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Highlights – First Quarter 2017
•EBIT: MNOK 131.5 (EBIT/kg: NOK 15).
•Market remains strong.
•Low harvest volume (8 552 tons) in three regions, as planned in order to boost sea production, increases costs per kilo.
•Stable production in all regions.
•EBIT/kg in Rogaland: NOK 28.0
• Stable production in all regions.
•EBIT/kg in Rogaland: NOK 28.0. – Normal harvest volume and stable costs.
•EBIT/kg in Finnmark: NOK 9.4. – ILA location laid fallow, costs included in Q4.
•EBIT/kg in BC: NOK 14.1. – Harvesting from weak generation previously affected by algae challenges.
•EBIT/kg in Shetland: NOK -11.2. – Harvesting from weak locations to be laid fallow under new production plan.
•Expected harvest volume of 70 000 tons in 2017 is maintained. – Smolt input as planned and reflects an increase (in both number and size) compared with Q1 2016.

First Quarter Results 2017
EBIT for the Group before fair value adjustment of biomass was MNOK 131 in Q1 2017, against MNOK 214 in 2016. The harvest volume in Q1 2017 was 8 552 tons, against 13 635 tons in the corresponding period last year, reflecting a reduction of 37%. The low harvest volume was planned in order to maximise the level of biomass in the sea in order to achieve higher growth.

EBIT from the four regions includes value creation from sales/Ocean Quality (OQ), while OQ’s value creation relating to fish from Bremnes (which owns 40% of OQ) appears in the item designated IKE in the above table.

The pre-tax accounts for Q1 show a loss of MNOK 69 against a profit of MNOK 252 in last year’s first quarter. The negative result must be seen in the light of the fair value adjustment of biomass to take account of the decline in salmon prices from Q4 2016 to Q1 2017.

Group operating income in Q1 2017 totalled MNOK 1 422, reflecting a 12% change compared with the same period in 2016. The increase was due to higher prices and some increase in volume from Bremnes (external fish) compared with Q1 2016.

The results for Q1 2017 reflect a reduction in the harvest volume in all regions apart from Rogaland. This has meant that fixed costs are divided over a smaller volume, thereby increasing costs per kilo.

Following a decline in salmon prices in the first weeks of 2017 the market has been relatively stable. GSF can report that demand for its salmon is good at the present price level.

In Norway, the proportion of salmon sold on fixed price contracts stood at 55% in Q1 2017 and this proportion is expected to be around 17% in Q2 2017. The decline in the proportion of fixed price contracts is partly explained by an increase in the harvest volume in Q2. The fixed price proportion for 2017 as a whole stands at 21%, and some increase in this figure is planned.

Measures to boost production and reduce costs
A stated goal is to reduce GSF’s cost level to the industry average, or lower. The company will also be aiming to increase production by 10% annually in the period 2018-2020.

GSF has an ongoing focus on improving operating efficiency, and this involves both increasing production per plant and per licence, as well as reducing costs per kilo. One of the key steps being taken is to set out bigger smolt which will make it possible to shorten the production time in the sea. An increase in the number of smolt is also decisive to achieve growth and lower costs.

The company this therefore planning to increase the amount of smolt set out in 2017 compared with 2016. So far this year the steps taken are in accordance with the plan.

There is also a focus on improving the survival rate and wellbeing of the fish.

Outlook
In a global perspective, there are expectations of limited supply-side growth in the salmon market. There is strong underlying demand for salmon and good prices are therefore expected in 2017.

The harvest volume in Q2 2017 is expected to be 18 000 tons. For 2017 as a whole the figure is expected to be 70 000 tons, 8% up on 2016.

Please find enclosed the company’s Q1 2017 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)

GSF Q1 2017 report
GSF Q1 2017 presentation

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