Bakkafrost P/f

Quarterly Report • Aug 22, 2023

SUMMARY OF Q2 2023

MARKETS & SALES

FINANCIALS

SEGMENT INFORMATION

OUTLOOK

APPENDIX

Nes Eysturoy, Faroe Islands

HIGHLIGHTS Q2-23 (Q2-22)

HIGHLIGHTS Q2-23 (Q2-22)
Revenues and Operational EBIT	 Revenue of DKK 1,670 million (DKK 1,684 million)  Operational EBIT* of DKK 353 million (DKK 587 million)
Operation	 Harvest in the Faroe Islands: 8,658 tgw (13,101 tgw)  Harvest in Scotland: 7,343 tgw (6,646 tgw)  Feed sales: 30,231 tonnes (31,243 tonnes)  Sourcing of marine raw material: 147,785 tonnes (97,610 tonnes)
Cash Flow	 Cash flow from operations of DKK 376 million (DKK 542 million)
Segments	 Positive operational EBIT from the segments except VAP DKK -26 million (DKK -108 million)
Dividends	 Dividend of DKK 10.00 per share for 2022 was paid out on 22 May 2023
	) EBIT aligned for fair value adjustments of biomass, onerous contracts provisions, income from associates and revenue tax *) Including internal sales of 29,630 tonnes (30,231 tonnes)

SUMMARY OF Q2 2023

MARKETS & SALES

FINANCIALS SEGMENT INFORMATION OUTLOOK

APPENDIX

Kolbeinagjógv, Faroe Island

q/q:

Average spot prices increased y/y and q/q in Q2 2023 (NOK/KG) y/y: 108.50 (Q2 2023) 107.46 (Q2 2022) 1.0% 1.03

HIGHER PRICES Y/Y AND Q/Q

YoY price dropped 15% in EUR due to weak NOK

(Q1 2023)

104.83

3.67

(Q2 2023)

108.50

Decreasing prices so far in Q3 2023

Increasing divergence in prices for small vs. large sized fish

SALMON MARKETS, SOLD QUANTITY

EU/UK/US consumption below supply growth

Indication of modest price sensitivity

Increased export from Chile to Russia

Partly replacing trade through Belarus

Strong growth in Greater China

• Driving demand for large-sized fish
• Supplied evenly by Norway and Chile

Japan and ASEAN

• Higher airfreight cost
• Limited supply from Canada (East Coast)

Salmon markets, sold quantity (head on Salmon markets, sold quantity (head on gutted weight)

							HEALTHY LIVING
Salmon markets, sold
			Salmon markets, sold quantity (head on gutted weight)
quantity (head on
			Estimated volumes Q1 comparison				Estimated volumes FY comparison
Markets	Q2 2023	Q2 2022	Volume	%	FY 2022	FY 2021	Volume	%
EU+UK	241	246	-5	-2%	1,140	1,158	-18	-2%
USA	140	143	-3	-2%	586	572	14	2%
Russia	11	7	5	69%	49	86	-37	-43%
Japan	10	11	-2	-13%	55	66	-11	-16%
Greater China	32	20	12	57%	103	105	-2	-2%
ASEAN	15	19	-3	-17%	84	81	3	4%
Latin America	44	44	1	1%	179	184	-5	-3%
Ukraine	4	3	1	41%	19	33	-14	-43%
Other markets	67	70	-3	-4%	328	315	13	4%

Comments:

Greater China = China / Hong Kong / Taiwan (incl. estimated re-export from Vietnam & Thailand) ASEAN = Association of Southeast Asian Nations (estimated re-export from Vietnam & Thailand subtracted) Latin America (including both Mexico and Caribbean + domestic consumption in Chile)

Source: Kontali

1% INCREASE IN GLOBAL HARVESTED AND SOLD QUANTITY

Stable supply to the market

Europe - Norway/UK growth neutralised by other countries Faroes – Building biomass for coming quarters Chile – Good productivity

