Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q3 2020 Earnings Presentation
42 slides from Bakkafrost P/f's earnings presentation, Nov 10, 2020
Slide 1: Q3 2020 Bakkafrost Group
Q3 2020 BAKKAFROST GROUP Glyvrar 10 November 2020
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
Slide 3: Summary of Q3 2020
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Faroe Islands, Hvannasund
Slide 4: Highlights
HIGHLIGHTS Harvest in the Faroe Islands (FO): 11,135 tgw in Q3 2020 (12,938 tgw in Q3 2019) Harvest in Scotland (SCT): 10,476 tgw in Q3 2020 Operation Feed sales of 39,869 tonnes in Q3 2020* (33,874 tonnes in Q3 2019*) Raw material purchase of 24,101 tonnes in Q3 2020 (17,845 tonnes in Q3 20
Slide 5: Summary of the Quarter
SUMMARY OF THE QUARTER Segments y/y (DKK million) Q3 2020 Q3 2019 YTD 2020 YTD 2019 (FO)* Farming/VAP Operating revenue 1,123 996 3,513 2,906 26.25 15.24 (Q3 2019) (Q3 2020) Operational EBITDA 188 373 853 1,091 Operational EBIT 103 303 533 910 (SCT)* Farming Profit for the period 177 181 501 582 N/A
Slide 6: Markets and Sales
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX
Slide 7: Markets & Sales
MARKETS & SALES SALES TO WESTERN EUROPE INCREASED – OTHER MARKETS DECREASED Sales & volume (FO only) Total sales of salmon Q3 2020 Q3 2019 YTD 2020 YTD 2019 Western Europe by markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 56% 92% 71% 45% n/a 45% 57% 89% 69% 46% n/a 46% 45
Slide 8: Global Markets
GLOBAL MARKETS LOWER PRICES AND WEAK NOK Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices decreased in Q3 2020 Q1 Q2 Q3 Q4 (NOK/KG) 80.00 70.00 y/y: 50.35 -3.8% 48.43 60.00 (Q3 2019) -1.92 (Q3 2020) 50.00 q/q: 59.36 -18.4% 48.43 40.00 (Q2 2020) -10.93 (Q3 2020) 30.00 Spot prices
Slide 9: Development in Harvested Quantity by Origin
DEVELOPMENT IN HARVESTED QUANTITY BY ORIGIN (HEAD ON GUTTED – HOG) Global Harvest growth of 5% Supply Development Q3 2020 Q3 2019 Change Norway 322 321 0.5 % UK 49 50 -3.4 % Faroes 16 18 -10.9 % Europe flat development Iceland 5 4 27.3 % Ireland 4 4 20.0 % Poor biological performance in Norway Tot
Slide 10: Salmon Markets, Sold Quantity
SALMON MARKETS, SOLD QUANTITY GOOD GROWTH IN SEVERAL MARKETS – SIGNIFICANT DROP IN GREATER CHINA Global Supply growth of 3.7% Salmon markets, sold quantity (head on gutted - HOG) EU grew 7% Estimated volumes Q3 comparison Estimated volumes H1 comparison Markets Q3 2020 E Q3 2019 Volume % H1 2020 H1
Slide 11: Short Term Supply Outlook
SHORT TERM SUPPLY OUTLOOK TIGHT SUPPLY GROWTH IN 2021 Global supply growth will be tight in 2021 SUPPLY - TOTAL 700 6% Somewhat increased European supply growth expected 600 up until 2H 2021 4% 500 2% Limited supply growth expected for the rest of 2021 400 0% 300 -2% 200 2021 drop in Americas
Slide 12: Segment Information
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Gravir, Lewis and Harris, Scotland
Slide 13: Farming – Harvest Volume
FARMING – HARVEST VOLUME DECREASED HARVEST IN THE FAROE ISLANDS – INCREASED AVG. SMOLT SIZE Q3 2019 Q3 2020 Harvest Volumes tonnes [HOG] Q3 2020 Q3 2019 YTD 2020 YTD 2019 Harvested volumes (tonnes HOG) North: 48% FO - North Region 5,337 3,651 24,543 18,252 FO: 12,938 14% 11,135 FO - West Region 4,68
