Slide 1: Q3 2020 presentation
Q3 2020 presentation CEO: Ivan Vindheim CFO: Kristian Ellingsen 4 November 2020
Slide 2: Forward looking statements
Forward looking statements This presentation may be deemed to include forward-looking statements, such as statements that relate to Mowi’s contracted volumes, goals and strategies, including strategic focus areas, salmon prices, ability to increase or vary harvest volume, production capacity, expect
Slide 3: Highlights
Highlights • Q3 operational EBIT of EUR 80 million in line with trading update • Covid-19 restrictions and seasonal high supply put pressure on salmon prices − Shortfall in the foodservice market not fully offset by strong growth in retail sales (net effect approx. -5% to -10%) • Mowi’s operations h
Slide 4: Key financials
Key financials Mowi Group - main figures Q3 2020 Q3 2019 YTD Q3 2020 YTD Q3 2019 2019 Unaudited EUR million Operational revenue and other income 958.2 -6 % 1 022.8 2 753.9 3 023.6 4 135.4 Operational EBIT 1) 80.4 -46 % 147.8 288.3 555.2 720.9 EBIT 130.2 (59.9) 144.9 383.1 617.0 Cash flow from operat
Slide 5: Salmon prices – weekly reference prices
Salmon prices – weekly reference prices • Prices in Q3 2020 down by 11% YoY in Europe and approx. 20% in Americas on Covid-19 resurgence 9 7 8 6 7 USD per lbs (Miami and Seattle) 5 6 EUR per kg (Oslo) 5 4 4 3 3 2 2 1 1 0 0 2018 2019 2020 Ref. price Norway EUR (NASDAQ average superior Oslo, GWT/kg) R
Slide 6: Price achievement, contract & superior share
Price achievement (1), contract & superior share 140 % 120 % 123 % 120 % 110 % 102 % 103 % 100 % 95 % 94 % 100 % 80 % 60 % 40 % 20 % 0% Norwegian Scottish Canadian Chilean Q3 2019 Q3 2020 Norwegian Scottish Canadian Chilean Q3-20 Contract share 24 % 53 % 9% 30 % Superior share 94 % 96 % 85 % 90 % Pa
Slide 7: Operational EBIT comparison
Operational EBIT comparison 180 4.4 -84.1 160 147.8 140 120 EUR million 100 7.4 2.3 80.4 80 2.6 60 40 20 0 Op EBIT Feed Farming Markets Consumer Other Op EBIT Q3 2019 Products Q3 2020 Page 7
Slide 8: Norway
Norway SALMON OF NORWEGIAN ORIGIN Operational Operational EBITEBIT Salmon Salmon of Norwegian of Norwegian Origin Origin EUR million Q3 2020 Q3 2019 Q3 Q3 2019 2020 vs Q3 vs Q3 2019 2020 Operational EBIT 66.6 103.8 120 EBIT 87.8 -6.7 100 Harv est v olume (GWT) 76 453 63 407 80 Operational EBIT per k
Slide 9: Norway: Operational EBIT/kg per region
Norway: Operational EBIT/kg per region 2.5 2.28 2.0 1.64 1.5 1.33 EUR per kg 1.06 1.0 0.96 0.87 0.72 0.5 0.12 0.0 South Mid North Total Q3 2019 Q3 2020 • Full cost in box in Q3 2020: − Region North: EUR 3.61 per kg, equivalent to NOK 36.1 per kg − Region Mid: EUR 3.98 per kg, equivalent to NOK 39.8
Slide 10: Norway: Sales contract portfolio
Norway: Sales contract portfolio 30 000 25 000 Contracted volumes (GWT) 20 000 15 000 10 000 5 000 0 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Realised contract volumes Contracted volumes (including prospects) • Contract negotiations currently ongoing for next year Page 10 Note: Mowi Norway’s
Slide 11: Scotland
