OREANDA-NEWS. OJSC “Russian Sea Group” (the “Company” or the “Group”), one of the leading companies on Russian fish market, announces its preliminary operational results for the 2Q and 1H of 2013 based on unaudited management accounts.

Financial results for the first half of 2013 will be announced as soon as the Group's interim unaudited condensed consolidated financial statements for 6 months ended June 30, 2013 are finalized.

On 28th of February 2013 the Group finalized a sale of its 100% subsidiary, CJSC “Russian Sea”, to a strategic investor. Therefore CJSC “Russian Sea” (ready-to-eat segment) operations are classified as discontinued. Chilled and frozen and aquaculture segments operations are classified as continuing.

Key operational results

In 2Q 2013 and in 1H 2013 the Group has demonstrated a significant sales growth as compared with the same period of the previous year despite the sale of ready-to-eat business in February 2013. In 2Q 2013 the consolidated revenue of the Group from both continued and discontinued operations increased as compared with the same period of the previous year by 8,7% and in the first six months of 2013 by 3,4% - from 7 567,6 million to 7 824,8 million rubles. The consolidated sales volumes of the Group increased by 16,4% in 2Q 2013 as compared with 2Q 2013 and by 8,1% in 1H 2013 as compared with 1H 2012.

In 2Q 2013 the Group consolidated revenue from continued operations increased by 35%- from 2 865,1 million to 3 869 million rubles. Sales volumes increased by 26% - from 29 019 tons to 36 556 tons.

In 1H 2013 the consolidated revenue of the Group from continued operations has shown 20,6% increase as compared with the 1H of 2012 and amounted to 7 245,0 million rubles. The consolidated sales volumes from continued operations increased by 14,5% - from 62 834 tons to 71 964 tons.

Chilled and Frozen segment

Segment's sales to external customers increased by 35,3% in 2Q 2013 as compared with the same period of 2012 and amounted to 3 868,1 million rubles. At the same time the sales volumes has grown to 36 547 tons that is 26,1% higher than in 2Q 2012.

Thus in 1H 2013 the chilled and frozen segment's revenue increased by 21,7% as compared with 1H 2012 and amounted to 7 245,0 million rubles. The sales volumes has grown by 15,2% to 71 955 tons.

The main segment's revenue growth driver in 2Q 2013 remained the delicacy red fish market situation. Salmon and trout import price growth resulted in the Company's sales price increase and contributed to its operational results improvement. As a result of price increase import of chilled delicacy red fish from Norway in the 1H of 2013 decreased by 20% (according to Norwegian export customs statistics data). At the same time Russian Fish Company's import volumes decreased only by 4%.

In 2Q 2013 the Company increased sales of Russian pelagic fish both in value and volume terms. Russian pelagic substitutes imported pelagic fish sales of which reduced as s result of purchase price increase.

Aquaculture segment

In 1H 2013 the second Atlantic salmon farm was successfully launched - Shalim in Ura-guba of Barents sea basin, Murmansk region. 12 cages and fish feeding barge were installed at the site. The smolt was put in the water. The Company prepares to start operations at Titovka site in 2014.

At the trout farm in Karelia two more sites for trout farming were launched. The commercial fish farming on them has already started.

In 1H 2013 the Company wasn't selling fish as all trout of the last season was sold till the end of 2012 in accordance with a normal for aquaculture segment farming and sales cycle. Currently the fish is in its main growth stage. The fish harvest will start in the second half of the year and will continue until the planned volume is sold. It is planned to harvest more than 1 000 tons of trout till the end of the year.

Commenting on the Group results and priorities Dmitry Dangauer, the Company CEO, said:

“During the first quarter of 2013 significant changes took place in Russian Sea Group. The sale of unprofitable ready-to-eat segment was finalized. As a result of the deal the credits were partially paid off that allowed to reduce the debt of the Group by more than 1,3 billion rubles. Accordingly were decreased the costs of the Group. Labor costs were reduced by 60%. The business processes were optimized. The Group became more transparent and manageable. The restructuring of the Group was finalized. The Company became more financially stable that is necessary for further progressive development of distribution segment and for implementation of an ambitious aquaculture project.

In chilled and frozen segment we see a significant sales growth both in volume and value terms in 1H 2013. The Company continues to develop the delicacy red fish category. Despite the price growth and further consumer demand decrease on salmon and trout Russian Fish Company's sales volumes of this category decreased slightly and the revenue increased as compared with the same period of the previous year. For the first 6 months of 2013 sales of chilled salmon and trout in value terms increased both in modern retail trade channel and in the regions. We expect that the prices will remain at the same high level in the second half of the year that will positively influence chilled and frozen segment's revenue. It should be noted that such tendency on delicacy red fish market justify that aquaculture segment's strategy was chosen correctly.

In the second half of the year we will continue to increase sales of Russian pelagic fish, Asian assortment, packaged fish products and increase sales through the Company's regional network.

We continue to progressively develop our strategically important and promising business division - aquaculture - that will play a defining role for the whole Group in future. In June 2013 we successfully launched the second salmon farm in Barents sea basin, Murmansk region. Thus currently the commercial salmon farming is held already at two sites. The first fish harvest is planned for 2014.

We continue to farm trout at Segozero lake in Karelia. In 1H 2013 two more sites were launched. Currently we prepare for fish harvest in 2H 2013”.