Slide 14: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE REVENUE AND OPERATIONAL EBIT DECREASED IN THE FAROE ISLANDS YTD YTD Farming FO (DKK million) Q3 2020 Q3 2019 2020 2019 Faroe Islands (FO) Operating revenue 530 693 1,737 2,207 Operational EBIT 97 231 385 765 Operational EBIT (mDKK) Operational EBIT margin 18% 33% 22
Slide 15: Farming – Operational EBIT per kg
FARMING – OPERATIONAL PERFORMANCE Margin (FO) - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg 30.00 25.49 25.00 23.61 20.00 15.90 FO: 23.61 NOK -11.18 NOK 12.43 NOK 15.00 12.43 (Q3 2019) (Q3 2020) 10.00 SCT: -3.89 NOK 5.00 (Q3 2020) -3.89 - Q3 2020 Q3 2020 Q3 2019 YTD 2020 YT
Slide 16: Value Added Products (VAP)
VALUE ADDED PRODUCTS (VAP) HIGHER VOLUMES, BUT LOWER OPERATIONAL EBIT (DKK million) Q3 2020 Q3 2019 YTD 2020 YTD 2019 Volumes (tonnes) Operating revenue 247 217 829 716 3,694 5,313 (Q3 2019) (Q3 2020) Operational EBIT 22 26 60 27 Operational EBIT margin 9% 12% 7% 4% Revenue (mDKK) VAP produced volum
Slide 17: Fishmeal, Oil and Feed (FOF)
FISHMEAL, OIL AND FEED (FOF) HIGHER RAW MATERIAL SOURCING, BUT LOWER EXTERNAL SALES OF FISHMEAL Q3 Q3 YTD YTD (DKK million) EBITDA (mDKK) 2020 2019 2020 2019 Operating revenue 481 484 1,060 1,050 94 69 (Q3 2019) (Q3 2020) EBITDA 69 94 160 218 EBITDA margin 14% 20% 15% 21% EBITDA margin (%) Feed sold
Slide 18: Market Conditions Feed
MARKET CONDITIONS FEED SIGNIFICANT INCREASE IN FEED SALES Volumes of raw material purchase and feed sale [tonnes] Total feed sales increased (tonnes) 180,000 45,000 160,000 40,000 33,874 18% 39,869 140,000 35,000 Raw material (tonnes) (Q3 2019) (Q3 2020) Feed sale (tonnes) 120,000 30,000 100,000 25,
Slide 19: Financials & ESG
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Faroe Islands, Haraldsund (A72) Image from Northend of Kunoy
Slide 20: Group Profit and Loss
GROUP PROFIT AND LOSS HIGHER REVENUE, BUT REDUCED OPERATIONAL EBIT Revenue (mDKK) (DKK million) Q3 2020 Q3 2019 YTD 2020 YTD 2019 996 1,123* Operating revenue 1,123 996 3,513 2,906 (Q3 2019) (Q3 2020) Operational EBITDA 188 373 853 1,091 * FO: 706 Operational EBIT 103 303 533 910 Operational EBIT (m
Slide 21: Operational EBIT and Adjusted Earnings per Share
OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE 459 408 415 350 335 339 331 307 303 254 255 252 268 268 248 231 Operational EBIT* 168 182 (mDKK) 103 2016 2017 2018 2019 2020 1,165 1,378 1,075 1,325 533 6.84 6.48 5.64 5.89 5.60 5.08 4.98 4.83 4.72 4.07 3.59 3.62 3.57 3.79 3.61 3.19 Adjusted EPS 2.5
Slide 22: Balance Sheet
BALANCE SHEET Headlines (mDKK) (DKK million) Q3 2020 End 2019 Intangible assets: 4,491 Intangible assets 4,491 4,396 (Q3 2020) Property, plant and equipment 3,978 3,780 380 333 PPE: 3,978 Right of use assets (Q3 2020) Financial assets 117 119 Long-term receivables 9 4 Biological assets: 1,902 245 2,
Slide 23: Cash Flow
CASH FLOW YTD YTD (DKK million) Q3 2020 Q3 2019 Cash flow, operations (mDKK) 2020 2019 779 105 Cash flow from operations 105 779 581 1,182 (Q3 2019) (Q3 2020) Cash flow from investments -176 -544 -473 -806 Cash flow from financing 63 2,053 -972 1,919 Cash flow, investments (mDKK) Net change in cash
Slide 24: Net Interest-Bearing Debt (NIBD)
NET INTEREST-BEARING DEBT (NIBD) NIBD IN Q3 2020 SLIGHTLY HIGHER THAN IN Q2 2020 NIBD was increased by: Development in NIBD in DKK millions Net investments (mDKK 176) Change in working capital (mDKK 10) NIBD was decreased by: Cash flow, operating activities (mDKK -45) Financing end Q3 2020 NIB
