Good morning, welcome to third quarter presentation of Lerøy Seafood Group. My name is Henning Beltestad, CEO of the company. With me today I have Sjur Malm, CFO. First of all, I will take you through the highlights in the quarter. Sjur will take you through the key financial figures. I will come back and have an outlook, looking at the supply and demand side of Atlantic salmon . First of all, we start with the third quarter. We achieved the EBIT before fair value adjustment of NOK 861 million. Harvest volume of 46,000 tons. EBIT all inclusive of 17.4. A contract share of 30%. Net interest-bearing debt of NOK 2.7 billion. We keep our harvest guidance of the year at 160,000 tons. This is the best third quarter ever.
Of course, it's not as good as the first quarter 2017, but still the best quarter ever for third quarter, which normally is the quarter with some biological issues and also we see normally a price trend that is negative within this quarter. If we look at the EBIT per kilo, we have 17.4, which is lower than the three previous quarters . I will take you through the farming side, the wild catch, and VAP sales and distribution, we start with the farming highlights. The prices in this quarter is down 7% compared to last year, from NOK 61 to NOK 57, and down NOK 11 from second quarter this year. The trout prices is in line with the salmon prices. The contract prices is above the spot prices, the cost is in line with the second quarter 2017.
The biomass in sea is 8% higher than same time last year, with the total biomass of 108,000 tons in the end of the quarter. The farming volumes, the estimates for 2017 is 40,000 tons in Lerøy Aurora, 65,000 tons in Lerøy Midt, 55,000 tons in Lerøy Sjøtroll, a total of 160,000 tons in Norway. 50% share of Scottish Sea Farms gives 16,000 tons for us in Scotland, so a total of 32,000 ton in Scotland this year. If we look in 2018 estimates, we see 38,000 tons in Lerøy Aurora, 67,000 tons in Lerøy Midt, and 62,000 tons in Lerøy Sjøtroll, so a total of 167,000 tons. We see that the volume in Scotland is going down to 13,500 tons. The volume in Scottish Sea Farms is going down from 32,000 tons to 27,000 tons, and Sjur will come back to the reason for that.
A total, 2018, 180,500 tons. The wild catch has been very strong through the first three quarters in 2017. The catch, the volume in this quarter is 17,000 tons, which is the same as Q3 2016. Relatively high share of haddock, 40% versus 6% of the catch in 2016. Remaining quota is 15,000 tons, compared to 12,000 tons last year. The expected total volume in Havfisk for this year will be between 65,000 and 70,000 tons . Prices, positive price development for cod with 2% year-on-year. Haddock up 26%, and saithe prices down 26% . Q3, normally a very challenging quarter for Lerøy Norway Seafoods, and also a very challenging quarter this year. If you look at the remaining quotas, we have of cod, 8,500 tons. Haddock, 3,500 tons. Saithe, 3,000 tons, a total of 15,000 tons.
If we look at VAP sales and distribution, a good quarter with a EBIT margin of 2.6% compared to 2.3% last year. We see a positive development in all key operations, but still a huge potential of improvement and through all the distribution factories that we have in the different markets. Sjur will take you through the key financial figures.
Yes. Thank you, Henning. Recent years have been quite challenging third quarters for both our company and the Norwegian industry due to biological issues, particularly on sea lice. We are happy to see that Q3 this year is faring much better. We have a very good production in Lerøy and very good production in Lerøy Midt. We also have very good control on sea lice in Hordaland, our southernmost operation, but we had some challenges on some sites in the quarter, which impacted the cost. Overall cost this quarter is in line with the second quarter, and we expect a significant fall in cost level in Q4, and also potentially into 2018. Looking at the key figures for the third quarter. The key drivers are shown on the latter lines. We can see that we have harvested 45% more volume.
We can see that profitability per kilo is slightly up, but the higher volume is the key driver for the increase in operational result or EBIT from NOK 481 million to NOK 861 million, an increase of 80%. We also have significant contribution from associated companies. These are Norskott Havbruk or Scottish Sea Farms, a farming operation in the U.K. It is our 50% share in wellboat company , and it's our share in a Danish operation. Good development in associated companies. Pre-tax before value adjustment, very close to NOK 900 million, up from 68% from last year. Obviously, we would have liked to perform even better in Hordaland, but this is a significant improvement from Q3 recent years.
