Mowi ASA · OSL:MOWI
Mowi ASA — Q4 2022 Earnings Presentation
46 slides from Mowi ASA's earnings presentation, Feb 15, 2023
Slide 1: Q4 2022 presentation
Q4 2022 presentation CEO: Ivan Vindheim CFO: Kristian Ellingsen 15 February 2023
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 • All-time high full-year revenue of EUR 4 946 million and Operational EBIT of EUR 1 005 million • Quarterly revenue of EUR 1 362 million and Operational EBIT of EUR 239 million – Continued good demand and low supply • Farming cost of EUR 5.25 per kg relatively stable from Q3 • Record-hig
Slide 4: Key financials
Key financials Mowi Group - main figures Q4 2022 Q4 2021 2022 2021 Unaudited EUR million Operational revenue and other income 1,361.8 18% 1,149.9 4,946.0 18% 4,207.6 • The second best Q4 ever and a record-high Operational EBITDA 1) 284.0 188.3 1,179.4 690.3 year for Mowi Operational EBIT 1) 238.9 64
Slide 5: Salmon prices – weekly reference prices
Salmon prices – weekly reference prices • Prices in Q4 2022 up by 17% YoY in Europe. Prices up 7% in Miami and 10% in Seattle 16 8 Q4-22 prices GWT/kg 14 7 • Norway EUR 7.04 (6.04) USD per lbs (Miami and Seattle) 12 6 • Chile USD 6.73(1) (6.22) 10 5 • Canada. USD 8.11(1) (7.50) EUR per kg (Oslo) 8 4
Slide 6: Price achievement and contract share
Price achievement and contract share • Good price 140% achievement 120% 115% 120% and superior 105% 107% 100% 100% 94% share 100% 95% 80% 60% 40% 20% 0% Norwegian Scottish Chilean Canadian Q4 2021 Q4 2022 Norwegian Scottish Chilean Canadian Q4-22 Contract share 28% 82% 39% 0% Superior share 92% 94%
Slide 7: Operational EBIT comparison
Operational EBIT comparison • Second best Q4 Operational EBIT ever • Improvements in all business areas YoY Page 7
Slide 8: Norway
Norway SALMON OF NORWEGIAN ORIGIN Operational Operational EBITEBIT Salmon Salmon of of Norwegian Norwegian Origin Origin EUR million Q4 2022 Q4 2021 Q4 Q420212022 vs Q4 vs Q4 2021 2022 Operational EBIT 198.3 124.8 300 EBIT 219.3 140.2 250 Harv est v olume (GWT) 87 065 71 103 200 Operational EBIT per
Slide 9: Harvest volumes GWT (1,000)
Mowi Norway grown 84,000 GWT organically over the past 5 years to record-high 294,000 GWT in 2022 320 • Record-high harvest volumes of 294,000 GWT in 2022 300 294 – 84,000 GWT growth over the past 5 years 280 Harvest volumes GWT (1,000) 273 – CAGR 6.9% well in excess of industry 260 262 • Mowi Norwa
Slide 10: Norway: Operational EBIT/kg per region
Norway: Operational EBIT/kg per region 3.0 • Region North: Highest margin on lowest cost and 2.65 good price performance. 2.5 2.35 2.37 2.28 • Region Mid: Earnings impacted by harvesting 50% 2.21 of the volumes in October at seasonally lower 2.0 prices in addition to more issues than normal this EUR
Slide 11: Norway: Sales contract portfolio
Norway: Sales contract portfolio 25,000 20,000 Contracted volumes (GWT) 15,000 10,000 5,000 0 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Realised contract volumes Contracted volumes (including prospects) • Contract share for our Norwegian volumes for H1-2023 of 30% • Contract prices significant
Slide 12: Scotland
Scotland SALMON OF SCOTTISH ORIGIN Operational EBIT Operational Salmon EBIT SalmonofofScottish Scottish Origin Origin EUR million Q4 2022 Q4 2021 Q4Q42021 vsvs 2022 Q4Q42022 2021 Operational EBIT 7.0 7.3 20 EBIT 22.7 13.7 15 Harv est v olume (GWT) 10 386 12 002 Operational EBIT per kg (EUR) 0.67 0.6
Slide 13: Chile
