Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q3 2021 Earnings Presentation

44 slides from Bakkafrost P/f's earnings presentation, Nov 9, 2021

  1. Slide 1: Q3 2021 Bakkafrost Group

    Q3 2021 BAKKAFROST GROUP Glyvrar 9 November 2021

  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 Q3 2021

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvest in the Faroe Islands (FO): 14,937 tgw in Q3 2021 (11,135 tgw in Q3 2020)  Harvest in Scotland (SCT): 6,914 tgw in Q3 2021 (10,476 tgw in Q3 2020) Operation  Feed sales of 44,973 tonnes in Q3 2021* (39,869 tonnes in Q3 2020*)  Raw material purchase of 17,224 tonnes in Q3 2021

  5. Slide 5: Summary of the quarter

    SUMMARY OF THE QUARTER LOWER OPERATIONAL EBIT DRIVEN MAINLY BY FARMING SCOTLAND YTD YTD Q3 2020 Q3 2021 (DKK million) Q3 2021 Q3 2020 2021 2020 Operating revenue 1,272 1,123 4,066 3,513 OPERATIONAL EBIT/Kg (NOK) Operational EBITDA 194 188 1,081 853 Farming Faroe Islands Operational EBIT 71 103 702 5

  6. Slide 6: Markets and Sales

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Haraldsund, A72 Faroe Islands

  7. Slide 7: Markets & Sales

    MARKETS & SALES TOTAL SALES TO ASIA AND EASTERN EUROPE INCREASED – OTHER MARKETS DECREASED Sales & volume (FO only) Total sales of Q3 2021 Q3 2020 YTD 2021 YTD 2020 salmon by markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Q3 2020 Q3 2021 Western Europe 65% 88% 71% 56% 92% 71% 65% 80% 69

  8. Slide 8: Global Markets

    GLOBAL MARKETS HIGHER PRICES Y/Y BUT LOWER PRICES Q/Q Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices increased y/y but Q1 Q2 Q3 Q4 decreased q/q in Q3 2021 80,00 70,00 (NOK/KG) 60,00 y/y: 48.43 14.4% 55.41 50,00 (Q3 2020) 6.98 (Q3 2021) 40,00 30,00 q/q: 63.31 -12.5% 55.41 (Q2

  9. Slide 9: Harvested and Sold Quantity by Origin

    HARVESTED AND SOLD QUANTITY BY ORIGIN  4% increase in total quarterly harvest SUPPLY DEVELOPMENT Q3 2021 Q3 2020 Change %  6% increase in supply to the markets, taking Norway 371 322 15,2 % inventory movements into account UK 49 49 -0,4 % Faroes 21 16 33,1 % Iceland 8 6 39,1 % Ireland 3 4 -27,1 %

  10. Slide 10: Salmon Markets, Sold Quantity

    SALMON MARKETS, SOLD QUANTITY  5% increase in the EU Salmon markets, sold quantity (head on gutted - HOG) Estimated volumes Q2 comparison Estimated volumes H1 comparison  Low compared to 14% harvest growth in Markets Q3 2021 E Q3 2020 Volume % H1 2021 H1 2020 Volume % Europe EU + UK USA 310.800 14

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK Expected drop in global harvest next quarters SUPPLY - TOTAL 1.400 30% 1.200 20% Around 8% growth in Europe in Q4 2021 1.000 10%  Flat development expected in 1H 2022 800 0% 600 -10% 400 Drop expected in Americas next quarters 200 -20%  Driven by Chile 0 -30% Q1 2021 Q2 2

  12. Slide 12: Segment Information

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME INCREASED HARVEST IN FO AND DECREASED IN SCT – INCREASED AVG. SMOLT SIZE Q3 2020 Q3 2021 Harvest Volumes tonnes [HOG] Q3 21 Q3 20 YTD 21 YTD 20 Harvested volumes (tonnes HOG) FO - North Region 2,862 5,337 16,814 24,543 North: 19% 11,135 34% 14,937 FO - West Region 7,756 4,68

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE HIGHER OPERATIONAL EBIT AND OPERATING REVENUE IN FO LOWER OPERATIONAL EBIT AND OPERATING REVENUE IN SCT Q3 2020 Q3 2021 YTD YTD Farming FO (DKK million) Q3 21 Q3 20 21 20 Operational EBIT (mDKK) Operating revenue 759 530 2,366 1,737 FO: 97 40% 135 Operational EBIT 1

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Q3 2020 Q3 2021 Margin - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg (NOK) 20,00 15,00 FO: 12.43 0.12 12.56 10,00 5,00 0,00 SCT: -3.89 -12.44 -16.32 Q3 FO Q3 SCT YTD FO YTD SCT -5,00 -10,00 -15,00 -20,00 2021 2020 FO: Deliberate early harve

