Mowi Asa · OSL:MOWI
Mowi Asa — Debt Investor Presentation (January 2020)
46 slides from Mowi Asa's debt investor presentation, January 2020
Slide 1: Bond Investor Presentation
Bond Investor Presentation January 2020
Slide 2: Important information and disclaimer (1/2)
Important information and disclaimer (1/2) This presentation and its appendices (collectively, the "Presentation") has been prepared by Mowi ASA (the "Company“ and the “Issuer”) with assistance from Cooperatieve Rabobank U.A, Danske Bank A/S, filial i Norge, DNB Markets, a part of DNB Bank ASA, Nord
Slide 3: Important information and disclaimer (2/2)
Important information and disclaimer (2/2) The Managers have not independently verified any of the information contained herein through formal financial due diligence procedures or other investigations. No representation or warranty (express or implied) is made as to, and no reliance should be place
Slide 4: Risk factors (1/4)
Risk factors (1/4) RISK FACTORS – Mowi ASA An investment in the Bonds involves inherent risks. Before making an investment decision with respect to the Bonds, investors should carefully consider the risk factors and all information contained in this Presentation, including the financial statements a
Slide 5: Risk factors (2/4)
Risk factors (2/4) Biological factors The Group's farming operations are subject to a number of biological risks which may have a material adverse effect on the Group's business, financial condition, results of operations or cash flow through adverse effects on growth, harvest weight, harvest volume
Slide 6: Risk factors (3/4)
Risk factors (3/4) RISK FACTORS RELATED TO THE GROUPS' FINANCIAL POSITION The Group may not be able to obtain sufficient funding The current sources of financing available to the Group may not be sufficient to operate the Group's business. The Group has applied certain assumptions in determining its
Slide 7: Risk factors (4/4)
Risk factors (4/4) Significant cash requirement to meet debt obligations and sustain operations The ability of the Group to make principal or interest payments when due in respect of its financial indebtedness, including (without limitation) the Issuer's financial indebtedness in respect of the Bond
Slide 8: Agenda: Company overview
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 8
Slide 9: Mowi at a glance
Mowi at a glance One of the world’s leading seafood companies The world’s largest producer of Atlantic salmon, (#4 measured in turnover) 450,000 GWT in 2020e (~6.5 million meals per day) #1 on sustainability (Coller FAIRR index) Listed on Oslo Stock Exchange Fully integrated value chain HQ in Bergen
Slide 10: Fully integrated value chain
Fully integrated value chain Feed Farming Consumer Products #4 #1 #1 Page 10
Slide 11: Fully integrated value chain
Fully integrated value chain Feed Farming Consumer Products Operations Started in Norway in 2014 Started in Norway in 1964 as Mowi Operations in 25 countries Scotland commenced operations Norway, Chile, Scotland, Canada, Europe, North America, Asia in 2019 Ireland, Faroe Islands Volumes 600,000 tonn
Slide 12: Diversified farming footprint - good risk management
Diversified farming footprint - good risk management (2020e harvest volumes of 450,000 GWT) Norway 260,000 Canada Scotland 44,000 67,000 Ireland 6,000 Faroe Islands 9,000 Chile 64,000 Page 12
Slide 13: Global operations in 25 countries
Global operations in 25 countries – 14,537 employees at year end 2018 VAP processing (28 plants), sales & marketing network Scandinavia Poland Sales Sales & Processing UK & Ireland Germany & CEE Sales & Processing Sales & Processing BeNeFra Spain Japan Sales & Processing Sales & Processing Sales & P
Slide 14: Agenda: Sustainability at Mowi
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 14
Slide 15: Mowi's focus on sustainability across its value chain
Mowi’s focus on sustainability across its value chain • Select the best families to reduce disease and • Reduce freshwater use • Improve energy efficiency with sea lice challenges • Produce larger smolts leading to reduced time at sea state-of-the art equipment • Reduce mortality at sea • Improve fe
Slide 16: Resource efficient and climate friendly production compared to other proteins
Resource efficient and climate friendly production compared to other protein alternatives Mowi sustainability ratings Agency Focus area Mowi rating Protein retention 31 % 34 % 18 % 15 % Holistic ESG Energy retention 23 % 25 % 14 % 27 % research and AA ratings Edible yield 68 % 46 % 52 % 41 % Feed Co
