THE FAROESE ORIGIN IS IMPERATIVE
BAKKAFROST GROUP Havbrukskonferansen, Oslo 23 November 2016
- 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.
ORIGIN IS THE FULCRUM IN THE VALUE CHAIN
DIVERCIFICATION BY LOCAL RAW MATERIAL – AND OWN FEED RECIPE
Low CO2 footprint
No need to import raw material from afar
Optimal raw material availability
- Blue Whiting
- Winter Capelin
- Summer Capelin
- Mackerel
- Herring
Short distance from fishing grounds to feeding the salmon
- Blue Whiting concentrated south of Faroe Islands
- New pelagic fleet with super cooling system
ADDITIONAL RAW MATERIAL FROM BY PRODUCTS / OFF-CUTS
New Pelagic industry in the Faroe Islands
- The Faroe Islands have built a large pelagic processing industry since 2012
- By-products / fish offcuts important resource
- Bakkafrost can apply these products sustainably
- No conflict with human consumption
Salmon guts
Additional raw material will be available from the new processing/VAP plant for processing of salmon meal and salmon oil
Benefits from large pelagic industry
- Value increase of fish by-product, fish offcuts
- Fish not suitable for human consumption
- Fish for which there is no market
- Rejected pelagic fish for human consumption
Source: Holtermann, Bakkafrost Note: (1) Norway
BAKKAFROST OFFERS A PREMIUM PRODUCT
- Supply constraints makes fish oil and fish meal costly ingredients
- Keeping the diet closer to the natural diet of wild salmon provides measurable benefits
- Healthier nutritional profile of end product
- Superior meat structure
- Higher production efficiency due to animal welfare has positive impact on non-feed cost elements
Standard feed recipe 2016E(1)
ORIGIN IS THE FULCRUM IN THE VALUE CHAIN
BAKKAFROST / HAVBRUKSKONFERANSEN 2016 Page 8
NATURAL CONDITIONS
ORIGIN IS THE FULCRUM IN THE VALUE CHAIN
BAKKAFROST / HAVBRUKSKONFERANSEN 2016 Page 10
BAKKAFROST SALMON
In Bakkafrost acquired fishmeal, -oil and feed producer Havsbrún in 2011
Havsbrún started cleaning all relevant fish oil used for Bakkafrost salmon in 2015
- Removes and reduces environmental pollutants
- Removes doubts regarding salmon intake and should make intake limitations for salmon redundant
- Salmon feed purified fish oil is new in the global salmon market and could be a differentiator
YOU CAN TASTE THE DIFFERENCE!
- Higher content of marine ingredients, compared with industry standard (Natural diet)
- Especially rich in Omega 3 fatty acids
- Purified fish oil
Produced of fish from sustainable quotas
- Produced from off-cuts and fish, which is not used for human consumption
- Only use of non GMO-ingredients
- Total traceability from initial catch to final feed
- Locally caught fish used for the feed
MARKET DIVERSIFICATION
Bakkafrost salmon is a global product sold worldwide
- 86% of sales came from Continental Europe in 2002
- 34% of sales came from Continental Europe in first nine months in 2016. Other main markets are more or less equal. The market is now diversified on all continents
Source: Bakkafrost
THE MARKET IS WILLING TO PAY UP FOR PREMIUM PRODUCTS
- Consistent large sized fish forms baseline for price premium
- Bakkafrost has further tailored its product for the premium market through
- Investing in very high inclusion rates of marine raw materials
- Development of a demand driven value added processing franchise
- Including capability of "upgrading" parts of ~10% of fish normally sold at discount as "downgraded" due to skin scars, deformities etc.
- Superior market access as the Faroe Islands is rarely part of recurring trade sanctions/embargos/dumping duties etc.