-

-

2% growth in American harvest

• North American drop was driven by Discovery Island exit

Limited inventory movements in the quarter

				HEALTHY LIVING
1% INCREASE IN GLOBAL HARVESTED AND SOLD QUANTITY
Stable supply to the market	Supply Development SUPPLY DEVELOPMENT	Q2 2023 Q2 2023	Q2 2022	Q2 2022 Change % Change %
	Norway	283	274	3.1 %
Europe - Norway/UK growth neutralised by other	UK	42	41	4.7 %
countries	Faroes Iceland	16 0	18 5	-13.7 % -93.1 %
	Ireland	4	7	-40.5 %
 Norway - Increasing volumes during the quarter	Total Europe	345	345	0.1 %
 Scotland – Recovery from large biological driven drop in 2022
 Faroes – Building biomass for coming quarters	Chile	163	153	6.8 %
	Canada USA	28 4	33 5	-15.1 % -22.6 %
 Iceland – Limited harvest due to 2022/23 biological issues	Total Americas	195	190	2.3 %
	Other	24	24	1.5 %
2% growth in American harvest	Total (Harvested quantity)	564	559	0.9 %
 Chile – Good productivity	Inventory movements	0	3	-97.4 %
	Total (Sold Quantity)	564	563	0.3 %
 North American drop was driven by Discovery Island exit

SUMMARY OF Q2 2023

MARKETS & SALES

FINANCIALS

SEGMENT INFORMATION

OUTLOOK

APPENDIX

Kolbeinagjógv, Faroe Island

GROUP PROFIT AND LOSS LOWER REVENUE AND OPERATIONAL EBIT

GROUP PROFIT AND LOSS	LOWER REVENUE AND OPERATIONAL EBIT				HEALTHY LIVING
Q2 2022	Q2 2023	(DKK million)	Q2 23	YTD 23	Q2 22	YTD 22
Revenue (mDKK)		Operating revenue	1,670	3,720	1,684	3,323
1,684 -1%	1,670	Operational EBITDA*	508	1,221	724	1,278
		Operational EBIT*	353	919	587	1,004
Operational EBIT (mDKK)		Fair value adjustment of biological assets	-432	-379	576	753
587 -40%	353	Onerous contracts	0	0	-34	-64
Fair value of biomass (mDKK)		Income from associates	-3	21	-4	-1
576	-432	Revenue tax	-30	-68	-63	-121
		EBIT	-112	493	1,062	1,572
Profit after tax (mDKK)		Net Financial items	-41	-59	-5	-24
845	-123	EBT	-153	433	1,057	1,549
		Taxes	30	-89	-212	-299
		Profit for the period	-123	344	845	1,249

MARGINS

MARGINS SCOTLAND IMPROVED –	FAROE	ISLAND SOFTER THAN THE HISTORICALLY STRONG Q2 2022			HEALTHY LIVING
Q2 2022	Q2 2023	(DKK million)	Q2 23	YTD 23	Q2 22 YTD 22
OPERATIONAL EBIT/Kg (NOK)		Operational EBITDA margin	30.4%	32.8%	43.0% 38.5%
Farming Faroe Islands 63.38 -19.62	43.76	Operational EBIT margin	21.2%	24.7%	34.8% 30.2%
Farming Scotland 8.29 6.93	15.22	Operational EBIT/Kg (Farming FO) (NOK)	43.76	41.76	63.38 47.53
VAP -24.46 16.37	-8.08	Operational EBIT/Kg (Farming FO and VAP) (NOK)	39.09	40.29	52.28 41.53
EBITDA margin		Operational EBIT/Kg (VAP) (NOK)	-8.08	-2.96	-24.46 -14.24
Fishmeal, -oil and Feed 22.7%	17.2%	Operational EBIT/Kg (Farming SCT) (NOK)	15.22	21.63	8.29 -1.47
		EBITDA margin (Fishmeal, -oil and Feed)	17.2%	17.4%	22.7% 21.3%

OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE**

*) Operational EBIT is EBIT before fair value adjustments of biomass, onerous contracts provisions, income from associates and revenue tax **) Earnings per share adjusted for fair value of biomass, onerous contracts provisions and tax and these.