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) SAME VOLUMES AND HIGHER COST OF RAW MATERIAL Q3 2020 Q3 2021 (DKK million) Q3 21 Q3 20 YTD 21 YTD 20 Volumes (tonnes) Operating revenue 267 247 836 829 Operational EBIT 11 22 91 60 5,346 0% 5,334 Operational EBIT margin 4% 9% 11% 7% Farming FO transferred to VAP (tgw) 5,29

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

    FISHMEAL, OIL AND FEED (FOF) LOWER RAW MATERIAL SOURCING AND HIGHER SALES OF FEED AND FISHMEAL Q3 2020 Q3 2021 Q3 Q3 YTD YTD (DKK million) 2021 2020 2021 2020 Operating revenue 557 481 1,226 1,060 EBITDA (mDKK) EBITDA 111 69 217 160 69 60% 111 EBITDA margin 20% 14% 18% 15% Feed sold (tonnes)* 44,973

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED SIGNIFICANT INCREASE IN INTERNAL FEED SALES Q3 2020 Q3 2021 Volumes of raw material purchase and feed sale [tonnes] 180.000 50.000 Total feed sales increased (tonnes) 160.000 45.000 140.000 40.000 Raw material (tonnes) 35.000 39,869 13% 44,973 Feed sale (tonnes) 120.000 30.000

  19. Slide 19: Financials & ESG

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS HIGHER REVENUE – REDUCED OPERATIONAL EBIT AND PROFIT Q3 2020 Q3 2021 Q3 Q3 YTD YTD (DKK million) 2021 2020 2021 2020 Operating revenue 1,272 1,123 4,066 3,513 Revenue (mDKK) Operational EBITDA 194 188 1,081 853 1,123 13% 1,272 Operational EBIT 71 103 702 533 Fair value adjustme

  21. Slide 21: Operational EBIT and Adjusted Earnings per Share

    OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 459 408 415 407 335 331 339 303 252 268 268 231 248 224 Operational EBIT* 182 (mDKK) 168 103 89 71 2017 2018 2019 2020 2021 1,378 1,075 1,325 622 702 6,84 6,48 5,60 5,89 5,08 4,98 4,83 4,80 3,79 4,07 3,57 3,61 3,19 2,95 Adjusted EPS** 2,55 2,06 (DK

  22. Slide 22: Balance Sheet

    BALANCE SHEET End 2020 Q3 2021 Q3 End Headlines (mDKK) (DKK million) 2021 2020 Intangible assets 4,495 4,493 Property, plant and equipment 4,742 4,221 PPE: 4,221 522 4,742 309 353 Right of use assets Financial assets 132 122 Biological assets: 2,117* 586 2,703* Long-term receivables 8 8 *(whereof mD

  23. Slide 23: Cash Flow

    CASH FLOW Q3 Q3 YTD YTD Q3 2020 Q3 2021 (DKK million) 2021 2020 2021 2020 Cash flow, operations (mDKK) Cash flow from operations 267 105 936 581 105 162 267 Cash flow from investments -310 -176 -823 -473 Cash flow from financing -136 63 -207 -972 Cash flow, investments (mDKK) Net change in cash -180

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

    NET INTEREST-BEARING DEBT (NIBD) NIBD INCREASED DURING Q3 2021 NIBD was increased by: Development in NIBD in DKK millions  Net investments (mDKK 310) NIBD was decreased by:  Cash flow, operating activities (mDKK -130)  Change in working capital (mDKK -97) NIBD and available funding Financing end

  25. Slide 25: Q3 ESG Update

    Q3 ESG UPDATE Bakkafrost sets a NetZero GHG emission target for 2050 Farming supply vessel M/S Bakkanes put in operation in Scotland to do mechanical delousing In October, the North East Atlantic Blue Whiting Fishery Improvement Project (FIP) is accepted into the MarinTrust Improver Programme, hence

  26. Slide 26: Outlook

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  27. Slide 27: Outlook

    OUTLOOK Market Contracts  Global harvest:  For 2022, Bakkafrost has signed contracts for around 21% of the total expected harvest volumes in the Faroe Islands  increased 4.6% in Q3 2021 vs Q3 2020 and Scotland  expected to decrease 4% in Q4 2021  expected to be flat in H1 2022 Fishmeal, Oil and

  28. Slide 28: Appendix

    SUMMARY OF Q3 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  29. Slide 29: Land Based Farming Expansion to 16 kt

    LAND BASED FARMING EXPANSION TO 16 KT S16 Glyvradalur capacity expansion in progress S24 Strond capacity expansion finalised  In operation in 2023  Full operation 2021 ~ 9m smolt á 500g 1.9kt ~ 3.8m smolt á 500g  10 unrelated departments, building of 320m x 80m S03 Norðtoftir capacity expansion i

  30. Slide 30: Scotland Site Overview

    SCOTLAND SITE OVERVIEW 7,742 TONNES CONSENT INCREASE SINCE THE ACQUISITION Total consent has increased by 11.6% (7,742 tonnes) since the acquisition in Q4 2019 Total consent is 74,765 tonnes in 44 farming sites: North: 24 sites / 44,415 tonnes consent  Uist, 5 sites  Sky & mainland, 6 sites  Loch