Scotland SALMON OF SCOTTISH ORIGIN Operational EBIT EBIT Operational Salmon of Scottish Salmon Origin of Scottish Origin EUR million Q3 2020 Q3 2019 Q3 2019 vs Q3 Q3 2020 vs2020 Q3 2019 30 Operational EBIT 5.6 26.2 EBIT -0.7 -23.7 Harv est v olume (GWT) 16 114 19 634 20 Operational EBIT per kg (EUR)
Slide 12: Canada
Canada SALMON OF CANADIAN ORIGIN Operational EBITEBIT Operational Salmon of Canadian Salmon Origin of Canadian Origin EUR million Q3 2020 Q3 2019 Q3 Q3 2019 vs Q3 2020 2020 vs Q3 2019 Operational EBIT -6.8 -0.2 0 EBIT 26.0 -28.6 -2 Harv est v olume (GWT) 12 054 15 786 Operational EBIT per kg (EUR) -
Slide 13: Chile
Chile SALMON OF CHILEAN ORIGIN Operational Operational EBIT EBIT Salmon Salmon of Chilean of Chilean Origin Origin EUR million Q3 2020 Q3 2019 Q3 2020 Q3 2019 vs 2020 vs Q3 Q3 2019 Operational EBIT 9.2 18.7 20 EBIT 14.9 15.4 15 Harv est v olume (GWT) 16 544 14 137 Operational EBIT per kg (EUR) 0.56
Slide 14: Ireland and Faroes
Ireland and Faroes SALMON OF IRISH ORIGIN SALMON OF FAROESE ORIGIN EUR million Q3 2020 Q3 2019 EUR million Q3 2020 Q3 2019 Operational EBIT 5.2 2.2 Operational EBIT 2.3 2.8 EBIT -3.2 -5.9 EBIT 2.6 1.1 Harv est v olume (GWT) 2 764 2 012 Harv est v olume (GWT) 1 844 2 013 Operational EBIT per kg (EUR)
Slide 15: Consumer Products
Consumer Products (1) CONSUMER PRODUCTS EUR million Q3 2020 Q3 2019 Operating rev enues 648.1 640.4 Operational EBIT 21.2 13.8 Operational EBI T % 3.3% 2.2% Operational EBI T % VAP only 4.3% 2.6% EBIT 19.4 14.3 Volume sold (tonnes prod. weight) 60 539 55 843 • Record-high Q3 volumes and earnings in
Slide 16: Feed
Norway Feed FEED EUR million Q3 2020 Q3 2019 Operating rev enues 220.4 165.2 Operational EBIT 12.4 7.9 Operational EBI T % 5.6% 4.8% EBIT 12.2 7.6 Feed sold v olume 171 319 126 723 Feed produced v olume 143 273 126 771 Scotland: New plant • Another good quarter with record-high volumes sold • Solid
Slide 17: Financials, Markets and Harvest volumes
Q3 2020 presentation Financials, Markets and Harvest volumes
Slide 18: Profit and Loss
Profit and Loss Mowi Group Q3 2020 Q3 2019 YTD Q3 2020 YTD Q3 2019 2019 EUR million Operational revenue and other income 958.2 -6 % 1 022.8 2 753.9 3 023.6 4 135.4 • Positive net fair Operational EBIT 1) 80.4 -46 % 147.8 288.3 555.2 720.9 value adjustment of Change in unrealized internal margin 4.9
Slide 19: FX: Price-cost lag for Mowi Norway vs. NOK peers
FX: Price-cost lag for Mowi Norway vs. NOK peers • Mowi and Mowi Norway functional currency is EUR − Eliminate currency fluctuations EURNOK YTD 2020 − Lower financing cost 14 • Significant weakening of NOK driven by Covid-19 12 − NASDAQ price Q3-20 vs Q3-19 down 11% in EUR terms, EURNOK but only 3%
Slide 20: Financial position
Financial position Mowi Group 30.09.2020 30.09.2019 31.12.2019 EUR million Non-current assets 3 369.9 3 150.4 3 210.4 Current assets 2 410.1 2 541.9 2 629.6 Total assets 5 779.9 5 692.3 5 840.1 Equity 2 721.9 2 819.2 2 892.6 Non-current liabilities 2 327.1 2 013.2 2 171.2 Current liabilities 730.9 8
Slide 21: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Mowi Group Q3 2020 Q3 2019 YTD Q3 2020 YTD Q3 2019 2019 EUR million • Working capital tie-up NIBD beginning of period -1 379.7 -1 108.0 -1 337.2 -1 037.2 -1037.2 driven by increased Operational EBITDA* 121.5 186.7 411.0 668.0 874.4 biomass in sea and Change in
