Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q2 2016 Earnings Presentation

30 slides from Bakkafrost P/f's earnings presentation, Aug 23, 2016

  1. Slide 1: Q2 2016 Bakkafrost Group

    Q2 2016 BAKKAFROST GROUP Oslo 23 August 2016

  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 2016

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS High spot prices – positive for Farming, negative for VAP  Harvested 13,004 tgw in Q2 2016 (14,182 tgw in Q2 2015)  Feed sales of 16,295 tonnes in Q2 2016* (17,657 tonnes in Q2 2015*)  Raw material purchase of 83,970 tonnes in Q2 2016 (86,012 tonnes in Q2 2015)  Revenues of DKK 790 mi

  5. Slide 5: Summary of the quarter

    SUMMARY OF THE QUARTER Record result in Farming, while VAP Q2 Q2 H1 H1 segment is suffering heavily. FOF segment (DKK million) 2016 2015 2016 2015 has good result Operating revenues 790 800 1,694 1,413 Operational EBITDA 336 330 618 591  Farming/VAP division increased margin from 22.62 NOK/kg in Q2

  6. Slide 6: Markets and Sales

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  7. Slide 7: Markets & Sales

    MARKETS & SALES The shifting from Eastern Europe to other markets Total sales of salmon Q2 Q2 H1 H1 continued by markets 2016 2015 2016 2015 EU 39% 29% 39% 34%  EU market share increased from 29% in Q2 2015 to USA 23% 17% 22% 18% 39% in Q2 2016 Asia 21% 15% 21% 13% Eastern Europe 17% 39% 18% 35% 

  8. Slide 8: Q2 Market Environment

    Q2 MARKET ENVIRONMENT MARKET CURRENCY Q2 2016 Q2 2015 Change % PRICE NORWAY Nasdaq Norway (EUR) 6,85 4,42 54,9 % UB North East US 12-14lb HOG (USD) 3,96 2,97 33,3 % 8,0 60,0 6,9 7,0 6,1 50,0 DKK Q2 2016 Q2 2015 Change % 6,0 Nasdaq Norway 51,00 33,01 54,5 % 4,7 4,8 40,0 5,0 4,4 4,5 UB North East US 1

  9. Slide 9: Global Markets

    GLOBAL MARKETS Undersupply leads to high market prices Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG]  The NASDAQ salmon price for size 4-5  Increased y/y Q2 2016 / Q2 2015 by ~69% - by 26.68 NOK/kg from 38.73 to 65.41  Increased q/q Q2 2016 / Q1 2016 by ~10% - by 6.03 NOK/kg from 59.38 to 65.

  10. Slide 10: Salmon Markets, Sold Quantity (Head on Gutted – HOG)

    SALMON MARKETS, SOLD QUANTITY (HEAD ON GUTTED – HOG) Low supply in Q2 2016 Reduced supply in Q2-2016 of Atlantic Salmon (head on gutted - HOG)  26 500 tonnes lower Estimated volumes Q2 comparison Estimated volumes YTD comparison supply compared with Q2 Markets Q2 2016 E Q2 2015 Volume % H1 2016 E H

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK Low supply ahead SUPPLY - TOTAL  8-9% drop in global supply expected in H2 2016 550.000 0% -2%  Temporary reduction in Norway 500.000 -4%  Biological challenges in Chile -6% 450.000  Europe expected to generate positive growth from Q4 -8% 2016 400.000 -10% Q2 2016 Q3 20

  12. Slide 12: Segment Information

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX Andrias Petersen, manager Bakkafrost Harvest, with Innovation Honours 2016 awarded to Bakkafrost for developing a concept to bathe salmon in freshwater onboard the wellboat ”Hans á Bakka”

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes Q2 Q2 H1 H1  Harvested volumes decreased by 8% in Q2 tonnes [HOG] 2016 2015 2016 2015 2016, compared with Q2 2015 West Region 4,100 2,501 13,525 5,042  The North region harvested 68% of the total quantity in the quarter and the west region

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Record high prices and good margin Q2 Q2 H1 H1 (DKK million) 2016 2015 2016 2015  The operational EBIT increased 44% from DKK 248 million in Q2 2015 to DKK 358 million Operating revenues 752 609 1,453 1,080 in Q2 2016 Operational EBIT 358 248 619 443  Good biologi

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming EBIT of NOK 34.47 per kg in Q2 2016, 40,00 compared to 20.07 in Q2 2015 35,00 34,47  High prices and good biological performance 30,00 32,68  North Region better performance in the quarter

