Presentation Q1 2014 SalMar ASA
CEO Leif Inge Nordhammer, CFO Trond Tuvstein Oslo, 22 May 2014
Agenda
Highlights
- Financial update
- Operational update
- Outlook
First quarter highlights
- Record high operational EBIT driven by high prices
- Satisfying performance from all farming segments
- Average salmon-price up ~30% from Q1 13
- Continued operational challenges driving costs
- Earnings in sales & process. negatively affected by 35% of volumes on fixed price contracts
Financial update
Group profit and loss
| NOK million |
1Q 14 |
1Q 13 |
FY 2013 |
|
|
|
|
| Operating income |
1 626,2 |
1 276,7 |
6 245,9 |
| Cost of goods sold |
655,4 |
630,3 |
3 051,2 |
| Payroll expenses |
168,9 |
130,7 |
623,1 |
| Other operating expenses |
247,2 |
233,6 |
1 086,3 |
| EBITDA |
554,8 |
282,1 |
1 485,3 |
| Depreciations |
69,5 |
47,2 |
225,8 |
| Operational EBIT |
485,2 |
234,9 |
1 259,5 |
| Fair value adjustment |
-184,3 |
64,0 |
528,2 |
| Particular biological events |
|
|
- |
| Non-recurring gains on aquisition |
- |
- |
161,8 |
| Operational profit |
301,0 |
298,9 |
1 949,4 |
| Income from investments in associates |
36,4 |
40,0 |
158,0 |
| Other financial items |
-27,5 |
-30,5 |
214,7 |
| Profit before tax |
309,9 |
308,4 |
2 322,1 |
| Tax |
73,0 |
73,0 |
418,7 |
| Net profit for the period |
236,9 |
235,4 |
1 903,4 |
- Revenues boosted by higher prices, average salmon price at NOK 47.58/kg, up 32% yoy*
- Harvest volume of 27 800 tons, down from 34 100tons in Q4 13. In line with Q1 13.
- Contract share of 35%, with average price well below spot
- An operational and biological challenging quarter
- PD-fish / handling
- Continued challenges related to sea lice
- Strong group EBIT/kg at NOK 17.45
- Reduced underlying interest cost
* Historical prices adjusted
Group balance sheet
| NOK Million |
31.03.2014 |
31.03.2013 |
31.12.2013 |
| ASSETS |
|
|
|
| Intangible fixed assets |
2 467,7 |
2 134,7 |
2 464,1 |
| Tangible fixed assets |
1 933,7 |
1 269,6 |
1 859,3 |
| Financial fixed assets |
443,3 |
1 014,6 |
408,8 |
| Total fixed assets |
4 844,7 |
4 418,9 |
4 732,2 |
| Inventory |
3 034,1 |
2 258,6 |
3 248,7 |
| Accounts receivables |
649,0 |
634,6 |
662,1 |
| Other short-term receivables |
198,1 |
199,0 |
217,6 |
| Cash and cash equivalents |
1 086,7 |
63,0 |
1 071,0 |
| Total current assets |
4 968,0 |
3 155,2 |
5 199,4 |
| TOTAL ASSETS |
9 812,7 |
7 574,2 |
9 931,6 |
| EQUITY AND LIABILITIES |
|
|
|
| Paid-in equity |
476,6 |
493,8 |
476,6 |
| Reserves |
4 465,9 |
2 613,5 |
4 246,4 |
| Minority interests |
352,5 |
28,6 |
337,8 |
| Total equity |
5 294,9 |
3 135,9 |
5 060,8 |
| Provisions for liabilities |
1 271,7 |
945,5 |
1 199,6 |
| Int. bearing long-term liabilities |
2 349,8 |
2 163,4 |
2 446,2 |
| Total long-term liabilities |
3 621,5 |
3 108,9 |
3 645,8 |
| Int. bearing short-term liabilities |
243,7 |
530,7 |
397,2 |
| Other short-term liabilities |
652,6 |
798,7 |
827,8 |
| Total short-term liabilities |
896,3 |
1 329,3 |
1 225,0 |
| TOTAL EQUITY AND LIABILITIES |
9 812,7 |
7 574,2 |
9 931,6 |
| Net interest bearing debt |
1 506,8 |
2 631,1 |
1 772,4 |
| Equity share |
54,0 % |
41,4 % |
50,9 % |
- Total assets down NOK 119.0m from Q4 to NOK 9 812.7m
- Tangible fixed assets up NOK 74.4m
- Inventory down NOK 214.5m
- Reduced fair value adjustment
- Reduced biomass compared to year end
- Equity up NOK 234.1m to NOK 5 294.9m
- Equity-ratio increased to 54.0%