Slide 22: 2020 Cash Flow Guidance
2020 Cash Flow Guidance • Working capital build-up EUR ~90m − Support further organic growth • Capital expenditures EUR ~265m(*) − Freshwater investments EUR ~65m in Norway, Canada, Chile − Sea water expansion projects EUR ~20m in Norway, Scotland and Canada − Consumer Products: rebuild Kritsen fact
Slide 23: Overview financing
Overview financing • Total committed financing of EUR 1,956 million out of which approximately EUR 475 million in cash and undrawn lines • Comfortably compliant with equity covenant of 35%. No earnings covenant • Long term NIBD target EUR 1,400m • Bank facility: EUR 1,406m Facility Agreement − Tenor
Slide 24: Supply development
Supply development Estimated volumes Compared to Q3 2019 Est. volumes Suppliers Q3 2020 Q3 2019 Volume % Q2 2020 Norway 322 500 320 800 1 700 0.5% 271 100 Scotland 48 700 50 400 -1 700 -3.4% 40 600 Faroe Islands 16 100 18 100 -2 000 -11.0% 20 400 Other Europe 9 400 7 600 1 800 23.7% 10 700 Total Eur
Slide 25: Global volume by market
Global volume by market Estimated volumes Compared to Q3 2019 Est. volumes 12 month comparison Markets Q3 2020 Q3 2019 Volume % Q2 2020 LTM PTM % EU 296 100 276 200 19 900 7.2% 242 600 1 037 300 1 012 100 2.5% Russia 21 700 21 200 500 2.4% 11 800 75 500 77 800 -3.0% Other Europe 26 400 27 400 -1 000
Slide 26: Development in reference prices
Development in reference prices Q3 2020 Change vs Q3 2020 Change vs Market Q3 2019 EUR Q3 2019 Norway (1) EUR 4.44 -11.0% EUR 4.44 -11.0% Chile (2) USD 3.87 -21.4% EUR 3.31 -25.3% Notes: Chile, GWT (3) USD 3.76 -34.4% EUR 3.22 -37.6% (1) NASDAQ average superior GWE/kg (gutted weight equivalent) (2)
Slide 27: Industry supply growth 2020e and 2021e
Industry supply growth 2020e and 2021e 2017 2018 2019 2020 Estim ates 2020 Estim ates 2021 GWT (1,000) Estim ate Low Y/Y grow th High Y/Y grow th Low Y/Y grow th High Y/Y grow th Norw ay 1 087 1 128 1 200 1 214 1 208 1% 1 220 2% 1 235 2% 1 275 5% UK 159 137 171 164 162 -5 % 166 -3 % 165 1% 175 7% Fa
Slide 28: Mowi volume guidance
Mowi volume guidance Atlantic salmon 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 2021 GWT (1,000) Actual Actual Actual Actual Actual Actual Actual Actual Actual Guidance Guidance Guidance Norway 230.5 56.1 51.4 63.4 66.0 236.9 50.5 56.6 76.5 76.5 260.0 260.0 Scotla
Slide 29: Outlook
Outlook • Notwithstanding the current Covid-19 resurgence we still believe in market recovery next year • Current low price level attracts new customers and new segments, and fuels the long-term development towards more elaborated products • Mowi’s extensive downstream business will continue to capi
Slide 30: Appendix
Q3 2020 presentation Appendix
Slide 31: Dividend policy
Dividend policy • The quarterly dividend level shall reflect the present and expected future cash flow generation of the Company • A target level for net interest-bearing debt is determined, reviewed and updated on a regular basis • When the target is met, at least 75% of the annual free cash flow a