Export price, Fresh Atlantic Salmon (head on)
Source: Kontali
SUMMARY OF Q3 2016
HIGHLIGHTS Q3 2016
Acquisition of Faroe Farming and strong result
- Harvested 10,664 tgw in Q3 2016 (12,982 tgw in Q3 2015)
- Feed sales of 28,850 tonnes in Q3 2016* (27,011 tonnes in Q3 2015*)
- Raw material purchase of 11,003 tonnes in Q3 2016 (10,417 tonnes in Q3 2015)
- Revenues of DKK 640 million in Q3 2016 (DKK 677 million in Q3 2015)
- Operational EBIT** of DKK 255 million in Q3 2016 (DKK 206 million in Q3 2015)
- Faroe Farming part of Bakkafrost from 1 July 2016
- Positive results in Farming and FOF segments, while loss in VAP segment
**) EBIT before fair value on biomass, onerous contracts, income from associates and revenue tax
Strongest quarterly result from combined Farming/VAP per kg, although VAP segment is still struggling. FOF segment has good result
- Farming/VAP division increased margin from 18.10 NOK/kg in Q3 2015 to 28.97 NOK/kg in Q3 2016
- VAP segment delivered a margin of -14.15 NOK/kg in Q3 2016, compared with 2.95 NOK/kg in Q3 2015
- Farming margin was 34.44 NOK/kg in Q3 2016, compared with 17.25 NOK/kg in Q3 2015.
- FOF delivered a margin of 19.5% in Q3 2016, compared with 13.0% in Q3 2015
- Group Operational EBIT was DKK 255 million in Q3 2016, compared with DKK 206 million in Q3 2015
| (DKK million) |
Q3
2016 |
Q3
2015 |
M9
2016 |
M9
2015 |
| Operating revenues |
640 |
677 |
2,334 |
2,091 |
| Operational EBITDA |
287 |
232 |
905 |
823 |
| Operational EBIT |
255 |
206 |
815 |
744 |
| Profit for the period |
346 |
168 |
783 |
492 |
|
|
|
|
|
| Operational EBITDA margin |
44.8% |
34.3% |
38.8% |
39.4% |
| Operational EBIT margin |
39.8% |
30.4% |
34.9% |
35.6% |
|
|
|
|
|
| Operational EBIT/Kg (Farming) (NOK) |
34.44 |
17.25 |
33.22 |
20.03 |
| Operational EBIT/Kg (Farming and VAP) (NOK) |
28.97 |
18.10 |
28.13 |
22.03 |
| Operational EBIT/Kg (VAP) (NOK) |
-14.15 |
2.95 |
-14.75 |
5.52 |
| EBITDA margin (Fishmeal, -oil and feed) |
19.5% |
13.0% |
21.4% |
19.5% |
DEVELOPMENT PER QUARTER Q1 2013 – Q3 2016
| (mDKK) |
Q3
2016 |
Q2
2016 |
Q1
2016 |
Q4
2015 |
Q3
2015 |
Q2
2015 |
Q1
2015 |
Q4
2014 |
Q3
2014 |
Q2
2014 |
Q1
2014 |
Q4
2013 |
Q3
2013 |
Q2
2013 |
Q1
2013 |
| Revenue |
640 |
790 |
905 |
760 |
677 |
800 |
613 |
757 |
584 |
711 |
631 |
667 |
741 |
610 |
473 |
Operational
EBIT |
255 |
307 |
254 |
257 |
206 |
303 |
235 |
227 |
209 |
212 |
186 |
125 |
187 |
169 |
105 |
| Profit/Loss |
347 |
224 |
213 |
319 |
168 |
191 |
132 |
222 |
211 |
126 |
87 |
138 |
200 |
184 |
67 |
| Harvest (tgw) |
10,664 |
13,004 |
10,934 |
13,675 |
12,982 |
14,182 |
9,726 |
12,651 |
10,881 |
11,212 |
9,269 |
11,097 |
11,335 |
10,540 |
8,296 |
| Op. EBIT Farming & VAP (NOK/kg) |
28.97 |
27.88 |
27.55 |
21.83 |
18.10 |
22.62 |
26.12 |
19.48 |
19.73 |
17.66 |
21.37 |
12.44 |
15.76 |
15.29 |
12.16 |
Equity
ratio |
63% |
61% |
66% |
66% |
63% |
61% |
61% |
60% |
57% |
53% |
57% |
54% |
52% |
49% |
48% |
| NIBD |
504 |
603 |
218 |
391 |
182 |
302 |
227 |
233 |
357 |
555 |
503 |
641 |
728 |
786 |
775 |
Turnover for the Bakkafrost Group has increased from 820 mDKK in 2010 to 2.9 bDKK in 2015.
Operational EBIT for the Bakkafrost Group has increased from 247 mDKK in 2010 to 1.0 bDKK in 2015.
The margin in Farming was NOK 19.63 per kg in 2015 – the highest ever.
The margin in VAP was NOK 5.58 per kg in 2015 – at the same time as Farming margin was record high.
BAKKAFROST / HAVBRUKSKONFERANSEN 2016 Page 19