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) VAP revenues and margin Q2 Q2 H1 H1 (DKK million) 2016 2015 2016 2015  Revenues decreased by 2% to DKK 187 million in Q2 2016 from DKK 191 million in Q2 2015 Operating revenues 187 191 367 380 Operational EBIT -68 31 -93 53  Operating EBIT in Q2 2016 DKK -68 million, com

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

    FISHMEAL, OIL AND FEED (FOF) Good margin Fishmeal, Oil and Feed  EBITDA DKK 45 million in Q2 2016, Q2 Q2 H1 H1 compared with DKK 53 million in Q2 2015 (DKK million) 2016 2015 2016 2015 Operating revenues 220 284 508 488  EBITDA margin of 20.7% in Q2 2016, compared with 18.7% in Q2 2015 EBITDA 45 5

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED Feed sales marginally lower Volumes of raw material purchase and feed sale [tonnes]  Quantity of feed sold was 16,295 tonnes in Q2 2016, 35.000 120.000 compared with 17,657 tonnes in Q2 2015 Raw material (tonnes) 30.000 100.000 Feed sale (tonnes) 25.000 80.000 20.000 60.000 1

  19. Slide 19: Group Financials

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenues of DKK 790 million. Lower Q2 Q2 H1 H1 harvested volumes and lower sales in FOF, (DKK million) 2016 2015 2016 2015 but higher spot prices Operating revenues 790 800 1,694 1,413  Operational EBIT increased from DKK 303 Operational EBITDA* 336 330 618 591 million to DK

  21. Slide 21: Balance Sheet

    BALANCE SHEET  Investments in PPE of DKK ~ 200 million in Q2 End H1 End H1 End 2016 (DKK million) 2016 2015 2015 Intangible assets 295 295 295  Financial assets nearly unchanged from year-end Property, plant and equipment 1,793 1,168 1,531 2015 Financial assets 136 113 131  The carrying amount of

  22. Slide 22: Cash Flow

    CASH FLOW  Cash flow from operations lower in Q2 2016 than Q2 Q2 H1 H1 Q2 2015: (DKK million) 2016 2015 2016 2015  Increase in inventory Cash flow from operations 248 326 493 407 Cash flow from investments -198 -72 -317 -178  Increase in receivables Cash flow from financing -197 -373 -103 -338 

  23. Slide 23: Outlook

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  24. Slide 24: Outlook

    OUTLOOK Market VAP  Renegotiated contracts from end of Q3 2016 in  Tight market balance in 2016, global supply line with the forward price picture reduction of 8-9% in H2 2016  Contracted 50% of capacity for 2017 Farming Fishmeal, -oil and feed  2016 estimated harvest volumes at 48,000 tonnes (e

  25. Slide 25: Appendix

     SUMMARY OF Q2 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  26. Slide 26: Development per Quarter Q1 2013 – Q2 2016

    DEVELOPMENT PER QUARTER Q1 2013 – Q2 2016 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (mDKK) 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 2013 2013 2013 2013 Revenue 790 905 760 677 800 613 757 584 711 631 667 741 610 473 Op. EBIT 307 254 257 206 303 235 227 209 212 186 124 187 169 105 Profit/Los

  27. Slide 27: Size and Survival Matters!

    SIZE AND SURVIVAL MATTERS! Yield per smolt (HOG) 2010-2012G vs 2013G Average harvest weight (HOG) 5,50 6,50 2010-2012G vs 2013G 5,00 6,00 5,50 4,50 5,00 4,00 2012 - 2014 4,50 2012 - 2014 2015 3,50 2015 4,00 2012 - 2014 2012 - 2014 2012 - 2014 2015 3,00 2012 - 2014 2015 2012 - 2014 2015 3,50 2015 201

  28. Slide 28: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  49,192 inhabitants (January 2016)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2014)  Service/public admin.: ~40%  Private service: ~31%  Construction: ~12%  Fishing :

  29. Slide 29: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development 12 months development Traded daily NOK/share 5 years development Traded Monthly NOK/share Origin of shareholders, 5 largest countries Subscribe Oslo Stock Exchange Releases from BAKKA by e-mail on: http://www.bakkafrost.com/en/frontpage/

  30. Slide 30: Bakkafrost Salmon is Unique

    Bakkafrost Salmon is Unique Situated in the Faroe Islands, between Iceland, Scotiand and Norway, in the heart of the North AUlantic Current and the clean pristine ice-cold waters of the North Atlantic Ocean, Bakkafrost is located in the prime spot to produce unique salmon products. The beautiful dee

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