We have good production, and we are quite pleased with that performance in the quarter. Looking to year-to-date figures, we can see that the driver for increase in profitability is not that much volume.
It's more on margin and then more on price. We can see that harvest volume is up 4%. We see the margin is up close to NOK 10, we see that we have an operating result year-to-date of NOK 2.9 billion from NOK 1.8 billion last year, an increase of 61%. Again, we have very good development in associated companies. Pre-tax profit is up to NOK 3,033,000,000, up 60% from last year. Overall, this is by far the best results ever reported by Lerøy at this time of the year, and we are happy overall with the development in 2017. Looking at our balance sheet, there are no big changes this quarter. If you remember, we consolidated the acquisition into whitefish from 1st of September last year.
It is a technicality which is increasing the intangible asset, and it's related to deferred tax on the concessions or licenses rather than having it reported as goodwill. Tangible fixed asset is up due to our investments in smolt in Hordaland due to our new factory in Central Norway and due to our investments in Rodé Vis, the most important ones. Other than that, I would like to highlight that, as Henning said, we have 8% more fish in sea. The cost of the fish is 4% higher, so this is an indication of a lower cost level and indication for lower costs going forward. Other than this, there's no big developments this quarter. We have equity ratio of 57%, net interest-bearing debt of NOK 2.7 billion , and a strong balance sheet in our own view. Looking at amortization schedule, there are no big amortizations coming up in coming years.
We are well within our coverage. Looking at our cash flow, there are not that much to highlight this quarter. We have increased our working capital slightly in what is normally a working capital-intensive quarter. We have a good cash generation and good cash conversion. We have invested, as you can see, significantly in this quarter related to the projects I already have mentioned. Looking at the figures year-to-date, we have EBITDA of NOK 3.4 billion, and we have an increase in tax payments this year compared to last year due to higher profits. We have built some working capital, a little bit on biomass, a little bit on Whitefish. We have invested in the projects I already have mentioned. We have received dividends from associated companies, and we've done a small transaction in Denmark, which is the key development on other non-current assets.
Overall, we have reduced our net interest-bearing debt by NOK 700 million from start of the year up until now, and we are quite happy with that development, and there is potential for further reductions into Q4. This compares to Q3 profit this year compared to last year. We can see that there is a vast improvement, and we are quite happy with that. Lerøy, excellent production this year. We have invested in larger smolts. We have a good focus on operation. We are seeing record growth. As you can see, our volumes are up 10,000 tons year-to-date compared to last year. We are quite happy with that. Well-performing, good margin. This quarter, it's a slight impact from lower average harvest weight due to the fact that we've been actually seeing higher growth than expected.
We've been close to capacity limits, and we have had to harvest the fish a little bit sooner than expected, but no big issues there. Lerøy Midt had a challenging quarter in Q3 last year and a challenging quarter in Q3, 2015. There's been a high focus, excellent development, good operations in Lerøy Midt. I would say this is a true sign of good recovery in the region. We have good development in cost. We have potential for further cost reduction, which we think we will realize in Q4 into 2018. We are increasing volume production this year, and we expect to see further growth going into next year. Yeah, it's a good operational quarter for central Norway. Looking into Hordaland or Lerøy Sjøtroll, it's a little bit of a mixed bag this quarter. We have seen good performance at the trout sites.
We have seen challenges on some of our sites on the autumn 2016 generation of salmon due to gill health issues. That has made us harvest fish sooner than we have expected. It was a situation which was very, I would say, it developed quick, and it was over quite quick. September, in particular, was a very challenging month in Hordaland, and we have seen a significant cost impact from that situation. Situation is now normalized, but this has some impact on volume in Q4 and 2018. The most important situation has normalized. Henning has already touched upon wild catch. We are seeing good development in Havfisk, the catching company. They have record numbers year to date, excellent performance, high catch rates. We see prices on cod and haddock is in positive development, some challenges on saithe.
We have a seasonal trend in the land operations in Lerøy Norway Seafoods, where Q3 is the weakest quarter and where there's a significant negative impact from that operation this quarter. We've owned these companies now for about 1 year. We've done a lot, but there's still plenty to do, and we look forward to developing it further. Looking into our operations in U.K., which we own together with SalMar, we are happy to report strong figures for this quarter, EBIT of NOK 19.5. We've also seen here some challenges on gill health, on some sites, which have an impact on harvest volumes. We now expect more volumes to be harvested this year, due to early harvest and a less lower potential next year. This is not only us seeing challenges in U.K.