- Net interest bearing debt reduced by NOK 265.6m to NOK 1 506.8m
Group cash flow
| NOK Million |
Q1 14 |
Q1 13 |
FY 2013 |
| Profit before tax |
309,9 |
308,4 |
2 322,1 |
| Tax paid in period |
-1,4 |
-2,3 |
-6,5 |
| Depreciation |
69,5 |
47,2 |
225,8 |
| Share of profit/loss from associates |
-36,4 |
-40,0 |
-158,0 |
| Realized and unrealized gains on financial |
|
|
|
| assets |
- |
- |
-341,8 |
| Non-recurring gains on acquisitions |
- |
- |
-161,8 |
| Change in fair value adjustments |
184,3 |
-64,0 |
-528,2 |
| Change in working capital |
-108,7 |
-59,8 |
-417,6 |
| Other changes |
29,8 |
38,3 |
172,0 |
| Net cash flow from operating activities |
446,9 |
227,7 |
1 106,0 |
| Net cash flow from investing activities |
-136,1 |
-49,4 |
698,7 |
| Change in interest-bearing debt |
-261,6 |
-125,7 |
-540,8 |
| Dividend paid out |
- |
- |
-0,1 |
| Buy-out of non-controlling interest |
- |
- |
-70,4 |
| Interest paid |
-28,0 |
-44,8 |
-158,1 |
| Other changes |
-4,9 |
- |
-20,6 |
| Net cash flow from financing activities |
-294,4 |
-170,4 |
-790,0 |
| Net change in cash for the period |
16,5 |
7,9 |
1 014,6 |
| Foreign exchange effects |
-0,7 |
-0,2 |
1,1 |
| Cash in the beginning of the period |
1 071,0 |
55,3 |
55,3 |
| Cash and cash equivalents end of period |
1 086,7 |
63,0 |
1 071,0 |
- Strong cash flow from operations during the quarter, NOK 446.9m
- Negative cash flow from investments at NOK 136.1m
- Ongoing investment programs throughout the value chain in the Group.
- Negative cash flow from financing at NOK 294.4m
- Debt instalments of NOK 261.6m
- Interest paid NOK 28.0m
- Options scheme NOK 4.9m
- Cash and cash equivalents of more than NOK 1bn by the end of the quarter
Operational update
Farming Central Norway
| Q1 14 |
Q1 13 |
FY 2013 |
| 448,1 |
643,4 |
2 702,0 |
| 190,9 |
209,9 |
924,2 |
| 42,6% |
32,6% |
34,2% |
| 9,9 |
17,8 |
70,2 |
| 19,35 |
11,81 |
13,17 |
|
|
|
Harvest volume (1,000 tons) EBIT/kg (NOK)
- Strong EBIT margin in the quarter
- Earnings lifted by higher prices
- Harvest volume skewed towards the last month of the quarter
- PD-handling, increased cost:
- On-growth in sea
- Higher FCA
- Challenges with well boat logistics
- Volume from sites north of PD zone.
- Restrictions on use of well boats
- Low utilization of capacity
- Increased number of lice treatments
- Higher direct lice cost
- Expect harvest volumes unchanged at 73 000 tons in 2014
Farming Northern Norway
| Q1 14 |
Q1 13 |
FY 2013 |
| 331,8 |
77,5 |
912,7 |
| 149,3 |
20,5 |
320,2 |
| 45,0% |
26,4% |
35,1% |
| 7,1 |
2,3 |
23,8 |
| 21,05 |
8,91 |
13,45 |
|
|
|
Harvest volume (1,000 tons) EBIT/kg (NOK)
Another strong quarter
- Harvest volume skewed towards the first month of the quarter
- Very strong EBIT/kg at NOK 21.05
- Higher prices at the start of the quarter
- Good biological development improving underlying cost for standing biomass
- Expect lower production costs going forward
Expect harvest volumes of 38 000 tons in 2014
Farming Rauma
| Q1 14 |
Q1 13 |
FY 2013 |
| 206,0 |
110,8 |
595,4 |
| 65,0 |
36,8 |
161,9 |
| 31,6% |
33,3% |
27,2% |
| 4,1 |
3,1 |
14,9 |
| 15,68 |
11,92 |
10,88 |
|
|
|
Harvest volume (1,000 tons) EBIT/kg (NOK)
- Earnings-improvements from higher volumes and higher prices
- Harvest volume slightly skewed towards the end of the quarter
- Improved EBIT/kg at NOK 15.68
- Organic salmon 50% of volumes
- Premium squeeze at increasing spotprices
- Finished harvesting 12G-S1
- Cost expected to improve going forward