BALANCE SHEET

		HEALTHY LIVING
(DKK million)	Q2 23	End 2022
Intangible assets	4,512	4,509
Property, plant and equipment	5,951	5,647
Right of use assets	481	439
Financial assets	239	234
Deferred tax assets	354	336
Biological assets	2,777	2,938
Inventory	1,050	1,074
Financial derivatives	0	7
Receivables	782	809
Other receivables	146	168
Cash and cash equivalents	544	720
Total Assets	16,835	16,882
Equity	10,278	10,396
Deferred tax and other taxes	1,914	1,826
Long-term interest-bearing debt	3,454	3,383
Long-term leasing debt	389	353
Short-term leasing debt	66	106
	731	817
Accounts and other payables Total Equity and Liabilities	16,835	16,882

CASH FLOW

				HEALTHY LIVING
(DKK million)	Q2 23	YTD 23	Q2 22	YTD 22
Cash flow from operations	376	949	542	693
			-272	-447
Cash flow from investments	-304	-507
Cash flow from financing	-99	-618	-206	-247
Net change in cash	-26	-176	63	-1
Cash at the end of the period	544	544	508	508

NET INTEREST-BEARING DEBT (NIBD) NIBD DECREASED DURING Q2 2023

NIBD was increased by:

-

NIBD was decreased by:

Financing end Q2 2023

• NIBD: DKK 2,911 million
• Bank facilities of EUR 700 million, and an accordion of EUR 150 million.
• Undrawn credit facilities: DKK 2,304 million

HEALTHY LIVING

NIBD and available funding

FARMING – LOWER VOLUMES AND AVERAGE HARVEST IN THE FAROE ISLAND BUT HIGHER	HARVEST VOLUME	IN SCOTLAND				HEALTHY LIVING
Q2 2022	Q2 2023	Harvest Volumes tonnes [HOG]	Q2 23	YTD 23	Q2 22	YTD 22
Harvested volumes (tonnes HOG)		FO - North Region	1,270	5,396	4,801	14,847
	8,658		5,528	9,376	3,082	8,415
13,101 -34% FO:		FO - West Region
6,646 10% SCT:	7,343	FO - South Region	1,860	4,891	5,218	7,298
		FO – Total	8,658	19,663	13,101	30,560
Average harvest weight (kg)		SCT	7,343	15,436	6,646	10,619
4.7 -9% FO:	4.3
4.0 SCT: 15%	4.6	Total (FO & SCT)	16,001	35,099	19,747	41,179
Smolt transfer (million pcs.)		Sea water temperatures at 18m depth in the Faroe Islands

Page 16

IMPROVED OPERATIONAL EBIT IN SCOTLAND

				HEALTHY LIVING
Farming FO (DKK million)	Q2 23	YTD 23	Q2 22	YTD 22
Operating revenue	892	1,989	1,140	2,338
Operational EBIT	242	557	617	1,088
Operational EBIT margin	27%	28%	54%	47%
Farming SCT (DKK million)	Q2 23	YTD 23	Q2 22	YTD 22
Operating revenue	587	1,296	467	701
Operational EBIT	71	226	41	-12
Operational EBIT margin	12%	17%	9%	-2%
Sea water temperatures at 5m depth in Scotland

Farming SCT (DKK million)		Q2 23 YTD 23 Q2 22 YTD 22
Operating revenue	587	1.296	467	701
Operational EBIT	71	226	41	-12
Operational EBIT marqin	12%	17%	9%	-2%

GOOD MARGINS IN BOTH REGIONS

• FO: Low harvest volumes (back-end loaded in 2023) Lower average harvest weight Good growth (building biomass) Low sea lice levels
• SCT: Good biological development until June Higher harvest volumes and biomass Low sea lice levels Increased average harvest weight

Margin - EBIT per kg total harvested quantity [NOK/kg] 63,38 8,29 47,53 -1,47 43,76 15,22 41,76 21,63 -10,00 10,00 30,00 50,00 70,00 Q2 FO Q2 SCT YTD FO YTD SCT 2022 2023

