On to price achievement for Marine Harvest, and also the contract share and the superior share for the company in the different farming regions. We see in Norway, 93% price achievement in this quarter compared to 88% the same quarter 2016. Our contract prices continue to increase, but we are still lagging a very high spot price. The contract share for Norway was 54%, and that's in the high end, but it's also on the back and the result of very low harvest volumes. Now we get back to contract volume going forward. In Scotland, the volumes were up quite significantly, so contract share fell to 41%. We got some favors from in the spot market. High superior share there, 96% superior fish in the quarter. Very good quality on the fish.
Price achievement in Canada, we are spot-oriented in the Canadian operation. That's why we in reality achieved the benchmark price there. It is the spot price. It's close. It's adjusted obviously for quality and a slight downturn here, 89% is on the low end for quality. Chile, 25% contracts, 91% price achievement. Bear in mind the increase in prices in Americas over the quarter and our contract share of 25%. Still room to improve our price performance in Marine Harvest. If you look at the bridge operational EBITDA from Q1 2016 to Q1 2017, you will see that the farming operation is the main area of change. The reason for this is unfortunately not cost reduction, it is price driven. The EUR 114.4 million improved result comes from increased prices on the products.
Markets, which is the trading organization in Marine Harvest, is down with EUR 5.3 million compared to the same quarter in 2016. This is on the back of lower volumes. Consumer Products improved their result with EUR 10.2 million in the quarter and have a very good quarter both operationally, and this is in fact on the back of lower volumes. Operationally in our factories, really around Europe, it's a lot of good performance. All in all, we end up at EUR 220 million at the end. A little bit about the different regions and the different units. Our Norwegian operations obviously have a strong result. It is price driven. We're not satisfied with the cost performance in Norway, in most regions. I'll get back to the different regions as we go along here.
Improved contract prices give obviously a better result and also a result of these very high spot prices in the quarter. We have increased costs in this quarter, mainly due to lower volumes and lower volumes on the back of biological issues in 2016. This comes from the sea lice challenge and also when fish die, feed conversion ratio is up because you have less fish to divide the feed on. All in all, EUR 123 million up from EUR 100.9 million. I will say that the Norwegian operation in this quarter is maybe the operation that has the biggest room for improvement going forward. This is a slide that shows contracts going forward for the Norwegian operation. As you can see here, Q1, it was 54% contract share, but in absolute terms, 25,000 tonnes contracted.
If you look at going forward, you see Q2 being on the same level and a stable level also for Q3. The contract share will obviously be decided in terms of the volume we harvest going forward in %. Over to the different Norwegian regions. Start with Region South. I would say Region South has good performance. They're the region that is improving the most by far. They're at EUR 2.99 per kilo in the quarter. We've been able to grow the fish larger and see the result of that. We have obviously better control in sea lice in part of these regions, in Agder, which is part of Region South, it's very good. Also in Rogaland, good results. All in all, satisfied with Region South. Region West and Region North is normally the regions in Marine Harvest that performs the best.
Region North harvested only 6,000 tonnes this quarter. That is down from a normal harvest that will be around between 15,000 and 20,000 tonnes in that region. Really not good timing on when you harvested the fish, and very low volumes and high cost in Region North gives us the really disappointing result of only EUR 2 per kilo for this region. Region West. Still challenged biologically, both in terms of not so much sea lice this time of the year, but the following damages to sea lice treatment earlier. Some CMS, some treatment losses also in this quarter. Region Mid still struggles. We have invested a lot in new equipment, and we are better prepared for the season to come. We believe that at least into the H2 we'll see improvement in this region.
On to Scotland. Scotland ended at EUR 55.4 million in operational EBIT, up from EUR 8.5 million in Q1 2016. Increased volume from 12,600 tons to 17,700 tons in the quarter increased their EBIT per kilo from EUR 0.68 to EUR 3.12. This is really a turnaround, mostly explained by price, as you can see from the waterfall here. As you can see, also only black bars in the cost components. Cost has been reduced along the way. This shows this is about biology. If you're able to grow the fish to big sizes, you get good results. I'm very pleased with the Scottish operation in this quarter. Next quarter, we have it from somewhat higher cost site, but the trend in Scotland is really good. Our Canadian operation continued to have a very strong performance. We made EUR 30 million in this quarter on the back of 8,800 tons.
