Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q2 2019 Earnings Presentation

36 slides from Bakkafrost P/f's earnings presentation, Aug 20, 2019

  1. Slide 1: Q2 2019 Bakkafrost Group

    Q2 2019 BAKKAFROST GROUP Oslo 20 August 2019

  2. Slide 2: Disclaimer

    DISCLAIMER  This presentation includes statements regarding future  No representation or warranty (expressed or implied) is results, which are subject to risks and uncertainties. made as to, and no reliance should be placed on, the Consequently, actual results may differ significantly from fairnes

  3. Slide 3: Summary of Q2 2019

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvested 12,609 tgw in Q2 2019 (12,902 tgw in Q2 2018) Operation  Feed sales of 18,872 tonnes in Q2 2019* (15,673 tonnes in Q2 2018*)  Raw material purchase of 110,109 tonnes in Q2 2019 (118,387 tonnes in Q2 2018)  Revenues of DKK 947 million in Q2 2019 (DKK 954 million in Q2 2018)

  5. Slide 5: Summary of the quarter

    SUMMARY OF THE QUARTER Operational EBIT for the Farming segment (DKK million) Q2 2019 Q2 2018 H1 2019 H1 2018 lower. Operational EBIT for the VAP segment almost zero and higher EBITDA Operating revenue 947 954 1,910 1,805 margin in the FOF segment. Operational EBITDA 397 456 718 770  Farming/VAP ma

  6. Slide 6: Markets and Sales

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  7. Slide 7: Markets & Sales

    MARKETS & SALES Sales distribution was different in Q2 2019, compared Total sales of salmon Q2 Q2 H1 H1 with Q2 2018, especially regarding sales of fresh salmon. by markets 2019 2018 2019 2018 Sales to Eastern Europe decreased significantly, and all EU 42% 27% 46% 29% other markets increased USA 25%

  8. Slide 8: Global Markets

    GLOBAL MARKETS Slightly higher prices in Q2 2019 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Q1 Q2 Q3 Q4  Prices increased 1.6%, compared with Q1-2019  y/y by 6.15 NOK/kg ~-8.8% - from NOK 70.17 to NOK 64.02  q/q by 1.01 NOK/kg ~1.6% - from NOK 63.01 to NOK 64.02 Growth in global supply in

  9. Slide 9: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 10% growth in European harvest SUPPLY DEVELOPMENT Q2 Q2 Change % (HOG - 1,000 tonnes) 2019 2018 Norway 8.6% increase Norway 277 255 8.6%  Higher incoming biomass and improved growth UK 38 32 20.3%  Accelerated harvest due to algae bloom Ireland

  10. Slide 10: Salmon Markets, Sold Quantity (HOG)

    SALMON MARKETS, SOLD QUANTITY (HOG) Good momentum in most markets Salmon markets, sold quantity (head on gutted - HOG)  EU – Strong demand Estimated volumes Q2 comparison Estimated volumes FY comparison Markets Q2 2019 Q2 2018 Volume % H1 2019 H1 2018 Volume % EU 234,800 217,800 17,000 8% 456,800 4

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK SUPPLY - TOTAL Downtrend on supply growth 800 10% 700 9%  Diminishing growth expected in global supply 600 8% 7% 500 6%  Europe impacted by algae bloom in Norway 400 5% 300 4%  Americas – downside risk due to biology in Chile 3% 200 2% 100 1% 0 0% TOTAL Change same quart

  12. Slide 12: Segment Information

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes tonnes [HOG] Q2 2019 Q2 2018 H1 2019 H1 2018  The expected harvest for 2019 is 54,500 tonnes North Region 7,858 12,902 14,601 15,638 gutted weight West Region 4,751 0 11,715 9,501  Harvested volumes decreased by 2% in Q2 Total 12,609 12,90

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Reduced volume and revenue down (DKK million) Q2 2019 Q2 2018 H1 2019 H1 2018  Operating revenue decreased from DKK 775 Operating revenue 759 775 1,514 1,441 million in Q2 2018 to DKK 759 million in Q2 Operational EBIT 303 393 533 622 2019 Operational EBIT margin 4

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming operational EBIT decreased by NOK 7.77 per kg from NOK 39.09 in Q2 2018 to 45,00 NOK 31.31 in Q2 2019 40,00  Operational EBIT per kg in the North Region 35,00 was NOK 30.23 and in the West R

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) VAP operational EBIT margin (DKK million) Q2 2019 Q2 2018 H1 2019 H1 2018  Higher prices and higher volumes in Q2 2019, Operating revenue 238 94 498 187 compared to Q2 2018 Operational EBIT 0 -17 1 -29  Revenue increased to DKK 238 million in Q2 2019, Operational EBIT ma

  17. Slide 17: Fishmeal, Oil and Feed (FOF)

    FISHMEAL, OIL AND FEED (FOF) Better EBITDA margin (DKK million) Q2 2019 Q2 2018 2019 H1 2018 H1  Lower EBITDA of DKK 58 million in Q2 Operating revenue 283 326 567 627 2019, compared with DKK 66 million in Q2 2018 EBITDA 58 66 124 152  EBITDA margin increased to 20.6% in Q2 EBITDA margin 20.6% 20.