Chile SALMON OF CHILEAN ORIGIN Operational EBIT Operational Salmon EBIT SalmonofofChilean Origin Chilean Origin EUR million Q4 2022 Q4 2021 Q4Q4 2022 2021 vsvsQ4 Q42022 2021 Operational EBIT 19.9 10.6 25 EBIT 18.6 18.1 20 Harv est v olume (GWT) 18 430 16 480 15 Operational EBIT per kg (EUR) 1.08 0.6
Slide 14: Canada
Canada SALMON OF CANADIAN ORIGIN Operational EBITEBIT Operational Salmon Salmon ofof Canadian CanadianOrigin Origin EUR million Q4 2022 Q4 2021 Q4Q42021 vs vs 2022 Q4Q42022 2021 25 Operational EBIT 16.0 0.4 EBIT -8.9 -2.2 20 Harv est v olume (GWT) 10 808 10 110 15 Operational EBIT per kg (EUR) 1.48
Slide 15: Ireland and Faroes
Ireland and Faroes SALMON OF IRISH ORIGIN SALMON OF FAROESE ORIGIN EUR million Q4 2022 Q4 2021 EUR million Q4 2022 Q4 2021 Operational EBIT -3.1 1.5 Operational EBIT 5.5 5.3 EBIT -6.5 -4.4 EBIT 1.8 4.6 Harv est v olume (GWT) 720 1 568 Harv est v olume (GWT) 3 140 3 777 Operational EBIT per kg (EUR)
Slide 16: Iceland: Arctic Fish acquisition – exciting growth opportunity
Iceland: Arctic Fish acquisition – exciting growth opportunity Excellent growth and living conditions for salmon in Iceland • Acquisition of 51% of the shares in Icelandic salmon farmer, Arctic Fish, before year end 2022 • Iceland is Mowi’s seventh farming country and was the last spot missing from
Slide 17: Consumer Products
Consumer Products CONSUMER PRODUCTS EUR million Q4 2022 Q4 2021 Operating rev enues 892.7 785.5 Operational EBIT 42.5 25.6 Operational EBI T % 4.8% 3.3% Operational EBI T % VAP only 6.4% 4.1% EBIT 42.3 25.1 Volume sold (tonnes prod. weight) 63 841 67 867 Award-winning MOWI Saumon Pas Fumé • Best qua
Slide 18: Feed
Norway Feed FEED EUR million Q4 2022 Q4 2021 Operating rev enues 314.8 212.8 Operational EBITDA 21.4 11.9 Operational EBIT 17.4 7.9 Operational EBI TDA % 6.8% 5.6% Operational EBI T % 5.5% 3.7% EBIT 17.4 6.3 Feed sold v olume 148 810 140 954 Feed produced v olume 131 085 137 327 Scotland • Best quar
Slide 19: Financials, Markets and Harvest volumes
Q4 2022 presentation Financials, Markets and Harvest volumes
Slide 20: Profit and Loss
Profit and Loss Mowi Group Q4 2022 Q4 2021 2022 2021 EUR million Operational revenue and other income 1,361.8 18% 1,149.9 4,946.0 18% 4,207.6 • Positive net fair value adjustment of Operational EBIT 238.9 64% 145.8 1005.1 92% 522.6 biomass of EUR 13 million mainly 1) Change in unrealized internal ma
Slide 21: Financial position
Financial position Mowi Group EUR million 31.12.2022 30.09.2022 31.12.2021 • Strong financial position Non-current assets 4 042.6 3 612.2 3 542.2 Current assets 3 488.7 3 183.6 2 717.6 Total assets 7 531.4 6 796.0 6 259.5 Equity 3 687.1 3 516.5 3 131.4 Non-current liabilities 2 576.7 1 991.2 2 155.3
Slide 22: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Mowi Group Q4 2022 Q4 2021 2022 2021 EUR million NIBD beginning of period* -1 353.4 -1 148.6 -1 257.3 -1 458.4 • Strong earnings Operational EBITDA* 284.0 188.3 1179.4 690.3 Change in working capital -228.5 -122.1 -491.4 -26.8 • Working capital tie-up Taxes pa
Slide 23: 2023 Cash Flow Guidance
2023 Cash Flow Guidance • Working capital release of EUR ~150m due to temporary build-up last year (EUR ~200m release H1- 23) • Capital expenditure EUR ~370m (including Arctic Fish EUR ~ 30m) – Freshwater investments EUR ~ 70m – Seawater investments EUR ~ 50m – Processing / Sales & Marketing: New pr
Slide 24: Underlying cost pressure in Farming offset by cost cut initiatives
Underlying cost pressure in Farming offset by cost cut initiatives until post- Covid inflation • Farming blended cost relatively stable until Development in blended Farming cost per kg for Mowi group 2022 6 5.09 – CAGR 1.8% < inflation 4.37 4.47 5 4.16 4.12 4.26 4 EUR/kg • Significant inflationary p
