Highlights - Fourth Quarter 2015

• EBIT of MNOK 43 for Grieg Seafood (GSF) in Q4 2015, of which Norway accounts for MNOK 96 (EBIT of 10.6 per kg).
• A strong market with rising prices towards the end of the period.
• Stable production in Finnmark and BC. Slightly weaker in Rogaland.
• Challenges presented by algae and sea lice again resulted in a high level of mortality in Q4 and weak production in Shetland. The production cycle in this region is being changed from 24 to 18 months in order to reduce the biological risk.
• The Group's harvested volume in Q4 was 15 279 tons gutted weight. The corresponding figure for 2015 as a whole was 65 398 tons.
• The expected volume for 2016 continues to be 70 000 tons.
• A bond loan of MNOK 400 was refinanced by bank debt in Q4.

Fourth Quarter Results 2015

EBIT for the Group in Q4 before fair value adjustment of biomass was MNOK 43, against MNOK 130 in 2014. The harvested volume in Q4 2015 was 15 279 tons, against 15 941 tons in the same period last year. 

Before taxes and fair value adjustment of biomass, the accounts for Q4 show a profit MNOK 5.5, compared with MNOK 132.3 in the fourth quarter of 2014.

Group sales revenues in Q4 totalled MNOK 1 189, an increase of 14% on the corresponding period in 2014. Volumes were 4% down.

The salmon market is strong and prices increased throughout Q4, but the American market was again weak. The UK market remains under pressure due to the strong GBP. GSF had few fixed price contracts in Q4 2015.

The fourth quarter accounts for GSF reflect very high costs in Shetland due to high mortality and the unfavourable GBP. In Norway, cost levels in Q4 showed only small changes compared with the preceding quarter, while costs in BC were lower.  

Measures to boost production and cut costs

It is an aim to bring GSF's cost level down to the industry average, or lower. We will also be aiming to increase production by 10% annually in the period 2017-2019.

GSF needs to improve operational efficiency. This involves both increasing the production per plant and per concession and reducing costs per kilo. The following steps are being taken:

By increasing the smolt size, it will be possible to shorten the production time in the sea. The quantity of smolt is also being increased.

Green licences will be implemented in Finnmark in the course of 2016. There will also be a general focus on MTB utilisation and increased production throughout the Group.

In BC oxygen equipment is being procured in order to reduce the effect of periods when the oxygen level is low.  

A purchasing project is being established with the aim of reducing purchasing costs by 10% (this figure does not take account of fish feed).

Organisational changes have been made to strengthen the focus on operations. All staff functions are now located in Bergen. All IT systems have been standardised throughout the Group. An HR director has been appointed with responsibility for personal development among GSF's employees. 

In Shetland the following steps are being taken:
The production cycle is being changed from 24 to 18 months. Implementation of this plan will make it possible to make more effective use of the good locations more effectively, while weaker areas will be laid temporarily fallow and manpower levels at sea will be reduced.

The level of staff at the harvesting plant in this region is also being reduced.

Lumpfish are being used as a means of combating sea lice. Monitoring of algae will also be a focus area.

The Board has decided to carry out a strategic review of the company's operations in Shetland. 
 

Outlook

With expectations of limited supply-side growth, a strong market is likely in the period ahead. This also applies to the US market.

GSF continues to expect a harvested volume of 70 000 tons in 2016. The forecast for Finnmark has been increased by 1 000 tons, while in Shetland it has been reduced by a corresponding amount. Norway is expected to account for 61% of the harvested volume in 2016, against 53% in 2015.

Please find enclosed the company's Q4 2015 report and presentation.

For further information, please contact:

- CEO Andreas Kvame (cell phone: +47 907 71 441)
- CFO Atle Harald Sandtorv (cell phone: +47 908 45 252)

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