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED Volumes of raw material purchase and feed sale [tonnes] Increase in feed sales  Quantity of feed sold was 18,872 tonnes in Q2 2019, 180.000 35.000 compared to 15,673 tonnes in Q2 2018 160.000 30.000 140.000 Raw material (tonnes) Feed sale (tonnes) 25.000 120.000  External fe

  19. Slide 19: Group Financials

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenue in Q2 2019 amounted to DKK 947 (DKK million) Q2 2019 Q2 2018 H1 2019 H1 2018 million, compared to DKK 954 million in Q2 2018 Operating revenue 947 954 1,910 1,805  Operational EBIT in Q2 2019 was lower Operational EBITDA* 397 456 718 770 compared with Q2 2018, amount

  21. Slide 21: Operational EBIT and Earnings per Share

    OPERATIONAL EBIT* AND EARNINGS PER SHARE 459 408 350 335 339 331 303 307 257 254 255 252 268 268 235 231 206 Operational EBIT* 168 (DKK million) 2015 2016 2017 2018 YTD 2019 1,001 1,165 1,378 1,075 607 (YTD) 11,44 8,19 7,13 7,32 6,96 6,56 5,60 Earnings per share 3,91 4,39 4,61 4,37 3,88 (DKK) 3.44 2

  22. Slide 22: Balance Sheet

    BALANCE SHEET  Intangible assets amounts to DKK 390 million at the end (DKK million) Q2 2019 End 2018 of Q2 2019 Intangible assets 390 390  Investments in PPE of DKK 157 million in Q2 2019 and Property, plant and equipment 3,112 2,884 PPE amounts to DKK 3.1 billion Financial assets 111 113 Long-te

  23. Slide 23: Cash Flow

    CASH FLOW  Cash flow from operations amounted to (DKK million) Q2 2019 Q2 2018 H1 2019 H1 2018 DKK 327 million in Q2 2019, compared to DKK 279 million in Q2 2018 Cash flow from operations 327 279 403 648 Cash flow from investments -157 -108 -263 -219  Cash flow from investments amounted to DKK -15

  24. Slide 24: Net Interest-Bearing Debt (NIBD)

    NET INTEREST-BEARING DEBT (NIBD) Net interest-bearing debt Development in NIBD in DKK millions  Cash flow from operating activities decreased the NIBD with DKK 369 million in Q2 2019  Net investments increased the NIBD with DKK 157 million in Q2 2019  Change in working capital in Q2 2019 increase

  25. Slide 25: Outlook

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  26. Slide 26: Outlook

    OUTLOOK Market VAP  Global supply in Q2 2019 increased around 8%, compared  Contracted around 35% of expected harvest for 2019 to Q2 2018  Bakkafrost’s long-term strategy is to sell 40-50% of  Global harvest in Q3 2019 is expected to increase 5%, the harvested volumes as VAP products at fixed pr

  27. Slide 27: Appendix

     SUMMARY OF Q2 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  28. Slide 28: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN  8% global supply growth in Q2 2019 Global Supply of Atlantic Salmon (head on gutted - HOG)  10% growth in European harvest in Q2 2016 2017 2018 2019E 2020E 2019 Norway 1,055 1,078 1,130 1,176 1,215 UK 142 159 138 161 168  American harvest incr

  29. Slide 29: Q2 Market Environment

    Q2 MARKET ENVIRONMENT PRICE NORWAY NORWAY  Reduced market prices, compared to Q2 2018 8,0 7,2 7,2 60,0 7,0 6,2 6,3 6,4 6,0 50,0  Increase vs. Q1 2019 6,0 5,1 5,7 5,8 40,0 5,0 EUR DKK 4,0 30,0 3,0 20,0  Nasdaq Norway price EUR 6.4 in Q2 2019 2,0 10,0 1,0  10% down vs. Q2 2018 - - Q2 Q3 Q4 Q1 Q2 Q

  30. Slide 30: Superior Biology Combined with State of the Art Infrastructure

    SUPERIOR BIOLOGY COMBINED WITH STATE OF THE ART INFRASTRUCTURE FISHMEAL, OIL AND FEED BROODSTOCK SMOLT SEA WATER PROCESSING SALES/MARKETING Equivalent to 100k (tgw) None 12 million @ 200 grams 21 farming sites/17 fjords 130k primary (tgw) Central sales Faroes annual harvest @ 55k (tgw) @100g smolt/

  31. Slide 31: Development per Quarter

    DEVELOPMENT PER QUARTER Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (mDKK) 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 Revenue 800 677 760 905 790 640 868 854 1206 804 906 851 954 622 750 964 947 Operational EBIT 303 206 257 254 307 255 350 335 459 252

  32. Slide 32: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • Dividend for 2018 of DKK 8.25 (NOK 10.65) per share was 99% paid out on 26 April 2019. Totalling 403.1 DKK million (NOK 520.3 million) 49%** 49% 50% 50% 50% 49% 46% 40% Dividend policy 19%  Competitive return through:  Dividends  Increase i

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    BAKKAFROST / Q2 2019 PRESENTATION Page 33

  34. Slide 34: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  51,540 inhabitants (Mar 2019)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2018)  Service/public admin.: ~36%  Private service: ~33%  Construction: ~15%  Fish & aquacul

  35. Slide 35: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development 12 months development Traded daily Rank Holding Share Nam e CitizenshipType of accoun NOK/share 1 4,594,437 9,4% JACOBSEN, ODDVØR MARITA FRO Ordinary 2 4,495,846 9,2% JACOBSEN, JOHAN REGIN FRO Ordinary 3 4,005,869 8,2% FOLKETRYGDFONDET N

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    BAKKAFROST / Q2 2019 PRESENTATION Page 36

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