Slide 25: Q3 ESG Update
Q3 ESG UPDATE BAKKAFROST / Q3 2020 PRESENTATION Page 25
Slide 26: Q3 ESG Update
Q3 ESG UPDATE BAKKAFROST / Q3 2020 PRESENTATION Page 26
Slide 27: Outlook
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Plocrapol, Harris, Scotland
Slide 28: Outlook
OUTLOOK Market Contracts 5% increase expected in global harvest in Q4-2020 For 2021, contracted around 33% of expected harvest volumes in the Faroe Islands and 25% in Scotland 1% increase in global harvest expected in 2021 Bakkafrost strategy is to allocate around 40% of expected harvested v
Slide 29: Appendix
SUMMARY OF Q3 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Hatchery, Norðtoftir, Faroe Islands (S03) Under construction 12,000m3 to be in operation in 2022 - Original hatchery: Light Brown - New built 2012 – 2016: rest
Slide 30: 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
Slide 31: 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, multiple
Slide 32: Scotland Site Overview
SCOTLAND SITE OVERVIEW 43 farming sites / 67,023T consent South 20 sites / 29,205T consent Mull and Gigha, 6 sites Loch Striven and Arran, 4 sites Loch Fyne, 10 sites North 23 sites / 37,818T consent Uist, 5 sites Sky & mainland, 7 sites Loch Roag, 6 sites East Lewis & Harris, 5 si
Slide 33: Faroe Islands - Growing to 100kt
FAROE ISLANDS - GROWING TO 100KT 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 CAPACIT
Slide 34: Development in Supply and Sold Quantity by Origin
DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Expected supply growth in 2021 Global Supply of Atlantic Salmon (head on gutted - HOG) 2017 2018 2019 2020E 2021E 3% growth in Global supply Norway 1,078 1,129 1,198 1,207 1,274 UK 159 137 171 164 167 5% growth in European supply Ireland 15 13 14
Slide 35: Q3 2020 Market Environment
Q3 2020 MARKET ENVIRONMENT DECREASING MARKET PRICES PRICE NORWAY 6.6 Decreased market prices, compared to Q3 2019 7.0 6.3 6.4 60.0 5.7 5.8 5.6 6.0 5.2 50.0 Significant demand disruption (Covid-19) 5.0 5.0 4.5 40.0 Limited supply growth 4.0 EUR DKK 30.0 3.0 Nasdaq Norway price EUR 4.5 in Q3 2
Slide 36: Q3 2020 Sales per Region
Q3 2020 SALES PER REGION BAKKAFROST / Q3 2020 PRESENTATION Page 36
Slide 37: Development per Quarter
DEVELOPMENT PER QUARTER Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (mDKK) 2018 2018 2019 2019 2019 2019 2020 2020 2020 Revenue 622 750 964 947 996 1605 1255 1134 1123 Operational EBIT 168 231 268 339 303 415 248 182 103 Profit/Loss 356 -7 213 189 181 220 -148 472 177 Harvest FO (tgw) 7,217 12,234 13,707 12,609 12,9
Slide 38: Dividend
DIVIDEND Dividend Dividend per share in % of adj. EPS* • No dividend for 2019 because of the disruption and 99% uncertainty caused by Covid-19 Dividend policy 49%** 49% 46% 50% 50% 50% 40% Competitive return through: Dividends 19% Increase in the value of the equity Generally, Bakkafrost sha
Slide 39: Page 39
BAKKAFROST / Q3 2020 PRESENTATION Page 39
Slide 40: Facilities and locations
Facilities and locations BAKKAFROST / Q3 2020 PRESENTATION Page 40
Slide 41: Faroe Islands
FAROE ISLANDS 18 islands – 1,387 km2 TAXES Total percent of GDP: 41.8% (2016) 52,703 inhabitants (September 2020) 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 mar
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BAKKAFROST / Q3 2020 PRESENTATION Page 42