CREATING SUSTAINABLE VALUE
BAKKAFROST GROUP Bergen 5th March 2015
- This presentation includes statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements.
- No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, none of the Company, or any of its principal shareholders or subsidiary undertakings or any of such person's officers or employees or advisors accept any liability whatsoever arising directly or indirectly from the use of this document.
THE IMPORTANCE OF A GOOD
REGULATORY FARMING ENVIRONMENT
- SUMMARY OF Q4-2014
- A UNIQUE VALUE CHAIN
- BAKKAFROST SALMON – A UNIQUE PRODUCT
- MARKET DIVERSIFICATION
- STATUS ON INVESTMENTS
Bakkafrost's Farming Site in Gøtu A-25
A GOOD REGULATORY FARMING ENVIRONMENT
During the period 2001-2004 the Faroe Islands were severely struck by ISA outbreaks
New legislation and regulation was introduced in 2003 known as "The Faroese Veterinary Model":
- One generation based farming model
- Fallowing periods between each generation
- Immunisation and vaccination programs
- Restricting movement of equipment and fish
- Density limits introduced
- Brood stock facilities allowed on land only
- Fish for harvest not allowed in open waiting cages at harvest station
- Minimum distances between farms and hatcheries
- Rules to fight and control sea-lice introduced
The Model has resulted in one of the most predictable fish production environments in the world with good KPI for salmon farming, such as FCR, Mortality and Growth rate
Key Performing Indicators developed positively post New Veterinary System
The mortality rate with the Faroese Veterinary Model has been between 5 and 10% compared to 20 to 25% before – despite the annual production has never been higher than now
Larger fish
- a sign of a good biology
- Average size increased from 5.6 kg in 2010 to 6.4 kg in 2014
- the highest ever
A low Economical Feed Conversation Rate (EFCR) – lower costs
• FCR on a low level since new Veterinary system between 1.13 – 1.17
A High Growth Rate - higher productivity
• High growth rate in the period, TGC around 3 – 3.1
Margin EBIT/kg last 15 years (NOK/kg) Margin EBIT/kg last 5 years (NOK/kg) Margin EBIT/kg 2014E (NOK/kg)
During the last 15 years, 2000 - 2014, Norway had the highest margin of the farming countries with 6.3 NOK/kg in average, while BAKKA had 5.7 NOK/kg
The last five years - 2010-2014 BAKKA had a strong average margin of 13.00 NOK/kg
In 2014 BAKKA had a farming margin of 17.7 NOK/kg
Higher value from:
- a good regulatory farming environment
- the new structure of the industry in the Faroe Islands and
- company specific strategy Source: Kontali
THE IMPORTANCE OF A GOOD REGULATORY FARMING ENVIRONMENT
- SUMMARY OF Q4-2014
- A UNIQUE VALUE CHAIN
- BAKKAFROST SALMON – A UNIQUE PRODUCT
- MARKET DIVERSIFICATION
- STATUS ON INVESTMENTS
DEVELOPMENT PER QUARTER Q1 2012 – Q4 2014
| (mDKK) |
Q4 2014 |
Q3 2014 |
Q2 2014 |
Q1 2014 |
Q4 2013 |
Q3 2013 |
Q2 2013 |
Q1 2013 |
Q4 2012 |
Q3 2012 |
Q2 2012 |
Q1 2012 |
| Revenue |
757 |
584 |
711 |
631 |
667 |
741 |
610 |
473 |
582 |
457 |
416 |
400 |
| Op. EBIT |
227 |
209 |
212 |
186 |
124 |
187 |
169 |
105 |
99 |
86 |
78 |
60 |
| Profit/Loss |
222 |
211 |
126 |
87 |
138 |
200 |
184 |
67 |
148 |
26 |
91 |
16 |
| Harvest (tgw) |
12,651 |
10,881 |
11,212 |
9,269 |
11,097 |
11,335 |
10,54 |
8,296 |
13,044 |
9,73 |
10,219 |
11,348 |
| Op. EBIT Farming & VAP (NOK/kg) |
19.48 |
19.73 |
17.66 |
21.37 |
12.44 |
15.76 |
15.29 |
12.16 |
7.25 |
8.00 |
7.78 |
5.42 |
| Equity ratio |
60% |
57% |
53% |
57% |
54% |
52% |
49% |
48% |
49% |
47% |
47% |
43% |
| NIBD |
233 |
357 |
555 |
503 |
641 |
728 |
786 |
775 |
807 |
770 |
733 |
764 |
Turnover for Bakkafrost group has increased from 820 mDKK in 2010 to 2.7 bDKK in 2014
Operational EBIT for Bakkafrost Group has increased from 247 mDKK in 2010 to 834 mDKK in 2014
The margin in Farming was NOK 17.65 per kg in 2014 – the highest ever.