That is down from 11,500 tons in Q1 2016. High prices, spot-oriented, EUR 3.42 per kilo in operational EBIT margin. Slightly higher cost on the back of lower volumes, but still good performance in Canada in this quarter. Some higher biological cost this quarter and some negative scale effects, as already mentioned. All in all, I'm very pleased with our operations in Canada. Very exciting to go into the east coast of Canada, maybe especially Newfoundland. That's going to be a challenge for many of us. Their proximity to the U.S. market is excellent. We are 12, 15 hours from Boston with trucking the fish right down there, so logistically this will be an advantage. To be able to supply Canada both from the east and west coast down the road will be a strength for Marine Harvest.
It's going to be really exciting to develop this business, and we've got the best man, I would say, almost in the world to do it. I look forward to this adventure. On to Chile. Chile, obviously, a huge turnaround in terms of profit. We lost EUR 23 million, or close to EUR 24 million, in Q1 2016. This year, we made money, if you look at the volumes here, we dropped from 15,300 ton Q1 2016 to 6,300 ton in Q1 2017. The result of this is obviously the result of the algal bloom and the following lack of fish. This has increased in higher prices. If you see on the chart there, you see cost actually are reduced in most areas. Obviously, there is a volume effect, but slight cost reduction on very low volumes.
The issue now is obviously to continue this, to gradually grow the volumes, and to gradually improve the operation in Chile. We have employed a new managing director there during this quarter, he just started, and we have high hopes for Chile. The one thing that's going to continue to be a challenge in this region is the regulatory part of the business. It's extremely complex and it's going to drive cost. At the same time, we're going to continue to work to improve that, as we always do. If you go to Ireland and Faroe Islands, well, we continue to make money in Ireland. High cost, extremely high price. I think the result in the Faroe Islands with EUR 4.5 per kilo must be close to a world record. I don't think I've ever seen anything higher, but I might be wrong on that statement.
It seems like in the Faroe Islands, they can grow big fish and sell them expensive, which obviously is comforting. On to Consumer Products. Consumer Products is our factory set up in Europe. We have good result in this quarter, good improvement from Q1 2016 overall. We have got our factory in Rosyth, just outside of Edinburgh, to really start to produce and to function. That is a smokehouse, but also an MAP factory. Really good performance. [inaudible] is going good. The same are the fresh segments and most of the smoke factories in Europe. Operational improvements, cost improvements on slightly lower volumes. Remember, this is an operation that certainly gets their fair share of raw material price increase. It's not easy to be a value-adding operator when we have the highest market prices on salmon ever. We continue this journey.
As you know, we started a plant in Dallas to supply the Midwest. We will continue with a new plant just outside of Vancouver, mostly for MAP portions into the U.S. market and into the Canadian market. This is the way to build demand. You need to make convenient product for the customer, close to the customer. Feed, not the best of quarters in Q1. Low volumes. This is low season for fish feed, still good. Operationally, this goes well. You see small picture of the Scottish construction, started early this year and this goes on plan. We expect this to be finished H2 of 2018, and this will be by far the best feed plant in Scotland, both from operational point of view, but also not least maybe from the logistical part of the picture.
All the other feed plants are north, northeast or in the middle of the country or on the east part of the country. They have to truck all the feed over to the west coast where the farming happens. This site on the ocean, highly efficient, logistically, and we have high expectations for this plant. It will change the game in fish feed production in Scotland, and that is about time.
We expect this plant to do around 170,000-175,000 tons when it is finished. It will supply Ireland with Irish organic feed. It will supply Scotland, obviously, Faroe Islands. It will also supply all freshwater feed to Europe. This is a little bit different plant than the plant in Bjugn because it is set up to produce freshwater diets as well. More flexibility in terms of raw material we can use in this plant. Ivan, it's all up to you and give the details on the financials there and some market expectations.
Thank you, Alf-Helge. Good morning, everyone. As usual, we start with the P&L. Alf has visited almost all the numbers, but good numbers are always nice to repeat, so if we shall do it, we should do it this time. Operational revenue, EUR 892 million in the quarter, up 10% year-over-year. Whereas volumes are down 13%, 84,000 tons in total for the Q1. Earning-wise, operation EBIT, EUR 220 million, almost 2x as much as what we made in the Q1 2016. As Alf has said, I think 2 x already, record high Q1 for Marine Harvest. Further down in the P&L, we have a big number on net fair value adjustment of biomass in this quarter, EUR 122 million negative. Mainly explained by the drop in prices we saw from year-end until the end of the quarter.