It is likely that we see a significant reduction in harvest volume in U.K. in 2018 compared to 2017. Henning has already touched upon this. Positive margin development. We're building this operation step by step, and we are seeing positive development in key markets. I give the word back to you, Henning.
Thank you, Sjur Malm. I will go through supply and demand. I start with this one. Updated November 3 , it's fresh numbers from Kontali, where we see that the expectation for this year, 2017, is up 3% in Norway, up 11% in U.K. The growth in Europe, about 4.5%. The growth in Chile, 9.3%. The global growth, about 5.3%. Last year was down 6.7%. If we look into 2018, we expect a growth in Norway of 8%, 1% growth in U.K. We don't believe that it will be this volume for next year. As we see, our volumes in Scottish Sea Farms is down by 5,000 tons. We also know that other companies is reducing the numbers for next year, the estimates.
We expect the volumes in the U.K. to go down between 20,000-30,000 tons because of gill health issues in some regions. This will definitely affect the volumes in the first half of 2018. I'll come back to that later. Total growth in Europe, 6.8%, and Chile up 8.7%, and a global growth of 7%, but we think it will be lower than that. If we look at the price development, we have seen the last quarter now, the price is going down. We had the second quarter of 2017 at NOK 68, third quarter at NOK 57, and so far in fourth quarter at NOK 52. If you look at the volumes from Norway, the last 3 months, October up 12%, expectation for November is 6%, and up 10% in December. We see that the volume is going down month by month.
November is lower than October, and December is lower than November. We expect a good price development during the last quarter. If we look at Europe, it's the same situation. If you look at Chile, there is still a growth in Chile every month. Worldwide, we see that except the first two months, we will have a positive supply development every month. 2018. If you look at first quarter in Norway, we see 5% in January, 5% in February, minus 6% in March. We remember that the first quarter of this year has been extremely high prices, especially into January, we had extremely high prices above NOK 70. We see there's more volume coming in second quarter, compared to this year.
Then we see the second half of the year, there will be between 4%-11% increase month-by-month. If we look at Europe, same situation first quarter, even though 9% in January, 5% in February, and 7% in March. I think the situation in U.K. will reduce the volume in the first quarter, maybe between 12,000-15,000 tons less volume and will also reduce the volume in second quarter. We think that these numbers is on a high level. If you look at Chile, there will be some increase first half and then second half of the year, there will be a normal situation compared to the volumes that we have this year.
We look at worldwide, same picture, a little bit up in the 1st 2 months, then 2nd quarter, higher volumes and then a little bit lower growth at the end of the year. If we look at the demand side, the year-to-date number for Atlantic Salmon consumption, we see that EU is down 3% year-to-date October. Other markets are up 6%, U.S. up 2%, Japan 1%, and Russia is down 6%. The interesting thing to see is the 3rd quarter. In the 3rd quarter, we saw that the price level were around 57 NOK, and then we see that the other markets is reacting on this price level, and we have an increase in other markets of 16%. We also see that the U.S. market is improving a lot in this quarter up by 8%, and EU is staying at the same level.
Let's go into and have a look at the other markets. Here we see this, the major market like China up 25%. We have South Korea up 17%. We see Israel up 14%, Thailand up 44%, Taiwan 50%. We see that this market is reacting on a lower price level and better availability of the salmon. That's very positive for us to see when we'll have higher volumes, expected volumes for 2018. That really the other market is the ones that are taking the increased volumes. That's positive. These markets is mainly in spot pricing. At the end, the outlook, continued positive outlook. We believe it's good that we have some growth for next year, so we can develop new markets and also other segments in the markets that we have today.
We have a guidance of this year of 176,000 tons and next year 180,000 tons. We expect the contract share for salmon and trout in fourth quarter to be around 30% like third quarter. We see a significant potential in the whitefish. We just started. We've had 10 months now, and it's been a challenging 10 months, but we see a lot of opportunities, a lot of potentials, and we're really looking forward to developing Havfisk and Lerøy Seafood going forward. Thank you very much.