Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q1 2018 Earnings Presentation

38 slides from Bakkafrost P/f's earnings presentation, May 7, 2018

  1. Slide 1: Q1 2018 Bakkafrost Group

    Q1 2018 BAKKAFROST GROUP Oslo 7 May 2018

  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 Q1 2018

     SUMMARY OF Q1 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvested 12,237 tgw in Q1 2018 (13,158 tgw in Q1 2017) Operation  Feed sales of 13,923 tonnes in Q1 2018* (19,827 tonnes in Q1 2017*)  Raw material purchase of 130,104 tonnes in Q1 2018 (106,567 tonnes in Q1 2017)  Revenues of DKK 851 million in Q1 2018 (DKK 854 million in Q1 2017)

  5. Slide 5: Summary of the quarter

    SUMMARY OF THE QUARTER The result for the Farming segment Q1 Q1 decreased due to lower salmon prices and (DKK million) 2018 2017 2017 2016 higher costs. The VAP result was negative Operating revenues 851 854 3,770 3,203 again, but the FOF segment had a very Operational EBITDA 314 377 1,561 1,298 str

  6. Slide 6: Markets and Sales

     SUMMARY OF Q1 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  7. Slide 7: Markets & Sales

    MARKETS & SALES Sales to Eastern Europe and Asia increased, and Total sales of salmon Q1 Q1 sales to EU and USA decreased in Q1 2018, compared by markets 2018 2017 2017 2016 with Q1 2017. VAP on contract was on a low level at EU 31% 46% 45% 43% 17% USA 16% 19% 18% 23% Asia 21% 13% 16% 17%  EU marke

  8. Slide 8: Global Markets

    GLOBAL MARKETS Large price increase during Q1 2018 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Q1 Q2 Q3 Q4  Exceptional high price change during Q1 2018 80.00  Price change (low/high) of NOK 25.95 ~50% 70.00 - from NOK 51.90 to NOK 77.85 60.00  y/y by 5.93 NOK/kg ~8.8% 50.00 - from NOK 67.0

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

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 10% supply growth in Q1 2018 SUPPLY DEVELOPMENT Q1 Q1 Change (head on gutted - HOG) 2018 2017 %  European harvest increased by 4%  American harvest increased by 23% Norway 263.3 249.3 5.6 % UK 31.1 35.8 -13.1 % Ireland 3.5 2.4 44.4 % 6% growth f

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

    SALMON MARKETS, SOLD QUANTITY (HOG) Good growth in most markets in Q1 Salmon markets, sold quantity (head on gutted - HOG) 2018 Estimated volumes Q1 comparison Estimated volumes FY comparison Markets Q1 2018E Q1 2017 Volume % FY 2017 FY 2016 Volume % EU performed well EU 218,000 204,200 13,800 6.8%

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK  Modest supply growth expected for the coming quarters SUPPLY - TOTAL 700 12%  Growth rate impacted by inventory movements 600 10%  Growth in harvest likely to be instrumental for pricing 500 8% 400  Frozen products are materially sold through alternative channels 6% 30

  12. Slide 12: Segment Information

     SUMMARY OF Q1 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes Q1 Q1 tonnes [HOG] 2018 2017 2017 2016  Harvested volumes decreased by 7% in Q1 2018, compared with Q1 2017 North Region 2,736 9,124 30,251 24,768  The West Region represented 78% of the West Region 9,501 4,034 24,364 22,774 harvested volu

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Reduced margin at lower prices and higher Q1 Q1 production costs (DKK million) 2018 2017 2017 2016  The operational EBIT decreased from DKK Operating revenues 667 751 2,987 2,841 373 million in Q1 2017 to DKK 228 million in Operational EBIT 228 373 1,308 1,315 Q1 2

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming EBIT down by NOK 10.12 per kg to NOK 24.15 in Q1 2018, compared to NOK 40.00 34.27 in Q1 2017 35.00 34.27 34.50  Difference between the North Region and the 30.00 30.02 West Region in operat

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) Positive VAP margin negative again Q1 Q1 (DKK million) 2018 2017 2017 2016  Substantial decrease in revenue by 51% to DKK 93 Operating revenues 93 192 999 881 million in Q1 2018, from DKK 192 million in Q1 2017 Operational EBIT -12 -53 -75 -201  Operating EBIT in Q1 2018

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

    FISHMEAL, OIL AND FEED (FOF) Margins very strong in the quarter Fishmeal, Oil and Feed  EBITDA of DKK 86 million in Q1 2018, Q1 Q1 compared with DKK 45 million in Q1 2017 (DKK million) 2018 2017 2017 2016 Operating revenues 300 277 1,303 1,158  EBITDA margin of 28.8% in Q1 2018, compared with 16.3

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED Feed sales decreased Volumes of raw material purchase and feed sale [tonnes]  Quantity of feed sold was 13,923 tonnes in Q1 2018, 35,000 180,000 Raw material (tonnes) compared to 19,827 tonnes in Q1 2017 30,000 160,000 Feed sale (tonnes) 140,000 25,000  Biomass on lower leve

  19. Slide 19: Group Financials

     SUMMARY OF Q1 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX Hatchery Strond, Klaksvík under construction 29 April 2018 – Intake of first eggs expected at 20 June 2018. At full operation in 2019/2020 the hatchery is expected to produce 7 million smolts at 50

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenues on nearly same level as in Q1 2017 Q1 Q1 from DKK 854 million to DKK 851 million in Q1 (DKK million) 2018 2017 2017 2016 2018. Operating revenues 851 854 3,770 3,203  Operational EBIT in Q1 2018 decreased to Operational EBITDA* 314 377 1,561 1,298 DKK 268 million, c