- Challenges related PD and sea lice
- Higher production cost
- Expect harvest volumes of 17 000 tons in 2014
Villa Organic
| Villa |
1Q 14 |
4Q 13 |
FY 2013 |
|
|
|
|
| Driftsinntekter (mill.) |
312 |
232 |
315 |
| Operasjonell EBIT (mill.) |
120 |
61 |
54 |
| Operasjonell EBIT i % |
38 % |
26 % |
17 % |
|
|
|
|
| Slaktet kvantum (1 000 tgw) |
6,7 |
5,0 |
6,1 |
| Driftsresultat/ kg. gw (NOK) |
17,92 |
12,18 |
8,95 |
Harvest volume
(1,000 tons) |
EBIT/kg (NOK) |
|
|
|
|
|
17,92 |
| 6,7 |
|
|
|
|
|
12,18 |
|
| 5,0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,1 |
|
|
|
|
|
-5,37 |
|
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14 |
Q1 13
Q2 13 |
Q3 13
Q4 13 |
Q1 14 |
|
|
|
|
- Strong revenue increase
- Harvest volume 6 700 tons, up from 5 000 tons in Q4
- Volumes evenly distributed through the quarter
- EBIT/kg NOK 17.92 versus NOK 12.18 in Q4
- Continued positive cost development
- Good performance on standing biomass
- The process of splitting the company progresses as planned
- Expected harvest volume 1H 2014:
- 11 000 tons
- SalMars share: 5 500 tons
Sales & Processing
| NOKm |
Q1 14 |
Q1 13 |
FY 2013 |
| Operating income (mill.) |
1 387,2 |
1 325,0 |
6 047,4 |
| Operational EBIT (mill.) |
-28,1 |
-30,9 |
-160,9 |
| Operational EBIT % |
-2,0% |
-2,3% |
-2,7% |
1 620 1 623
Operating income (NOK million) EBIT-margin (%)
- Operating income of NOK 1 387.2 million
- 35% on fixed price contracts with average price well below spot
- Efficiency significantly improved by keeping PD-fish in waiting pens
- Operating margin unchanged QOQ at -2%
Norskott Havbruk (Scottish Seafarms)
| 1Q 14 |
1Q 13 |
FY 2013 |
|
|
|
|
|
1 189,1 |
|
|
221,1 |
|
|
18,6 % |
|
|
57,0 |
|
|
267,2 |
|
|
101,1 |
|
|
|
| 7,3 |
6,5 |
26,9 |
| 12,00 |
5,95 |
8,23 |
| EBIT/kg (NOK) |
|
|
|
|
|
|
|
12,00 |
|
|
9,15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
391,0
87,2
22,3 %
1,1
90,5
36,4 |
289,1
38,8
13,4 %
22,7
59,6
21,8
9,47
7,87
5,95 |
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
- Record operating profit
- High salmon prices
- High contract share, 46%
- EBIT/kg NOK 12.00 versus NOK 9.15 in Q4 13
- Harvested 740 tgw less than budget due to weather effects in Shetland in Q1
- This fish will be harvested Q2 14
- Biological situation well managed and under control
- Expect harvest volumes of 25 000 tons in 2014
Outlook
Outlook
- Still cost challenges related sea lice going forward
- Still challenges related to PD in Farming Central Norway / Farming Rauma
- Lower average weight on standing biomass YoY
- Strategic correct areas for the use of eight green licenses awarded in group B
- New licenses will be put into production as quick as possible
- Total output of Atlantic salmon estimated +7% in 2014 ( 2,18 mill tons)
- Norway: approx. 1 224 800 tons, +7% YoY
- Chile: approx. 510 000 tons, +9% YoY
- Expect continued strong demand in core markets going forward
- Expect to harvest approx. 40% of the total volume of 133 000 tons in 1H 2014
- Sales & process.: Current contract share for 2q 2014 app. 40%.
- AGM to be held 4 June 2014 on Frøya. BoD will propose a DPS of NOK 8.0.
Post-Balance Sheets Events
- Friday April 11 the Directorate Of Fisheries announced the result for green licenses in group A (Troms and Finnmark).
- All of SalMars 10 applications was rejected
- SalMar is going to appeal this decision
Thank you for your attention
See www.salmar.no for more information