Slide 25: Initiating a new EUR 25 million cost savings programme for 2023
Initiating a new EUR 25 million cost savings programme for 2023 • Realised EUR 48 million in annualised cost savings Cost savings per year and business area (EUR million) in 2022, well ahead of the EUR 25 million target • Initiating a new EUR 25 million cost savings 124 programme for 2023, including
Slide 26: Delivering on the productivity programme – 1,346 FTEs so far
Delivering on the productivity programme – 1,346 FTEs so far (90% of target) • Productivity programme FTE reductions based on “as is” volumes – Salary and personnel expenses second largest cost item in Mowi; EUR 613 million in 2022 – Productivity increase of 15% 2022 vs 2019, i.e. already delivering
Slide 27: Mowi ranked #1 on sustainability amongst food producers
Mowi ranked #1 on sustainability amongst food producers Good progress on reducing (FY 2022) GHG emissions in 2022 and since 2019 Scope 1 & 2 GHG emissions Scope 3 GHG emissions -10% 400 -33% 2,000 Tonnes (1,000) Tonnes (1,000) -3% 350 1,900 -9% 300 1,800 250 1,700 200 1,600 150 1,500 2019 2020 2021
Slide 28: Ocean-based Atlantic salmon farming is on the right side of sustainability
Ocean-based Atlantic salmon farming is on the right side of sustainability Rating agencies About the rating Score (1) Salmon is the most sustainable farmed animal protein alternative Mowi ranked as the most sustainable animal protein producer in the world (amongst the 1st largest 60 animal protein p
Slide 29: Overview financing
Overview financing • Bank Facility: EUR 1,800m sustainability-linked facility Share of sustainable funding – 5 years facility (Maturity: September 2026) – Covenant: 35% equity ratio (adjusted for IFRS 16 leasing effects) – Accordion option: EUR 300m – Lenders: DNB, Nordea, ABN Amro, Rabobank, Danske
Slide 30: Supply development
Supply development Estimated volumes Compared to Q4 2021 Est. volumes Suppliers Q4 2022 Q4 2021 Volume % Q3 2022 Norway 404,500 401,200 3,300 0.8% 380,100 Scotland 35,100 36,200 -1,100 -3.0% 44,100 Faroe Islands 27,100 30,400 -3,300 -10.9% 23,200 Other Europe 14,400 13,200 1,200 9.1% 11,500 Total Eu
Slide 31: Global volume development
Global volume development Estimated volumes Compared to Q4 2021 Est. volumes 12 month comparison Markets Q4 2022 Q4 2021 Volume % Q3 2022 LTM PTM % EU+UK 324,600 324,300 300 0.1% 322,100 1,143,700 1,158,000 -1.2% Russia 14,900 27,300 -12,400 -45.4% 13,800 48,700 86,100 -43.4% Other Europe 28,100 32,
Slide 32: Development in reference prices
Development in reference prices Q4 2022 Change vs Q4 2022 Change vs Market Q4 2021 EUR Q4 2021 Norway (1) EUR 7.04 16.6% EUR 7.04 16.6% Chile (2) USD 5.88 6.9% EUR 5.76 19.7% Chile, GWT (3) USD 6.73 8.2% EUR 6.59 21.1% Notes: (1) NASDAQ average superior GWE/kg (gutted weight equivalent) North Americ
Slide 33: Industry supply growth 2023e
Industry supply growth 2023e 2019 2020 2021 2022 2023E 2023E GWT (1,000) Norw ay 1,200 1,233 1,380 1,365 1,399 Low 1,384 Y/Y grow th 1% High 1,414 Y/Y grow th 4% • Low supply growth of 2% expected for UK Faroe Islands 171 78 160 73 179 95 150 90 164 94 160 91 6% 1% 168 97 12% 8% 2023 Other Europe* 3
Slide 34: Mowi volume guidance all-time high
Mowi volume guidance all-time high Atlantic salmon 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 2022 Q1 2023 2023 GWT (1,000) Actual Actual Actual Actual Actual Actual Guidance Guidance Norway 273.2 59.4 59.8 87.4 87.1 293.7 63.0 290.0 Scotland 64.4 10.5 13.0 14.5 10.4 48.4 10.0 64.0 Chile 66.0 16.0 14.4 16