The margin in VAP was NOK 3.69 per kg in 2014 – at the same time as Farming margin was record high
MARKETS & SALES
Bakkafrost benefits of the global salmon market
- Access to all markets
- Flexible and efficient market adaptation
- Market position improved on Eastern European market in 2014, especially with fresh salmon
- Sales to EU dropped on fresh from 25% to 11% in 2014
- VAP/contract share 45% of total volume in 2014
Total sales of salmon
by markets |
2014 |
2013 |
| EU |
45% |
47% |
| USA |
19% |
19% |
| Asia |
16% |
27% |
| Eastern Europe |
20% |
6% |
Fresh salmon only
by markets |
2014 |
2013 |
| EU |
11% |
25% |
| USA |
31% |
33% |
| Asia |
27% |
33% |
| Eastern Europe |
31% |
9% |
BAKKAFROST / Creating sustainable value Page 9
ACHIEVED MARKET PRICE
Increased value from market focus
Faroese salmon achieved 5.3 NOK/kg higher value per kg exported salmon than Norway compared with 2.9 NOK/kg in 2013
Source: Kontali Analyse
- THE IMPORTANCE OF A GOOD REGULATORY FARMING ENVIRONMENT
- SUMMARY OF Q4-2014
A UNIQUE VALUE CHAIN
- BAKKAFROST SALMON – A UNIQUE PRODUCT
- MARKET DIVERSIFICATION
- STATUS ON INVESTMENTS
A UNIQUE VALUE CHAIN
- THE IMPORTANCE OF A GOOD REGULATORY FARMING ENVIRONMENT
- A UNIQUE VALUE CHAIN
- SUMMARY OF Q4-2014
- BAKKAFROST SALMON – A UNIQUE PRODUCT
- MARKET DIVERSIFICATION
- STATUS ON INVESTMENTS
A UNIQUE PRODUCT
Bakkafrost salmon has achieved highest quality reputation
MARKET DIVERSIFICATION
Bakkafrost salmon is a global product sold in all continents
- 86% of sales came from continental Europe in 2002
- 45% of sales came from Continental Europe in 2014. Other main markets are more or less equal. The market is now very diversified on all continents
Source: Bakkafrost
- THE IMPORTANCE OF A GOOD REGULATORY FARMING ENVIRONMENT
- A UNIQUE VALUE CHAIN
- SUMMARY OF Q4-2014
- BAKKAFROST SALMON – A UNIQUE PRODUCT
- MARKET DIVERSIFICATION
STATUS ON INVESTMENTS
Building ground for Bakkafrost's new Harvest- & VAP plant in Glyvrar. To be in operation in Q1-2016 Picture from early January-2015
INVESTMENTS – PROGRAMME 2013 - 2017
The investments will be made step by step in the relevant parts in the value chain to secure:
- Efficiency
- Biological risk
- Organic growth
Status on main investments
Drawing of Bakkafrost's new Hatchery in Viðareiði. New Hatchery on top and existing facilities below
Productivity increase and risk reduced
- Investment program includes 3,5 fold increased capacity within 2017
- First capacity available mid 2014. Gradually more capacity available until end 2017
- Larger smolt
- Higher quality smolt
- Reduce growth period in sea farming
- Reduced lice
- Reduced biological and veterinary risk
- Reduce number of treatments and costs
- Reduce mortality
Growth speed with 100g vs 300g smolts
Actual growth period with larger smolt
- Reduced risk
- Up to 6 months reduced growth period will reduce risk significantly
- Reduced mortality
- Fewer treatments and lower treatment costs
- Organic growth
- Shorter production cycle in farms will increase production
- Around 30% theoretical growth potential with size increase from 100g to 500g
Results with large smolt in Faroe Islands
The graph shows actual growth period until harvest at 6 kg wfe in Faroe Islands in the period 2005-2014
BAKKAFROST - PREPARING FOR THE FUTURE
New Harvest and VAP operation
The new plant and HQ 7 factories merged into one
Profiles from the National Football Team enjoying top quality Bakkafrost salmon. Bakkafrost is the main sponsor of the Faroe Islands National Football Team.