  21. Slide 21: Operational EBIT and Earnings per Share

    OPERATIONAL EBIT* AND EARNINGS PER SHARE 459 350 335 331 303 307 257 254 255 252 268 235 206 Operational EBIT* (DKK million) 2015 2016 2017 YTD 2018 1,001 1,165 1,378 268 11.44 8.19 7.13 6.56 5.60 Earnings per share 4.39 4.61 3.91 (DKK) 3.44 2.71 1.63 1.16 -0.45 2015 2016 2017 YTD 2018 16.62 27.57 1

  22. Slide 22: Balance Sheet

    BALANCE SHEET  Intangible assets at the end of Q1 2018 are unchanged Q1 End from year end 2017 (DKK million) 2018 2017 Intangible assets 377 377  Investments in PPE of DKK 111 million in Q1 2018 and Property, plant and equipment 2,636 2,570 PPE amounts to DKK 2.6 billion Financial assets 79 77  F

  23. Slide 23: Cash Flow

    CASH FLOW  Cash flow from operations on same level in Q1 Q1 Q1 2018 as in Q1 2017 (DKK million) 2018 2017 2017 2016 Cash flow from operations 368 365 1,458 850  Cash flow from investments represents investments in PPE, which amounted to DKK Cash flow from investments -111 -179 -636 -740 -111 milli

  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 and 111 16 -6 -278 changes in working capital decreased the NIBD with DKK 284 million in Q1 2018 258  Net investments and other in Q1 2018 increased the NIBD with DKK

  25. Slide 25: Outlook

     SUMMARY OF Q1 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX Service operation with M/S Róland in progress at farming site A-11 Hvannasund April 30th 2018

  26. Slide 26: Outlook

    OUTLOOK Market VAP  Global supply in Q1 2018 estimated to increase  Contracted around 13% of expected harvest for around 10%, compared with Q1 2017 the rest of 2018  Global harvest increase in 2018 expected to be around 4% Fishmeal, Oil and Feed  Supply growth next three quarters expected to be

  27. Slide 27: Appendix

     SUMMARY OF Q1 2018  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 4% harvest growth in 2018 Global Supply of Atlantic Salmon (head on gutted - HOG) 2014 2015 2016 2017E 2018E  Inventory movements expected to add 2-3% Norway 1,076 1,112 1,055 1,078 1,156 UK 153 150 142 157 140  Total supply growth of 7% in 2018

  29. Slide 29: Q1 2018 Market Environment

    Q1 2018 MARKET ENVIRONMENT Prices higher than last quarter, but below same quarter last PRICE NORWAY year 8.0 7.4 7.3 7.2 60.0 6.9 7.0 6.1 6.4 6.2 6.0 50.0  Reduced quantities and increasing prices during the 6.0 5.1 40.0 quarter 5.0 EUR DKK 4.0 30.0  Nasdaq Norway price EUR 6.2 in Q1 2018 3.0 20.

  30. Slide 30: Investment Programme 2016 - 2020

    INVESTMENT PROGRAMME 2016 - 2020 Investments will be made step by step in the relevant parts of the value chain to secure:  Biological risk  Efficiency  Organic growth BAKKAFROST / Q1 2018 PRESENTATION Page 30

  31. Slide 31: Investment Programme 2016 - 2020

    INVESTMENT PROGRAMME 2016 - 2020 Investment program of DKK 2.2b from 2016 to 2020 Investment Programme 2016 – 2020 (mDKK) 590 Fishmeal, Oil & Feed (380 mDKK) 570  New salmon meal and –oil plant  New feed line to increase capacity 410  Advanced feed line capabilities 360 Smolt (1,130 mDKK) 280  V

  32. Slide 32: Increased Smolt Production Leads to Increased Production

    INCREASED SMOLT PRODUCTION LEADS TO INCREASED PRODUCTION Larger smolt (PS) will reduce time of cycle in farming Farming volume – growth potential with PS (1,000 tonnes) 80  Harvest cycle every second year from the same fjords until 70.0 70 effect from larger smolt evolves 60 54.6 50.6 51,0 47.5  S

  33. Slide 33: Development per Quarter Q1 2014 – Q1 2018

    DEVELOPMENT PER QUARTER Q1 2014 – Q1 2018 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (mDKK) 2018 2017 2017 2017 2017 2016 2016 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 Revenue 851 906 804 1,206 854 868 640 790 905 760 677 800 613 757 584 711 631 Operational EBIT 268 331 252 459 335

  34. Slide 34: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • Dividend for 2017 of DKK 10.50 (NOK 13.52) per 100% 99% share is paid out in Q2 2018 90% 80% 70% 60% 50% 50% 49%** 49% 46% 49% Dividend policy 50% 40% 40% 30%  Competitive return through: 19% 20% 10%  Dividends 0%  Increase in the value of

  35. Slide 35: Page 35

    BAKKAFROST / Q1 2018 PRESENTATION Page 35

  36. Slide 36: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  50,750 inhabitants (Mar 2018)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2017)  Service/public admin.: ~33%  Private service: ~32%  Construction: ~14%  Fishing : ~21%

  37. Slide 37: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development Traded daily No of shares % Name Type Nationality 12 months development NOK/share 5 years development Traded Monthly NOK/share Subscribe Oslo Stock Exchange Releases from BAKKA by e-mail on: http://www.bakkafrost.com/en/bakkafrost_invest

  38. Slide 38: Page 38

    BAKKAFROST / Q1 2018 PRESENTATION Page 38

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