Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost Group — Q1 2021 Earnings Presentation

41 slides from Bakkafrost P/f's earnings presentation, May 11, 2021

  1. Slide 1: Q1 2021 Bakkafrost Group

    Q1 2021 BAKKAFROST GROUP Glyvrar 11 May 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 Q1 2021

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Ravnsfjall, Faroe Islands

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvest in the Faroe Islands (FO): 14,025 tgw in Q1 2021 (10,667 tgw in Q1 2020)  Harvest in Scotland (SCT): 7,002 tgw in Q1 2021 (7,268 tgw in Q1 2020) Operation  Feed sales of 23,717 tonnes in Q1 2021* (19,123 tonnes in Q1 2020*)  Raw material purchase of 48,547 tonnes in Q1 2021 (

  5. Slide 5: Summary of the Quarter

    SUMMARY OF THE QUARTER (DKK million) Q1 2021 Q1 2020 (FO)* Farming/VAP Operating revenue 1.176 1.255 25.10 21.48 (Q1 2020) (Q1 2021) Operational EBITDA 354 367 Operational EBIT 224 248 Profit for the period 408 -148 (SCT)* Farming 5,70 -1.23 (Q1 2020) (Q1 2021) Operational EBITDA margin 30,1% 29,2%

  6. Slide 6: Markets and Sales

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Fuglafjøður, A57 Faroe Islands

  7. Slide 7: Markets & Sales

    MARKETS & SALES SALES TO WESTERN AND EASTERN EUROPE INCREASED – OTHER MARKETS DECREASED Sales & volume (FO only) Total sales of Q1 2021 Q1 2020 2020 2019 Western Europe salmon by markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 59% 88% 68% 52% 91% 67% 56% 90% 70% 44% 93% 50

  8. Slide 8: Global Markets

    GLOBAL MARKETS LOWER PRICES Y/Y BUT HIGHER Q/Q Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices decreased y/y but Q1 Q2 Q3 Q4 increased q/q in Q1 2021 80,00 (NOK/KG) 70,00 69.92 -22.1% 54.48 (Q1 2020) -15.44 (Q1 2021) y/y: 60,00 50,00 44.23 23.2% 54.48 (Q4 2020) 10.25 (Q1 2021)

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

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN (HEAD ON GUTTED – HOG)  Total quarterly supply up 16% SUPPLY DEVELOPMENT Q1 2021 Q1 2020 Change % Norway 317 274 15.8 % UK 36 29 23.4 % Faroes 20 16 30.6 %  European harvest up 18% Iceland 11 8 46.4 % Ireland 2 1 68.8 %  Strong growth in all or

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

    SALMON MARKETS, SOLD QUANTITY (HEAD ON GUTTED – HOG)  High elasticity in Europe Salmon markets, sold quantity (head on gutted - HOG)  Large retail share compared to other markets Estimated volumes Q1 comparison Estimated volumes FY comparison Markets Q1 2021E Q1 2020E Volume % FY 2020E FY 2019 Vol

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK  Expectation of drop in global harvest next 12 months SUPPLY - TOTAL 800 16% 14%  Stable growth around 8% in Europe rest of 2021 700 12% 600 10%  Drop expected in Q1 2022 8% 500 6% 400 4% 300 2%  Strong drop expected in Americas 0% 200 -2%  Driven by Chile 100 -4% 0 -6

  12. Slide 12: Segment Information

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Gravir, Lewis and Harris, Scotland

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME INCREASED HARVEST IN THE FAROE ISLANDS – INCREASED AVG. SMOLT SIZE Q1 2020 Q1 2021 Harvest Volumes tonnes (HOG) Q1 2021 Q1 2020 Harvested volumes (tonnes HOG) North: 81% FO - North Region 11.422 6.265 FO: 10,667 31% 14,025 FO - West Region 2.458 2.769 West: 18% FO - South Re

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE LOWER OPERATIONAL EBIT, BUT HIGHER OPERATING REVENUE Faroe Islands (FO) Farming FO (DKK million) Q1 2021 Q1 2020 Operational EBIT (mDKK) Operating revenue 645 633 203 -30% 143 Operational EBIT 143 203 (Q1 2020) (Q1 2021) Operational EBIT margin 22% 32% Operational E

  15. Slide 15: Farming – Operational Performance Operational EBIT per kg

    FARMING – OPERATIONAL PERFORMANCE Margin - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg 30,00 25,00 20,00 FO: 26.51 NOK -12.21 NOK 14.10 NOK 15,00 (Q1 2020) (Q1 2021) 10,00 5,00 SCT: 5.70 NOK (Q1 2020) -6.93 NOK -1.23 NOK (Q1 2021) 0,00 Q1 FO Q1 SCT YTD FO YTD SCT -5,00 2021

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) STRONG QUARTER WITH HIGHER VOLUMES AND IMPROVED RESULTS (DKK million) Q1 2021 Q1 2020 Volumes (tonnes) Operating revenue 300 274 5,408 -3% 5,265 Operational EBIT 75 -11 (Q1 2020) (Q1 2021) Operational EBIT margin 25% -4% VAP transferred from Farming FO volumes (tgw) 5,265

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

    FISHMEAL, OIL AND FEED (FOF) HIGHER RAW MATERIAL SOURCING, BUT LOWER EXTERNAL SALES OF FISHMEAL (DKK million) Q1 2021 Q1 2020 EBITDA (mDKK) Operating revenue 322 310 40 48 (Q1 2020) (Q1 2021) EBITDA 48 40 EBITDA margin 15% 13% EBITDA margin (%) Feed sold (tonnes)* 23,717 19,123 13% 15% Fishmeal sold

  18. 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 19,123 24% 23,717 140.000 35.000 Raw material (tonnes) (Q1 2020) (Q1 2021) Feed sale (tonnes) 120.000 30.000 100.000 25.