BUILDING NET BIOMASS IN H1 FOR THE FIRST TIME PAST 12Y

2017 2016 2015 2014 2013 2012

VALUE ADDED PRODUCTS (VAP) LOWER VOLUMES AND HIGHER COST OF RAW MATERIAL

				HEALTHY LIVING
(DKK million)	Q2 23	YTD 23	Q2 22	YTD 22
Operating revenue	395	772	417	835
Operational EBIT	-26	-20	-108	-137
Operational EBIT margin	-7%	-3%	-26%	-16%
		10,055	6,318	12,995
Farming FO transferred to VAP (tgw)	4,957
VAP produced (tgw)	4,999	9,752	5,944	12,880
Margin - EBIT per kg total VAP produced [NOK/kg]
10,00 5,00

FISHMEAL, OIL AND FEED (FOF)

RECORD-HIGH SOURCING LEADING TO HIGHER SALES OF FISHMEAL AND FISH OIL

(DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Operating revenue 744 1,475 523 965 EBITDA 128 257 119 205 EBITDA margin 17% 17% 23% 21% Feed sold (tonnes)* 30,231 52,518 31,243 57,435 Fishmeal sold external (tonnes) 21,328 35,103 5,247 15,044

• Including internal sales, corresponding to 98% of feed volumes in Q1 2023 (Q1 2022: 96%)

21

MARKET CONDITIONS FEED RECORED-HIGH RAW MATERIAL SOURCING

Raw material sourcing

Feed raw material prices

• Fish oil prices all-time high
• Fishmeal stable on high level
• Rapeseed oil decreasing
• Vegetable proteins decreasing

Source: Holtermann

SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION

OUTLOOK

APPENDIX

EXPECTED HARVEST GROWTH OF 2% IN 2023

-

1.800

24

OUTLOOK

Global harvest

• Marginal increase 0.3% in Q2 2023 vs Q2 2022
• 2% global supply growth expected in 2023

Harvest: Farming

• Expected harvest of 93kt* gutted weight (Faroe Islands: 63kt and Scotland: 30kt*)

Smolt release:

• In 2023, Bakkafrost expects to release 25.6 million smolts (Faroe Islands: 16.0 and Scotland: 9.6)

* Risk to be reduced by 5–6kt (Scotland)

Contracts

• For 2023, Bakkafrost has signed contracts for around 23% of the total expected harvest volumes

Fishmeal, Oil and Feed

• Feed sales are expected to be around 130,000 tonnes in 2023
• Fishmeal and fish oil volumes are expected to be record-high in 2023

Headlines from CMD on 6 June 2023

CAPEX: 6,3bn DKK (2024-2028)

• 2028: 165,000kt harvest volume / 200,000kt capacity
• FO: Sustainable growth (site optimisation & new technology) Cost-efficient (repurposed) broodstock facilities. Hatchery capacity of 24m smolt @500g
• SCT: Build hatchery capacity of 15m smolt @500g New processing facility Improved cost-efficiency in vessel operation