Slide 17: New feed plant in Scotland is environmentally friendly
New feed plant in Scotland is environmentally friendly • The new feed plant in Scotland completed in 2019 • Mowi’s new feed plant in Scotland manufactures a range of feed products, satisfying our requirements for freshwater, seawater and organic feed in Scotland, Faroes and Ireland • Sustainable raw
Slide 18: Fjæra freshwater hatchery is water efficient and improves biology
Fjæra freshwater hatchery is water efficient and improves biology • The freshwater hatchery at Fjæra in Norway was completed in 2018 • Top modern smolt plant with access to high quality fresh water combined with recirculation technology (RAS) in order to control and maximise production • The freshwa
Slide 19: Sustainable fish farms
Sustainable fish farms • Sea site: Beitveitnes in Region Mid Norway • Community engagement min 1x year & local employment • Production (tonnes • Benthic impact monitored and results showing minimum impact in last production • Welfare monitoring: Underwater cameras cycle): ~ 7,000 • Reduced medicinal
Slide 20: Agenda: Green bond framework
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 20
Slide 21: Green Bond Framework
Green Bond Framework Background Green considerations Mowi and Green Bonds Population growth Growing middle class Climate change Fisheries fully or over-exploited We live longer • The Blue Revolution Plan1) launched in • Aims to mobilize debt capital to November 2019 defines a clear promote the trans
Slide 22: Use of proceeds
Use of proceeds UN SDG Category Eligible Projects Mapping • The net proceeds will be used to finance or refinance investments that promote • Sustainable feed Environmentally • Sustainable fish farms the transition towards a low-carbon and sustainable aquaculture • • Sustainable processing Research a
Slide 23: Green project evaluation & selection process
Green project evaluation & selection process • Mowi’s overall management of environmental, social, corporate governance and financial risks is a core component of our decision-making process Potential Green Project identified • The process of evaluation and selection of Green Projects will follow th
Slide 24: Management of proceeds and reporting
Management of proceeds and reporting Management of proceeds • Mowi will use a Green Register to track the allocation of net proceeds • Net proceeds to support financing of Green Projects or to repay Green Bonds • The management of proceeds will be reviewed by an external auditor appointed by Mowi Re
Slide 25: Agenda: Market overview
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 25
Slide 26: Megatrends driving demand
Megatrends driving demand Resource efficient production / Population growth Growing middle class climate change Global population growth drive Growing middle class in large Salmon production is a very increasing demand for food emerging markets expected to resource efficient protein which increase c
Slide 27: Value of global consumption
Development of supply vs demand past 10 years Value growth of 12% CAGR (Supply growth 5% + price growth 7%) 14 3 500 Value of global consumption (EUR billion) Global harvest volume (GWT in thousands) 12 3 000 10 2 500 8 2 000 6 1 500 4 1 000 2 500 - 0 2008 2010 2012 2014 2016 2018 Value of global co
Slide 28: Industry supply growth 2019e and 2020e
Industry supply growth 2019e and 2020e (as per Q3-2019 report) 2016 2017 2018 2019 Estim ates 2019 Estim ates 2020 GWT (1,000) Low Y/Y grow th High Y/Y grow th Low Y/Y grow th High Y/Y grow th Norw ay 1 054 1 087 1 128 1 195 1 189 5% 1 201 7% 1 220 2% 1 270 6% UK 142 159 138 161 159 15 % 163 18 % 16
Slide 29: Industry supply and demand
Industry supply and demand Supply by origin Demand by origin North Other Other; America; markets; 5% 6% Other Asia; 18 % 6% EU; Chile; Norway; China / Hong 44 % 27 % 51 % Kong; 5% Brazil; Faroe 4% Islands; USA; Russia; Scotland; 3% 20 % 4% 7% Page 29 Source: Kontali Analyse Note: Supply and demand f
Slide 30: Salmon prices – weekly reference prices
Salmon prices – weekly reference prices 10 7 9 6 8 USD per lbs (Miami and Seattle) 7 5 6 EUR per kg (Oslo) 4 5 3 4 3 2 2 1 1 0 0 2016 2017 2018 2019 2020 Ref. price Norway EUR (NASDAQ average superior Oslo, GWT/kg) Ref. price Chile USD (Urner Barry average D-trim 3-4 lbs FOB Miami) Ref. price North
Slide 31: Agenda: Financials
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 31
Slide 32: Development in key figures and ratios
