LEROY: FIRST QUARTER 2010 RESULTS

May 12, 2010 10:31

In  the first quarter of 2010, Leroy Seafood  Group had a turnover of NOK 1,873 million,  representing an increase from NOK 1,522 million for the same period in 2009. The  Board of Directors is very satisfied with the Group's development and with  the result achieved  for the period,  which is one  of the highest results achieved  in the  history of  the Group  to date, reports www.megafishnet.com with reference to Leroy Seafood.

The Group's  operating profit
before  fair  value  adjustment  of  biomass  was NOK 255.1 million in the first quarter  of 2010, compared  with NOK  141.9 million in  the first quarter of the previous  year. The strong  increase in operating  profit compared with the same period last year is as high as 79.8%. This is explained by higher prices for the Group's  main products, Atlantic salmon and  salmon trout, and an extremely good development  for the Sales and Distribution business segment. 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 lower than prevailing spot prices in the quarter under review. At the beginning of 2010, the Group's share of contracts was higher than at  the same  point in  2009, and will  vary between  35% and 40% throughout the year.  Taken into consideration  with the Group's  positive market outlook, this indicates  that the Group  can expect to  achieve good prices  in the time ahead too.  Net earnings  are also,  as expected,  characterised by  seasonally modest volumes.  In addition,  the fish  farming company  Lerøy Vest  AS still has high
production  costs compared with the other farming  entities in the Group. On the back  of  increased  volumes  and  improved  production,  the Board of Directors anticipates falling production costs in 2010 compared with 2009.

Thanks  to  good  market  conditions,  improved  biology  and  high volumes, the affiliated  company Norskott Havbruk (the Scotland-based Scottish Sea Farms Ltd) saw  an extremely good development in net  earnings in the first quarter. Income from  affiliated  companies  before  fair  value adjustment of biomass therefore increased from NOK 11.5 million in the first quarter of 2009 to NOK 26.2 million in the first quarter of 2010.

The  Group's profit before tax and fair value adjustment of biomass in the first quarter  of 2010 was  NOK 266.9 million  against NOK  124.1 million in the first quarter of 2009.

Some interesting key figures:
  * 22.5 thousand tons gutted weight of salmon and salmon trout harvested (Q1 2009: 22.2)
  * Turnover NOK 1,873 million (Q1 2009: 1,522)
  * Operating profit before fair value adjustment of biomass NOK 255.1 million (Q1 2009: 141.9)
  * Profit before tax and before fair value adjustment of biomass NOK 266.9
    million (Q1 2009: 124.1)
  * Spot prices for whole superior salmon have seen an increase of 20.5%
    compared with Q1 2009
  * Net interest-bearing debt was NOK 1,132 million (NOK 2,040 million at
    31.03.2009)
  * Equity ratio 54.0%

FINANCIAL SUMMARY 1(ST) QUARTER 2010

Net  earnings for the first quarter of this year corresponded to a profit before fair  value adjustment of biomass of NOK 3.71 per share, against a corresponding figure  of NOK 1.72 in the first quarter of 2009. The Group's financial position is  solid, with  book equity  of NOK  4,707 million, corresponding  to an equity ratio  of 54.0%. The Group's net  interest-bearing debt at the  end of the first quarter  of 2010 was NOK  1,132 million against NOK  2,040 million at the end of the  first quarter  of 2009. The  reduction in  the Group's net interest-bearing debt  over the past  year of close  to NOK 1 billion  is extremely satisfactory.
Cash  performance must also be viewed in  the context of a dividend distribution of  NOK 2.80 per  share (corresponding  to NOK  150 million) and  an increase in biomass in the same period.

The  Board of  Directors has  proposed to  the Annual  General Meeting on 26 May 2010 that  the  dividend  is  set  at  NOK  7.0 per share. If the Annual General Meeting  declares the proposed dividend, the  payment date will be 2 June 2010.
The shares will be quoted ex-dividend on 27 May 2010.

THE MARKET SITUATION/OUTLOOK

Expectations  in terms  of future  developments in  the world economy, including development  in  demand  for  the  Group's  products,  have become more positive through  2009 and the first quarter of  2010, despite the turmoil in Greece, and are  now  characterised  considerably  less  by  fear  than  was the case at the beginning  of 2009. That  said, the  Board of  Directors believes there is still rather  more uncertainty than  normal at the  macro scale. Development in demand for  the  Group's  main  products,  Atlantic  salmon  and salmon trout, has been
extremely  positive so far  in 2010. Moreover, a  substantial drop in the global supply of Atlantic salmon for 2010 is expected, as well as limited growth in the next  few years. Correspondingly, the Board of Directors anticipates a continued good  development in the global demand  for Atlantic salmon. This, together with expectations  for  improved  productivity  in  the Group's production, including improved  biology, provides justification  for the Board's  positive attitude to the  Group's development. The Board of  Directors currently anticipates a better result  for the  Group in  the second  quarter of  2010 than was achieved in the
second quarter of 2009, and correspondingly for the year as a whole.
Questions  and  comments  may  be  addressed  to  the  company's Chairman, Helge Singelstad, the CEO, Henning Beltestad, or to the CFO, Ivan Vindheim.

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