PERFORMANCE

BEST PRACTICES & WELL-INVESTED VALUE CHAIN DRIVES PERFORMANCE

HEALTHY LIVING

LARGE HIGH-QUALITY SMOLT ARE THE KEY TO GROWTH AND IMPROVEMENT

LARGE SMOLT STRATEGY DELIVERING LARGE HEALTHY SMOLT

HEALTHY LIVING

8m smolt at 500g 32,300m³ capacity

29,300m³ capacity

165,000 TONNES HARVEST IN 2028, FAROE ISLANDS AND SCOTLAND COMBINED

MARKETS & SALES

MARKETS & SALES						HEALTHY LIVING
SALES	TO NORTH AMERICA INCREASED -	SALES TO WESTERN EUROPE AND ASIA DECREASED
	Sales & volume	Total sales of salmon by markets	Q2 2023	Q2 2022	YTD 2023	YTD 2022
	Q2 2023	Western Europe	FO SCT	Total FO SCT Total	FO SCT Total	FO SCT Total
Q2 2022			58% 61%	59% 52% 86% 62% 25% 28% 6% 21%	65% 59% 62% 18% 26% 22%	53% 89% 62% 27% 6% 22%
					14% 12% 13%	16% 4% 13%
	Western Europe	North America Asia	24% 26% 16% 10% 13%	18% 6% 15%
62%	59%	Eastern Europe	1% 2%	2% 2% 1% 2%	2% 2% 2%	4% 1% 3%
		Rest of world	1% 1%	1% 0% 1% 0%	1% 1% 1%	0% 0% 0%
	North America
		Fresh salmon only by markets	Q2 2023	Q2 2022	YTD 2023	YTD 2022
21%	25%		FO SCT	Total FO SCT Total	FO SCT Total	FO SCT Total

HEALTHY LIVING Total sales of salmon Western Europe 58% 61% 59% 52% 86% 62% 65% 59% 62% 53% 89% 62% North America 24% 26% 25% 28% 6% 21% 18% 26% 22% 27% 6% 22% Asia 16% 10% 13% 18% 6% 15% 14% 12% 13% 16% 4% 13% Eastern Europe 1% 2% 2% 2% 1% 2% 2% 2% 2% 4% 1% 3% Rest of world 1% 1% 1% 0% 1% 0% 1% 1% 1% 0% 0% 0% Fresh salmon only by Q2 2023 Q2 2022 YTD 2023 YTD 2022 markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 40% 61% 53% 39% 86% 57% 51% 59% 56% 42% 90% 56% North America 27% 27% 27% 35% 7% 24% 21% 26% 24% 33% 6% 25% Asia 32% 11% 19% 25% 6% 18% 25% 12% 17% 21% 4% 16% Eastern Europe 1% 1% 1% 1% 0% 1% 2% 2% 2% 4% 0% 3% Rest of world 0% 0% 0% 0% 1% 0% 1% 1% 1% 0% 0% 0% Contract share FO, VAP products [% of qty] 100%
52%	80%		43%

VAP on contract HOG, Spot

-

-

							HEALTHY LIVING
DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN
	Global Supply of Atlantic Salmon (head on gutted -
Expected supply growth in 2023	HOG)
 2% increase in Global supply*			2018	2019	2020	2021	2022	2023E
	Norway UK		1,129 137	1,198 171	1,226 160	1,383 179	1,359 145	1,384 156
 2% increase in supply* from Europe	Ireland		13	14	14	14	17	15
	Iceland		12	22	27	35	42	39
 1% increase in supply* from the Americas	Faroes		64	78	72	96	89	91
	Total Europe		1,355	1,484	1,499	1,707	1,651	1,684
* Including expected inventory movements	Chile		598	601	657	638	649	668
	Canada		131	124	123	128	118	107
	USA Total Americas		17 747	19 744	18 798	17 783	18 785	17 792
	Others		65	71	91	109	106	111
	Total (Sold Quantity)		2,167	2,299	2,387	2,600	2,542	2,587
	Supply growth - Global		6%	6%	4%	9%	-2%	2%
	Supply growth - Europe		1%	10%	1%	14%	-3%	2%
	Supply growth - Americas		18%	0%	7%	-2%	0%	1%
	Salmon Markets (head on gutted -		HOG)
		2018	2019		2020	2021	2022	2023E
	EU+UK	949	1,017		1,073	1,158	1,140	1,139
	USA Japan	438		471	506	572	586	595
Comments: All figures are in hog-equivalents and thousand tonnes.		54		53 78	64 79	66 86	55 49	50 56
Figures represents sold quantity of Atlantic Salmon from each producing country
Source: Kontali	Russia	89
	Others	637		678	664	718	712	746
	Total (Sold Quantity)	2,167	2,299		2,387	2,599	2,542	2,587

Salmon Markets (head on gutted - HOG)
	2018	2019	2020	2021	2022	2023E
EU+UK	949	1,017	1.073	1.158	1.140	1.139
USA	438	471	506	572	586	595
Japan	54	53	64	દિવ	55	50
Russia	89	78	79	86	49	56
Others	637	678	664	718	712	746
Total (Sold Quantity)	2,167	2,299	2,387	2,599	2,542	2,587