We started the year at above EUR 8 and finished the quarter at EUR 6. Net financial items, also a little bit different this time. Highly impacted by mark-to-market accounting of the convertible bonds, EUR 143 million in total. A positive sign. Adjusted for that, interest expenses including amortizations are at normal level. Underlying earning per share in the quarter, EUR 0.36. Cash flow per share, EUR 0.39. Return on capital employed, annualized for the quarter, approximately 34%. Much about the P&L. Over to the balance sheet, or what we call financial position these days. No major changes since year-end. The balance sheet in total is down approximately EUR 300 million, explained by a drop in working capital, inventory and receivables. Equity ratio, close to 48%, and net interest-bearing debt, EUR 842 million.
The last item brings us over to the cash flow statement and the breakdown of the cash flow in the quarter. We started the quarter at EUR 890 million in net interest-bearing debt. Through great earnings and release of working capital, we made almost EUR 250 million in cash flow from operations. CapEx, EUR 57 million, in line with the forecast for the year. EUR 10 million on others. The lion's share is Gray Aqua Group and the completion of the acquisition for those assets in East Canada.
Under financials, payable interests, just below EUR 5 million. The first part of the conversion of the 2014 convertible bond, EUR 21 million. Dividend declared after the Q4, 2.8 per share, or in absolute terms, EUR 143 million. That brings us from EUR 890 million in net interest-bearing debt to EUR 842 million. All in all, a great quarter earnings-wise, but also cash flow-wise.
Over to the cash flow guidance. We stick to the previous guidance. We have only made one minor change this time, and it's on the CapEx. We adjusted it up by EUR 10 million related to the freshwater site we built in Inchmore, Scotland. We are progressing quicker than anticipated, so consequently, EUR 10 million more will come to this year. Happy news. Interest paid or payable interest, taxes, working capital are still the same. Dividend proposed by the board is to be, hopefully, resolved by the annual general meeting on the 1st of June. NOK 3 per share this time, up from 2.8 last time. The reason why we go through the AGM is that we have used the proxy we got from the AGM last year. You can see from the AGM notice we released this morning that we are increasing the proxy for next year.
Over to financing. We have exercised the call option we have on the 2014 convertible bond. That one is progressing. The share capital will be registered this month. In connection with that, we have refinanced our bank debt, we have increased it from EUR 805 million to EUR 1.206 billion with current banks. We have also added two new banks. It's not every day we do such financing. I think I will take the opportunity to also mention the name of the banks, and also because some of them are present here today. DNB, Nordea, ABN, Rabo, Danske, and SEB. The two last ones, they are new in the consortium or facility. We are very happy with that. It's a term sheet. The finalization of the agreement will hopefully be finished before summer holiday, or at least during the summer. The rest is unchanged.
We maintain our net interest-bearing debt target of EUR 1.05 billion. With the new financing, we have more or less the same amount available. I should also mention that in terms of the covenants for the bank facility, it's still the same. Only a 35% book equity ratio requirement. We also consider the interest rate terms favorable. We will not make any adjustments to the forecast for interest paid for this year, at least not for now, with Marine Harvest as is. Much about the financials. Over to the fundamentals. Supply in the quarter was globally down 4%, somewhat lower than what we expected. We harvested approximately 17,000 tonnes more in Europe than what we forecasted on after the Q4. As far as we know, mainly driven by sea lice and PD issues in Norway.
Chile is also up 12,000 tons, more than what we expected. They have had a warm summer and a challenging biology with algae, with SRS, et cetera. That said, biology is still under control, and I think we are doing okay biological-wise in Chile. We saw some advanced harvesting during the summer season in Chile this year. Over to price. Although the decline in supply was lower than expected, we still saw great prices in the Q1. Record high in Americas. As Alf-Helge said here, up above 10% compared to the Q4 and 40% year-over-year. Really great. Obviously, some of the explanation is the algae bloom in Chile last year and loss of volumes for the industry. In Europe, the price was quite stable at a very decent level, EUR 7.27 per kilogram.
Over to demand. Consumption was more or less in line with the supply for the quarter, so i.e., no inventory changes. A lot of red arrows, but when you are producing less, consumption is also down. If we convert it to value terms, all arrows are in green, and at least according to ourselves, demand is higher than ever. We see that some markets struggle a little bit with the prices, but all in all, we think that the response is great at this level and actually better than what we thought just a few months ago. Particularly U.S. has developed well. We also see that Asia is coming back with large size salmon available. We are still confident in terms of the market going forward. Over to the industry supply outlook. We have adjusted upwards 1%, so just a minor change because of the Q1.
