good level.
• Refinancing completed and strengthened financial position. Free liquidity increases by NOK 500m.
• Harvested volume of 18 950 tons in the second quarter (14 397 tons), an increase of 32% for the Group.

Results second quarter 2014
The Group's EBIT before fair value adjustment of biomass was NOK 123.8m, against NOK 133.7m in 2013. The harvested volume in this year's first quarter was 18 950 tons, an increase of 23% on the same period last year, and somewhat above previous guiding.

The decline in profits compared with the corresponding period last year was largely due to lower realised prices.  This applies particularly to Scotland and Canada where the average realised prices were NOK 7 and NOK 6 per kilo lower, respectively, than in the same period last year. A high proportion of harvesting late in the second quarter and weak prices realised in the UK, following the start of our joint sales organisation, were important causes of this development. Production costs in Norway are stable, but the underlying cost level is lower in both Canada and Scotland. This applies especially to Scotland where costs have been substantially down on last year's corresponding figures.  

Seawater production was good throughout the second quarter, especially in Finnmark and Scotland. Temperatures were abnormally high in July and challenging environmental and health conditions in Rogaland and Canada resulted in weak production in these two regions at the start of the third quarter.

Global supply of salmon increased by close to 14% in the second quarter. The good level of demand for salmon has been maintained, but prices in the second quarter were somewhat down on the first quarter, reflecting a higher global supply growth.

Group operating income in the second quarter totalled NOK 750.5m, an increase of 19.6% on the same period last year, while the figure for the first six months of the year was NOK 1 374.2m, compared with NOK 1 144.6m in 2013. Volumes were 32% higher, while prices were 8% down compared with the second quarter of 2013.

The second quarter profit before tax and fair value adjustment of biomass was NOK 112.4m, against NOK 118.4m in the same period last year. The half-year profit before tax and fair value adjustment of biomass was NOK 231.2m, against NOK 143.1m in the first half of 2013. The Grieg Seafood Group had a net cash flow from operations totalling NOK 120.1m in the second quarter of 2014, while the figure for the half-year was NOK 249.8m. At the end of the second quarter the Group's equity ratio stood at 44% while net interest-bearing debt amounted to NOK 1 308m.

In June this year, the Group's credit facilities were refinanced through a bank syndicate comprising Nordea and Danske Bank. This refinancing substantially increases Grieg Seafood's financial flexibility and provides funding for the Group's growth plans.

The Group's EBIT before fair value adjustments of biomass was NOK 6.5 per kg (NOK 9.3 per kg). Rogaland achieved an operating profit of NOK 10.2 per kg (NOK 10.2 per kg). Finnmark achieved an operating profit of NOK 9.7 per kg (NOK 13.1 per kg). The operating profit in Scotland reached NOK 2.2 per kg (loss of NOK 5.7 per kg), while Canada reached a loss of NOK 5.1 per kg in Q2 2014 against a profit of NOK 6.0 per kg in Q2 2013. Ocean Quality achieved an operating profit of NOK 9.9m (0.9%) against NOK 4.0m (0.5%) in the same period in 2013. The result of Ocean Quality is good in Norway, but weak (negative) in the UK in the first operational quarter.

Outlook
In August 2014 Russia imposed a 1-year import ban which also applied to salmon and trout from Norway. The import ban in Russia is expected to lead to a temporary increase in the supply of salmon to other salmon markets, and is therefore likely to temporarily impact salmon prices negatively. Over a certain period of time the pattern of trade can be expected to change so that the countries which are still able to export salmon to Russia will increase their export to Russia, with a corresponding reduction in their exports to other markets. Combined with the underlying strong growth in global demand for salmon, this is likely to gradually bring the global salmon market back into balance.

Following a mild winter with abnormally good growth conditions, production normalised in the second quarter and production growth has slowed down. There have been indication of declining feeding levels and production in Norway in the summer of 2014, and supply-side growth is expected to slow down towards the end of the year. For 2014 as a whole, the increase in global supply is expected to be 7%, which is not more than the long-term increase in global demand. It is expected that supply-side growth will decline in the second half of 2014, with only a marginal increase in global supply in 2015. 

Grieg Seafood expects to harvest 67 500 tons in 2014, 1 500 tons less than the previous guiding. The reduction relates mainly to Rogaland and to some extent Canada, while there is an increase in both Scotland and Finnmark. In the third quarter the harvested volume is expected to total 15 600 tons, compared with 13 953 tons in the same period last year. 

The third quarter accounts will include write-downs in the level of NOK 24m in Rogaland and NOK 4.5m in Canada due to an extraordinary level of mortalities at some sites in these regions at the start of the third quarter, as described previously.

The turnaround in Scotland has resulted in considerable operational improvements and further performance-related progress is expected in Scotland in the period ahead. Steps designed to secure the turnaround in Canada have been taken and measures are now in place to re-establish a harvest volume in the order of 15 000 tons in Canada. There will continue to be full focus on realisation of the Group's organic growth potential. Final allocation of the 4 new green licences in Finnmark will further strengthen Grieg Seafood's organic growth potential.

For further information, please contact:
- CEO Morten Vike (cell phone: +47 994 911 65)
- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

For more information, please see www.griegseafood.com 

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.