Slide 32: Contract coverage and sales contract policy
Contract coverage and sales contract policy SALES CONTRACT POLICY Min hedging rate Max hedging rate (1) • Q4 2020 contract shares (% of guided volume): Norway (2) 0% 50 % − Norway 28% Scotland 0% 75 % Canada 0% 30 % − Scotland 62% (2) Chile 0% 50 % Ireland 0% 100 % − Canada 0% Faroes 0% 30 % − Chile
Slide 33: Quarterly segment overview
Quarterly segment overview SOURCES OF ORIGIN QTD EUR million Norway Scotland Canada Chile Ireland Faroes Other 1) Group OPERATIONAL EBIT FARMING 38.0 -2.3 -10.8 -2.3 4.5 1.6 28.7 SALES AND MARKETING Markets 9.2 5.0 3.4 1.3 0.4 0.6 0.2 20.1 Consumer Products 7.6 2.4 0.7 10.2 0.2 0.0 0.0 21.2 SUBTOTAL
Slide 34: YTD segment overview
YTD segment overview SOURCES OF ORIGIN YTD EUR million Norway Scotland Canada Chile Ireland Faroes Other 1) Group OPERATIONAL EBIT FARMING 160.6 8.8 -18.5 5.2 18.2 11.6 186.0 SALES AND MARKETING Markets 21.7 8.5 8.4 4.8 0.8 2.5 0.5 47.2 Consumer Products 7.7 7.9 2.9 27.5 0.2 0.0 0.8 47.0 SUBTOTAL 19
Slide 35: Development in harvest volumes
Development in harvest volumes GWT 2016 2017 2017 2018 2019 2020E 2021E (1,000) Total Q1 Q2 Q3 Q4 Total Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4E Total Total Norway 236.0 49.0 39.4 55.4 66.4 210.2 230.5 56.1 51.4 63.4 66.0 236.9 50.5 56.6 76.5 76.5 260.0 260.0 Scotland 45.0 17.8 18.5 10.9 13.0 60.2 38.4
Slide 36: Cash flow guidance and historic developments
Cash flow guidance and historic developments Net capital expenditure (*) Net working capital 350 160 Maintenance level 300 140 250 120 100 200 EUR million EUR million 80 150 60 100 40 50 20 0 0 2015 2016 2017 2018 2019 2020E 2015 2016 2017 2018 2019 2020E Financial commitments and cost of debt (**)
Slide 37: Nova Sea
Nova Sea Harv est v olume (GWT) EBI T per kg NI BD EURm Ownership % 2018 2019 Q3 2019 Q3 2020 2018 2019 Q3 2019 Q3 2020 Q3 2020 Nova Sea 48 % 37 879 45 962 17 467 11 465 2.66 2.30 2.13 1.49 -62.1 • Leading integrated salmon producer in Northern Norway − 33.33 wholly owned licenses − 4 partly owned l
Slide 38: Debt distribution and interest rate hedging
Debt distribution and interest rate hedging CURRENCY DEBT 2020-2021 2021-2022 2022-2023 (2) 30/09/2020 Nominal value Fixed rate(3) Nominal value Fixed rate (3) Nominal value Fixed rate(3) EUR m 1 388.9 380.0 2.13 % 380.0 2.20 % - 0.00 % USD m 60.0 78.3 2.31 % 78.3 2.31 % 60.0 4.13 % GBP m 40.0 23.5
Slide 39: Hedging and long term currency exposure - policies
Hedging and long term currency exposure - policies • EUR/NOK − Mowi shall hedge between 0% and 30% of its assumed annual expenses in NOK against the EUR with a horizon of two years. The annual hedging shall be evenly distributed across the months of the year • USD/CAD − Mowi shall hedge between 0% a
Slide 40: Strategic currency hedging
Strategic currency hedging EUR/NOK USD/CAD STRATEGIC CURRENCY HEDGING MEUR Rate MUSD Rate 2020 49.8 9.89 7.2 1.34 2021 199.2 10.28 28.8 1.32 2022 149.4 10.88 21.9 1.35 P/L effect of contracts realized in Q3 (MEUR) -3.7 MEUR Market value 30/06/2020 -24.9 Change -2.5 Market value 30/09/2020 -27.4 DESI
Slide 41: Thank you
MOQOWI Thank you