Development in key figures and ratios Revenue and Operational EBIT Funds From Operations (2) 5 000 3.0 800 727 738 738 709 100% 4 092 3 649 3 812 2.5 4 000 3 510 80% 3 112 600 89 % EUR million 2.0 82 % 3 000 71 % 60% 379 EUR million 1.5 EBIT/kg 400 2 000 58 % 1.0 40% 700 792 753 721 1 000 347 0.5 20
Slide 33: Key financials
Key financials Mowi Group - main figures Q4 2019 trading update Unaudited EUR million Q3 2019 Q3 2018 YTD Q3 2019 YTD Q3 2018 2018 Operational revenue and other income 1,022.8 3% 990.2 3,023.6 2,740.7 3,814.5 • Operational EBIT ~EUR 165m Operational EBIT 1) 147.8 -29% 207.1 555.2 539.9 752.8 • Harve
Slide 34: Financial position and financing overview
Financial position and financing overview Mowi Group 30.09.2019 30.09.2018 31.12.2018 • Bank Facility Agreement: EUR 1,406m EUR million • Tenor 5 years (Maturity: June 2022) Non-current assets 3 150.4 2 469.3 2 558.1 Current assets 2 541.9 2 507.1 2 587.1 • Covenant: 35% equity ratio (adjusted for T
Slide 35: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Mowi Group 2019 Cash Flow Guidance (as of Q3-2019) Q3 2019 Q3 2018 YTD Q3 2019 YTD Q3 2018 2018 EUR million NIBD beginning of period -1 108.0 - 950.7 -1037.2 -831.9 -831.9 • Working capital build-up EUR ~115m Operational EBITDA* 186.7 246.3 668.0 653.9 906.2 •
Slide 36: Continued focus to improve our cost position
Continued focus to improve our cost position Stable development of “cost in box” per kg • Several cost reduction measures achieved in recent years 5 4 • Improved cost-conscious decision-making EUR per kg 3 • 2018 cost program 2 • EUR 61 million in annualised savings 1 • Other opex, COGS, FTE’s 0 201
Slide 37: Outlook
Outlook • Sector fundamentals remain strong • Good demand response in all key markets • Significant industry harvest volumes in Q3 2019 have reduced the biomass for future harvest • Fish Pool forward price (12 months) at EUR 6.1/kg • 2020 harvest volume guidance of 450,000 tonnes GWT • Feed plant in
Slide 38: Agenda: Appendix
• Company overview • Sustainability at Mowi • Green bond framework • Market overview • Financials • Appendix Page 38
Slide 39: Mowi volume guidance
Mowi volume guidance (guidance as per Q3-19) Atlantic salmon 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 2020 (*) GWT (1,000) Actual Actual Actual Actual Actual Actual Guidance Norway 231 56 51 63 66 237 260 Scotland 38 16 16 20 14 65 67 Canada 39 10 13 16 16 54 44 Chile 53 20 15 14 17 66 64 Ireland 6
Slide 40: Cash flow guidance and historic developments
Cash flow guidance and historic developments (as of Q3-19) Net capital expenditure Net working capital 350 160 Maintenance level 300 140 250 120 200 100 EUR million EUR million 80 150 60 100 40 50 20 0 0 2014 2015 2016 2017 2018 2019E 2014 2015 2016 2017 2018E 2019E Financial commitments and interes
Slide 41: Contract coverage and sales contract policy
Contract coverage and sales contract policy (as of Q3-19) SALES CONTRACT POLICY Min hedging rate Max hedging rate (1) • Q4 2019 guided contract shares (% of guided Norway (2) 0% 50 % volume): Scotland 0% 75 % Canada 0% 30 % • Norway 43% Chile (2) 0% 50 % • Scotland 96% Ireland 0% 100 % Faroes 0% 30
Slide 42: Dividend policy
Dividend policy • The quarterly dividend level shall reflect the present and expected future cash flow generation of the Company • A target level for net interest-bearing debt is determined, reviewed and updated on a regular basis • When the target is met, at least 75% of the annual free cash flow a
Slide 43: Debt distribution and interest rate hedging
Debt distribution and interest rate hedging (as of Q3-19) CURRENCY DEBT 2019 2020 2021 2022 (2) 30/09/2019 Nominal value Fixed rate(3) Nominal value Fixed rate(3) Nominal value Fixed rate(3) Nominal value Fixed rate(3) EUR m 1 147.5 970.5 3.27 % 380.0 2.13 % 380.0 2.20 % - 0.00 % USD m 60.0 167.5 2.
Slide 44: Hedging and long term currency exposure - policies
Hedging and long term currency exposure - policies • EUR/NOK • Mowi shall hedge between 0% and 30% of its assumed annual expenses in NOK against the EUR with a horizon of two years. The annual hedging shall be evenly distributed across the months of the year • USD/CAD • Mowi shall hedge between 0% a
Slide 45: Strategic currency hedging
Strategic currency hedging (as of Q3-19) EUR/NOK USD/CAD STRATEGIC CURRENCY HEDGING MEUR Rate MUSD Rate 2019 49.8 9.81 7.2 1.28 2020 199.2 9.95 28.8 1.31 2021 149.4 10.19 19.2 1.31 P/L effect of contracts realized in Q3 (MEUR) -1.3 MEUR Market value 30/06/2019 -0.6 Change -5.6 Market value 30/09/201
Slide 46: Thank you
MQOWI Thank you January 2020