  31. Slide 31: Scotland – Strategic Rationale

    SCOTLAND – STRATEGIC RATIONALE 1. Provides access to the attractive Scottish farming region  Niche and differentiated region  High quality salmon from Scottish Provenance priced at a premium 2. Creating a differentiated global leader in premium salmon  Exposure to two geographies, Faroe Islands a

  32. Slide 32: Scotland – Strategic Rationale

    SCOTLAND – STRATEGIC RATIONALE 3. Potential for significant improvement  Scottish Salmon profitability to improve over a five-year period through transfer of best practices  Synergies  Targeted investment programmes 4. Financially attractive  Acquiring the business at a reasonable value, multipl

  33. Slide 33: Investing in Sustainable Growth

    INVESTING IN SUSTAINABLE GROWTH 150,000 TONNES HARVEST IN 2026, FAROE ISLANDS AND SCOTLAND COMBINED Volumes Faroe Islands Scotland 2022-2026 Capex of DKK 6.2 bn builds 180,000t capacity by 2026 2020 50,700t 35,000t 1.800 16,00 1.600 14,00 1.400 12,00 Investments per kg (DKK) 1.200 10,00 2021 66,000t

  34. Slide 34: Planned Investments 2022-2026

    ~ 6.2BN PLANNED INVESTMENTS 2022-2026 FRONTLOADED TO ACCELERATE BUSINESS TRANSFORMATION IN SCOTLAND Faroe Islands: Planned investment profile 2022-2026 (DKK 1,000) • Hatchery capacity (2026 capacity: +23m smolt at 500g) 1.000 Planned investments • Increase feed capacity to cater 200,000 tonnes (HOG)

  35. Slide 35: Planned Investments Ensure Significant Uplift in Capacity

    PLANNED INVESTMENTS ENSURE SIGNIFICANT UPLIFT IN CAPACITY VALUE CHAIN SYNCHRONISED AT 180KT HOG HARVEST CAPACITY IN 2026 • Value chain syncronised at 180kt capacity in 2026 Development in capacity constraints 2018 2022 2026 • Extra capacity as “insurance” & flexibility and for growth: planned later

  36. Slide 36: Investing in Sustainable Growth

    INVESTING IN SUSTAINABLE GROWTH 150,000 TONNES HARVEST IN 2026, FAROE ISLANDS AND SCOTLAND COMBINED Volumes Faroe Islands Scotland 2022-2026 Capex of DKK 6.2 bn builds 180,000t capacity by 2026 2020 50,700t 35,000t 1.800 16,00 1.600 14,00 1.400 12,00 Investments per kg (DKK) 1.200 2021 66,000t 30,00

  37. Slide 37: Development in Supply and Sold Quantity by Origin

    DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - HOG) Expected supply growth in 2021 2018 2019 2020 2021E 2022E  8% growth in Global supply Norway 1,129 1,198 1,223 1,364 1,417 UK 137 171 160 188 185  14% growth in European supply Ireland 13 14 1

  38. Slide 38: Q3 2021 Market Environment

    Q3 2021 MARKET ENVIRONMENT PRICE NORWAY  Increased market prices compared to Q3 2020 7,0 6,6 60,0 6,3  Nasdaq Norway price EUR 5.3 in Q3 2021 6,0 5,6 5,2 5,3 50,0 5,0 5,1 5,0 4,5  Strong growth in European supply 4,0 40,0 4,0 EUR DKK 30,0  19% up vs. Q3 2020 3,0 20,0 2,0  15% reduction vs. Q2 2

  39. Slide 39: Development per Quarter

    DEVELOPMENT PER QUARTER Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (mDKK) 2019 2019 2020 2020 2020 2020 2021 2021 2021 Revenue 996 1,605 1,255 1,134 1,123 1,183 1,176 1,618 1,272 Operational EBIT 303 415 248 182 103 89 224 407 71 Profit/Loss 181 220 -148 472 177 -38 408 428 131 Harvest FO (tgw) 12,938 17,930 10,667

  40. Slide 40: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • The dividend for 2020 of DKK 3.65 (NOK 4,96) per 99% share was paid out on 30 April 2021. • Dividend payment equals 59% of adjusted EPS. 59% 49%* 49% 50% 50% 50% 46% 40% Dividend policy  Competitive return through: 19%  Dividends 0%  Increa

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    BAKKAFROST / Q3 2021 PRESENTATION Page 41

  42. Slide 42: Facilities and locations

    Facilities and locations BAKKAFROST / Q3 2021 PRESENTATION Page 42

  43. Slide 43: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2 TAXES  Total percent of GDP: 41.8% (2016)  53,498 inhabitants (Sept 2021)  Corporate tax: 18%  Farming revenue tax: 5.0% of revenues after 1 January 2019  Home rule – within the Kingdom of Denmark The tax is applied as follows (IMP ~ International market p

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    BAKKAFROST / Q3 2021 PRESENTATION Page 44

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