The [inaudible] year, it's more or less the same. As far as we can see, we will have a modest growth this year, and it's hard to see that we will get any substantial growth next year and actually the next few years to come, as long as we are dealing with the biological issues we are dealing with right now. The supply-demand balance looks favorable from a price point of view as far as we can see. Over to our internal volumes. In total, we maintain our volume, but we are taking it down in Norway 8,000 tonnes, and it's offset by increased volumes in Scotland and the Faroes.
Profit-wise, we should, I guess, be better off. We never like to take down volumes. In Norway, we have had continued biological issues into this year. This is a result of that. That being said, Scotland and Faroes are doing great biologically. We see that it's okay to be diversified. Sometimes we struggle in one region, and sometimes we struggle in another region, but always some regions are blossoming. With that, I would like to leave the virtual flag again so we can wrap up. Thank you.
Thank you, Ivan. Just quick in terms of the outlook. Overall, global supply growth in 2017, as just mentioned, look modest, we have to say. Variability in supply growth between Europe and Americas going forward, somewhat more fish coming from Chile than from Norway, Scotland, and the like. Future prices is at EUR 6.5 or NOK 62 for the next 12 months. We have China. At least what we see there is a more normalized trade relation with China, but so far, no practical impact on salmon exports. There's a huge opportunity there. If we can get this normalized, we can I know there's a big delegation going to China now in just in a few weeks to negotiate veterinary agreements and the like, and that we can get export back on track there.
As you saw from Ivan's slide here previous, we do about 80,000 tonnes into China and Hong Kong. Obviously, there's room for more in a country like China over time. Free trade between Norway and China is great opportunities for Marine Harvest and for the industry in general. In terms of the acquisition, I mentioned Gray Aqua and the east side of Canada. We started the planning process. We started the recruitment process. We will build an organization.
We will get this up and running within the next few years. Dividend had been commented on many times here, NOK 3 per share. I don't think I've said repayment of paid in capital still. That is great news for our shareholders, I think, but still subject to approval for general meeting on June 1st. I think with that, I will open up for questions. Just raise your hand, state your name and employer, and we'll try to answer the best we can. So, I think Ole.
Ole Sandberg. You mentioned Norway has the greatest potential for improvements. Could you give some flavor on the timing on that?
Yes. I think for Q2, we will have a challenging operation. We know it's very low volumes in Q2 for Marine Harvest, so I don't see any improvements there. It is about the H2 of the year. We have invested loads of money in new equipment for dealing with sea lice. We have better plans than ever, but so we said a year ago, and we failed. The proof is in the pudding, or maybe in the eating of the pudding. Still, we expect that we will see some improvement in the H2 .
Thank you.
[inaudible].
Thor Isaksen, SpareBank 1 Markets. How is the 2016 generation performing relative to 2015 Norway?
S0 or S1s?
Is it that or not?
Right now, S1s 2016, meaning the spring smolt, obviously are in good condition. S0 just came out a few months ago, so they are fine. Compared to last year, this is not a problem the first year in the sea. That's the issue. The problem starts usually in June, July, August. That's when we will really see the performance. It's a good performance, but it was fairly okay last year, too, if you go one year back. The problem is, can you handle the issues when they arise?
Another question. Have you secured more wellboat capacity or treatment capacity this year compared to last year?
Yeah. Wellboat capacity, Optilicer, Thermolicer, Hydrolicers, wrasse, lumpfish. Yes, on all of them. More capacity. It's really a shame because we are developing an industry that shouldn't be there. We need to sort this problem at another stage.
Thank you.
We forgot freshwater capacity. Head Industry Norwegian Markets.
One question on a more forward-looking nature. Your industry organization, Sjømat Norge, last week announced that they had a zero vision for emissions of waste, zero sea lice, and zero escapes. In my book, in order to reach that within 10 years, you need to produce a lot of eggs, closed containments. If you share this vision, does this means that you will have to increase your CapEx level considerably in the coming years to cope with that?
I think, one, we share the vision. If you don't have a vision of trying to go to zero for escaped fish or lice, this industry will not grow. I think what we are doing today, well, we are dealing with the problem. We are firefighting big time. There will be a roadmap on aquaculture, I think comes out 24th of May. That is not technology specific. If you develop a vaccine against sea lice or if you do something else so you can reduce the sea lice to zero, nothing's better than that. This is not technology specific. The targets in 2027, 10 years from now, shows a direction. I think that direction we really need because we cannot continue like we are doing now.