  19. Slide 19: Financials & ESG

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS LOWER REVENUE, REDUCED OPERATIONAL EBIT AND PROFIT Revenue (mDKK) (DKK million) Q1 2021 Q1 2020 1,255 1,176 Operating revenue 1,176 1,255 (Q1 2020) (Q1 2021) Operational EBITDA 354 367 Operational EBIT 224 248 Operational EBIT (mDKK) Fair value adjustment of biological assets 2

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

    OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 459 415 408 335 331 339 303 252 268 268 231 248 Operational EBIT* 224 168 182 (mDKK) 103 89 2017 2018 2019 2020 2021 1,378 1,075 1,325 622 224 6,84 6,48 5,60 5,89 5,08 4,98 4,83 3,79 4,07 3,57 3,61 3,19 2,95 Adjusted EPS** 2,55 2,06 (DKK) 1,27 -0,3

  22. Slide 22: Balance Sheet

    BALANCE SHEET Headlines (mDKK) (DKK million) Q1 2021 End 2020 Intangible assets: 4,493 Intangible assets 4,493 4,493 (Q1 2021) Property, plant and equipment 4,406 4,221 Right of use assets 338 353 PPE: 4,221 185 4,406 (End 2020) (Q1 2021) Financial assets 123 122 Long-term receivables 8 8 Biological

  23. Slide 23: Cash Flow

    CASH FLOW Cash flow, operations (mDKK) (DKK million) Q1 2021 Q1 2020 365 137 (Q1 2020) (Q1 2021) Cash flow from operations 137 365 Cash flow from investments -268 -101 Cash flow, investments (mDKK) Cash flow from financing 37 -773 -101 -268 Net change in cash -93 -509 (Q1 2020) (Q1 2021) Cash at the

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

    NET INTEREST-BEARING DEBT (NIBD) NIBD INCREASED DURING Q1 2021 NIBD was increased by: Development in NIBD in DKK millions  Net investments (mDKK 268)  Change in working capital (mDKK 228) NIBD was decreased by:  Cash flow, operating activities (mDKK -310) Financing end Q1 2021 NIBD and available

  25. Slide 25: Q1 ESG Update

    Q1 ESG UPDATE Healthy Living Plan Bakkafrost was nominated for two awards at edie Sustainability Leaders We believe that by investing in the health of our business, our people, our salmon, the Awards in February environment and the communities in which we operate, we will enable healthy living for m

  26. Slide 26: Outlook

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  27. Slide 27: Outlook

    OUTLOOK Market Contracts  Global harvest increased 14.4% in Q1 2021 vs Q1  For 2021, Bakkafrost has signed contracts for around 28% 2020 of the total expected harvest volumes in the Faroe Islands and Scotland  1-2% decrease expected in global harvest in Q2 2021  Bakkafrost strategy is to allocat

  28. Slide 28: Appendix

    SUMMARY OF Q1 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  29. Slide 29: Land Based Farming Expansion to 14 kt

    LAND BASED FARMING EXPANSION TO 14 KT S16 Glyvradalur capacity expansion in progress S24 Strond capacity expansion finalised  In operation in 2023  Now in full operation ~ 9m smolt á 500g 1.9kt ~ 3.8m smolt á 500g  10 unrelated departments, building of 320m x 80m S03 Norðtoftir capacity expansion

  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: 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

  34. Slide 34: 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 2017 2018 2019 2020E 2021E Norway 1,078 1,129 1,198 1,223 1,334  6% growth in Global supply UK 159 137 171 160 184 Ireland 15 13 14 14 13  11% growth in European

  35. Slide 35: Q1 2021 Market Environment

    Q1 2021 MARKET ENVIRONMENT PRICE NORWAY  Increased market prices despite of 6,6 7,0 6,3 6,4 60,0  Strong supply growth 6,0 5,0 5,6 5,2 5,1 50,0 5,0 4,5  Continued low food service demand (Covid-19) 4,0 4,0 40,0 EUR DKK 30,0 3,0  Nasdaq Norway price EUR 5.1 in Q1 2021 20,0 2,0  23% down vs. Q1 2

  36. Slide 36: Development per Quarter

    DEVELOPMENT PER QUARTER Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 (mDKK) 2019 2019 2019 2019 2020 2020 2020 2020 2021 Revenue 964 947 996 1,605 1,255 1,134 1,123 1,183 1,176 Operational EBIT 268 339 303 415 248 182 103 89 224 Profit/Loss 213 189 181 220 -148 472 177 -38 408 Harvest FO (tgw) 13,707 12,609 12,938 17

  37. Slide 37: 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

  38. Slide 38: Page 38

    BAKKAFROST / Q1 2021 PRESENTATION Page 38

  39. Slide 39: Facilities and locations

    Facilities and locations BAKKAFROST / Q1 2021 PRESENTATION Page 39

  40. Slide 40: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2 TAXES  Total percent of GDP: 41.8% (2016)  53,108 inhabitants (March 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

  41. Slide 41: Page 41

    BAKKAFROST / Q1 2021 PRESENTATION Page 41

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