Q2 2023 MARKET ENVIRONMENT

Reduced prices in Q2

-

					12,0
					10,0 8,0	6,2	6,1
					EUR 6,0 4,0 2,0	5,3
					-
Increasing supply pushed pricing MARKET CURRENCY Nasdaq Norway (EUR)	down in Q2 2023 8.95	June Q2 2022 10.53	Change % -15.0 %			9,8	10,3 10,4
UB North East US 14-16lb HOG (USD per kg) DKK	10.87 Q2 2023	12.91 Q2 2022	-15.8 % Change %		USD
Nasdaq Norway UB North East US 14-16lb HOG (per kg)	66.67 74.38	78.37 90.33	-14.9 % -17.7 %		-

Source: Kontali

Nasdaq less SSB price Nasdaq price

Q2 2023 – SPOT AND CONTRACT PRICING ALIGNED

Nasdaq spot price reflecting marginal pricing per week

Statistics Norway (SSB) publish average price for all whole fish sold per week

Incorporates bilateral contracts of variable duration

SSB price exceeded Nasdaq in Q2 2023

Normal spot/contract relationship in the quarter

Strengthened Fish Pool forward price for 2H 2023

Reduced supply estimates

Stable forward prices for 2024/2025

Source: Kontali

Fish pool forward price Fish pool forward price in Q1 2023 report

DEVELOPMENT PER QUARTER

1,618 1,272 1,488 1,639 1,684 1,867 1,940 2,050 1,670 Revenue 407 71 120 418 587 325 376 565 353 Operational EBIT 428 131 -3 405 845 249 -154 467 -123 Profit/Loss 17,561 14,937 20,694 17,459 13,101 16,850 19,276 11,005 8,658 Harvest FO (tgw) 10,634 6,914 5,122 3,973 6,646 8,100 5,198 8,093 7,343 Harvest SCT (tgw) 26.93 13.59 20.11 33.79 52.28 35.62 33.81 42.98 39.09 Op. EBIT Farming FO & VAP (NOK/kg) 26.52 12.56 18.29 36.03 63.38 35.60 27.56 42.14 43.76 Op. EBIT Farming FO (NOK/kg) 1.53 2.89 5.71 -5.65 -24.46 0.06 16.67 1.95 -8.08 Op. EBIT VAP (NOK/kg) 6.75 -16.32 -55.95 -17.67 8.29 -22.90 -39.96 28.23 15.22
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (mDKK) 2021 2021 2021 2022 2022 2022 2022 2023 2023

2023

2019

2014

2015

2016

2017

2018

2020

2021

2022

2023

36

• The AGM, which was held 28 April 2023, decided to pay out dividend for 2022 of DKK 10.00 per share. The payment was paid out on 22 May 2023.
• Dividend payment equals 53% of adjusted EPS

Dividend

Dividend policy

DIVIDEND

-

• Generally, Bakkafrost shall pay a dividend to its shareholders
• A long-term goal is that 30–50% of adjusted EPS shall be paid out as a dividend

* Adjusted EPS is EPS adjusted for fair value adjustments of biomass and onerous contracts provisions

** Dividend and acquisition of treasury shares

*** Dividend is paid out the following year

-

Dividend per share (DKK)***

59%

Dividend per share in % of adj. EPS*

50% 53%

OUR PILLARS AND VALUES

IMPROVEMENTS OF LARGE-SMOLT QUALITY, FAROES (2021G VS. 2020G)

VALUE CHAIN INSIGHT FARMING CYCLES GETTING SHORTER WITH LARGE HIGH-QUALITY SMOLT

~ 6.3BN PLANNED INVESTMENTS 2024-2028

REDUCE BIOLOGICAL RISK, IMPROVE EFFICIENCY AND INCREASE ORGANIC GROWTH

-

- Cost-efficient broodstock (repurposing old hatcheries)

• Increase feed capacity, including storage and logistics • Optimization of existing farming sites • Improved vessel capacity • Energy Transition • Harvest and processing plant • Site expansions • Vessel capacity for transport and treatment • Marine Site development
  • Offshore postponed

Scotland:

-

-