Slide 35: Harvest volumes GWT (1,000)
Volume growth of 109,000 GWT over 5 years to all-time high 484,000 GWT for 2023 (CAGR 5.2%) 550 • Strong growth in Mowi’s global harvest volumes over 5 years of 109,000 GWT 500 • Growth in excess of industry Harvest volumes GWT (1,000) 484 (5.2% CAGR vs industry at 4.1%) 466 464 450 440 • Intrinsic
Slide 36: Outlook
Outlook • A record-breaking 2022 and a good start to the new year • Modest supply growth going forward, and salmon normally fares well in challenging economic times • On 28 September 2022 the Norwegian government proposed an unsustainable tax level for the Norwegian salmon industry of 62%, and about
Slide 37: Appendix
Q4 2022 presentation Appendix
Slide 38: Proposed resource rent tax on salmon farming in Norway – 62% total tax
Proposed resource rent tax on salmon farming in Norway – 62% total tax • Currently, the industry pays 22% corporate tax, in addition to 0.6% export tax (on revenues) and NOK 0.4 per kg in production fee • On 28 September the Norwegian government announced a proposal for an additional resource rent t
Slide 39: Nova Sea
Nova Sea Harv est v olume (GWT) EBI T per kg (EUR) NI BD EURm Ownership % 2021 2022 Q4 2021 Q4 2022 2021 2022 Q4 2021 Q4 2022 Q4 2022 Nova Sea 48.7 % 43 539 44 027 12 260 14 743 1.80 2.85 1.92 2.00 -100.4 • Leading integrated salmon producer in Northern Norway − 33.33 wholly owned licenses − 4 partl
Slide 40: Dividend policy
Dividend policy • Mowi’s ambition is to create long-term value for the shareholder through both positive share price development and a growing dividend in line with long-term earnings − Quarterly ordinary dividend shall under normal circumstances be at least 50% of underlying earnings per share (EPS
Slide 41: Contract coverage and sales contract policy
Contract coverage and sales contract policy SALES CONTRACT POLICY Min hedging rate Max hedging rate (1) • Q1 2023 contract shares (% of guided volume): Norway (2) 0% 50 % Scotland 0% 75 % − Norway 27% Chile (2) 0% 50 % − Scotland 80% Canada 0% 30 % Ireland 0% 100 % − Chile 50% Faroes 0% 30 % − Canad
Slide 42: Quarterly segment overview
Quarterly segment overview SOURCES OF ORIGIN QTD EUR million Norway Scotland Chile Canada Ireland Faroes Iceland Other 1) Group OPERATIONAL EBIT FARMING 136.1 2.2 11.3 12.1 -4.2 5.4 162.8 SALES AND MARKETING Markets 13.9 1.8 2.1 3.9 0.3 0.1 0.1 22.1 Consumer Products 32.3 1.7 6.5 0.0 0.7 0.0 1.2 42.
Slide 43: FY 2022 segment overview
FY 2022 segment overview SOURCES OF ORIGIN YTD EUR million Norway Scotland Chile Canada Ireland Faroes Other 1) Group OPERATIONAL EBIT FARMING 669.1 25.4 48.4 54.0 1.0 19.3 817.2 SALES AND MARKETING Markets 28.0 10.8 7.1 12.5 1.6 0.3 0.8 61.1 Consumer Products 78.4 6.1 21.5 -0.7 3.5 0.0 3.4 112.1 SU
Slide 44: Development in harvest volumes
Development in harvest volumes GWT 2018 2019 2020 2021 2022 2023E (1,000) Total Total Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1E Total Norway 230.4 236.9 262.0 75.0 56.1 71.0 71.1 273.2 59.4 59.8 87.4 87.1 293.7 63.0 290.0 Scotland 38.4 65.4 52.7 18.3 19.2 15.0 12.0 64.4 10.5 13.0 14.5 10.4 48.4
Slide 45: Cash flow guidance and historic developments
Cash flow guidance and historic developments Net capital expenditure Net working capital 450 600 400 Maintenance level 500 350 400 300 300 EUR million 250 EUR million 200 200 100 150 0 100 50 -100 0 -200 2018 2019 2020 2021 2022 2023E 2018 2019 2020 2021 2022 2023E Financial commitments and cost of
Slide 46: Thank you
MQOWI Thank you