I don't know the exact number, but the number from Grieg Seafood is between NOK 3 billion and NOK 5 billion spent on sea lice firefighting in Norway. That does not really take the whole picture into account. If you look at the harvesting small fish, lower price achievement, other diseases that's coming into place, it's much higher. The average harvest weight from the 2010 generation to the 2015 generation dropped with 0.5 kilo. Tell me what that means. A lot of money lost.
I think we need a vision. We need technology. We don't need a fixed technology, we need really an aim where we want to go. If you're going to travel to the moon, you can't say that you, "Well, we're going to take a trip to Sweden." You have to aim high. I know it's extremely difficult, it has to be done. We share the vision, and it's going to be complicated to reach it. That is a fact, but we have to try.
Hi, [inaudible] Thomas with Arctic. Just a question on the financing now that you are calling this convertible bond and you have entered a new loan facility. Is it reasonable to assume that we can expect a one-off dividend as net debt will be very low relative to your targets, or that we could expect a new quarter of payment?
I actually expected that question. We are prepared. We never guide on dividend. We are in a process where we have just exercised the call option. It's progressing, but formally, we haven't done it. In terms of the refinancing, we have entered into a term sheet, so we haven't prepared or signed the final documentation. We would like to await those two processes and revert to this topic over the summer.
[inaudible] . Could you talk a little bit about sort of the end consumer or the retailers, and sort of their behavior over the past sort of four or five months, and how they have sort of dealt with the price increases that we have seen now that sort of the contract prices also have sort of filtered through at a high level? I understand there were some pushbacks early in the year, has their sort of behavior now changed recently, or how does that evolve over the coming months? Yeah.
I think it's fair to say that obviously it varies in the different markets. No doubt around that. If you take one extreme, meaning Russia, and seeing how consumption has dropped in Russia to consumers over time, the numbers are to the point of extreme. We are exporting only half of what we did, or Russia is importing only half of what they did a few years ago. If you look at maybe more and bigger markets, well, there is a challenge in France in terms of consumption of salmon. We know that. We saw early on in Germany a drop, flattening out when consumer get used to the new price.
Again, if you look at really all markets, there's value growth. People are buying fish for more money. They're spending more money on salmon than ever in all markets. That says a little bit about consumption. Obviously, when we lower volumes out of Norway or out of this year, this quarter 4.2% down, well, this fish has to be eaten and unfortunately, I have to say it's 4.2% down, so there will have to be lower consumption. People are paying more for it. Long term, we cannot continue like this. We need to reinstate growth in the business.
We need to come up with solution for the biological issues long term if we're going to build this business into what it should and deserves to be because the demand for fish is high and we're selling fish, as you know, to more than 160 different countries salmon is going into. Just a curiosity, if we looked at the slide that Ivan showed there earlier on demand, the only green arrows was the other market. Obviously all the main markets are down, but that follows supply. I don't know if that answered the question.
I understand they're down, have they more accepted the high prices now, the NOK 60 +, while they were sort of reluctant early in the year, looking for other protein sources, et cetera, to put in their sources and so forth? Have they now gotten used to the fact that they have to pay NOK 60 +?
Well, they are buying the fish and they're paying the price. That is a fact.
[Lina] Straat, ABG Sundal Collier. Just a quick follow-up on Thomas' question. I will not ask about the dividend, but it seems like your balance sheet is very strong and there's more cash on the way. In terms of longer-term strategy, are you also now looking, for example, into other species or looking broader than just salmon or other larger investments?
I think in terms of projects going forward, as already stated, as soon as we get the development licenses, there are money to be spent there. There's still money to be spent into hatcheries and improving our hatchery situation. Certainly also as we always say, if there are acquisitions that we find smart within our own business, we'll do that. In terms of new species, we don't rule out anything but the main focus is on salmon and being good at that for now.
Just a quick follow-up also on China. You're talking about free trade agreements. Are there other triggers we should look out for? When this happens, this will open the market for Marine Harvest, for example, veterinary agreement or what are you really waiting for?
What we are waiting for is there is a normalization now on the kind of the trade relations. What we need is the more specifics in terms of agreeing on import standards, veterinarian certificates on the fish and the like, to get this started again. I think that is really more on a practical bureaucracy and get it done. I think the intention from both parties are good. All good. Seems like we have no more questions. Then I will say have a great day and thank you for coming.