Mowi ASA · OSL:MOWI
Mowi ASA — Q2 2023 Earnings Presentation
43 slides from Mowi ASA's earnings presentation, Aug 23, 2023
Slide 1: Q2 2023 presentation
Q2 2023 presentation CEO: Ivan Vindheim CFO: Kristian Ellingsen 23 August 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 • Another record-breaking quarter on strong operational performance in all business areas – All-time high revenues of EUR 1,365 million, and Operational EBIT of EUR 300 million on good consumer demand and prices • Blended realised farming costs of EUR 5.60 per kg relatively stable versus
Slide 4: Key financials
Key financials Mowi Group - main figures Q2 2023 Q2 2022 YTD Q2 2023 YTD Q2 2022 2022 Unaudited EUR million Operational revenue and other income 1,364.5 11% 1,231.7 2,726.9 2,327.1 4,946.0 • Another record- Operational EBITDA 1) 348.0 363.1 715.3 612.0 1,179.4 breaking quarter Operational EBIT 1) 29
Slide 5: Salmon prices – weekly reference prices
Salmon prices – weekly reference prices • Lower price achievement for salmon of American origin versus European salmon due to influx of volumes into the American market • Relatively strong prices in the quarter, although down YoY due to global supply contraction of 6% in Q2-22 Americas Europe Chilea
Slide 6: Price achievement and contract share
Price achievement and contract share 120% 114% • Price achievement in 108% 102% line with reference 100% 95% 97% price in the quarter 87% 82% 80% 80% – Internal mix: contracts and 60% quality/timing differences 40% 20% 0% Norwegian Scottish Chilean Canadian Q2 2022 Q2 2023 Norwegian Scottish Chilean
Slide 7: Operational EBIT comparison
Operational EBIT comparison • In EUR terms: -6% YoY – From EUR 320 million to EUR 300 million • In NOK terms: +9% YoY – From NOK 3.2 billion to NOK 3.5 billion – Second best ever • Strong performance in all business areas Page 7
Slide 8: Norway
Norway SALMON OF NORWEGIAN ORIGIN Operational Operational EBITEBIT Salmon Salmon of of NorwegianOrigin Norwegian Origin EUR million Q2 2023 Q2 2022 Q2 Q220222023 vs Q2 vs Q2 2022 2023 Operational EBIT 206.0 235.2 300 EBIT 188.1 342.7 250 Harv est v olume (GWT) 61 469 59 815 200 Operational EBIT per
Slide 9: Norway: Operational EBIT/kg per region
Norway: Operational EBIT/kg per region 5.0 • Region South: Strong earning and margin on 4.5 4.45 good operational performance. Higher volumes 4.03 and reduced costs YoY 4.02 3.93 4.0 3.82 3.83 3.50 3.35 3.5 • Region West: Another strong quarter, stable 3.06 biological performance and higher volumes
Slide 10: Norway: Sales contract portfolio
Norway: Sales contract portfolio 25,000 20,000 Contracted volumes (GWT) 15,000 10,000 5,000 0 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Realised contract volumes Contracted volumes (including prospects) • 29% contract share for the second quarter • H2 expected to be stable in absolute terms Pa
Slide 11: Scotland
Scotland SALMON OF SCOTTISH ORIGIN Operational EBIT Operational Salmon EBIT Salmonofof Scottish Origin Scottish Origin EUR million Q2 2023 Q2 2022 Q2Q22022 vsvsQ2 2023 Q22023 2022 Operational EBIT 41.8 20.7 50 EBIT 17.3 67.8 40 Harv est v olume (GWT) 18 278 12 954 Operational EBIT per kg (EUR) 2.29
Slide 12: Chile
Chile SALMON OF CHILEAN ORIGIN Operational EBIT Operational Salmon EBIT SalmonofofChilean Origin Chilean Origin EUR million Q2 2023 Q2 2022 Q2 2023 vs Q2 Q2 2022 vs Q2 2023 2022 Operational EBIT 25.3 15.3 30 EBIT 1.9 9.3 25 Harv est v olume (GWT) 13 797 14 400 20 Operational EBIT per kg (EUR) 1.83 1
Slide 13: Canada
Canada SALMON OF CANADIAN ORIGIN Operational EBITEBIT Operational Salmon Salmon ofof Canadian CanadianOrigin Origin EUR million Q2 2023 Q2 2022 Q2Q22022 vs vs 2023 Q2Q22023 2022 Operational EBIT 12.0 31.2 40 35 EBIT -25.1 10.2 30 Harv est v olume (GWT) 9 352 10 413 25 Operational EBIT per kg (EUR) 1
Slide 14: Ireland and Faroes
Ireland and Faroes SALMON OF IRISH ORIGIN SALMON OF FAROESE ORIGIN EUR million Q2 2023 Q2 2022 EUR million Q2 2023 Q2 2022 Operational EBIT 2.3 9.2 8.9 Operational EBIT 13.0 10.4 EBIT 3.5 8.9 EBIT 10.8 15.2 Harv est v olume (GWT) 1 646 3 294 Harv est v olume (GWT) 2 840 1 802 Operational EBIT per kg
Slide 15: Iceland (Arctic Fish)
Iceland (Arctic Fish) SALMON OF ICELANDIC ORIGIN EUR million Q2 2023 Operational EBIT -0.5 EBIT 3.4 Harv est v olume (GWT) 100 Operational EBIT per kg (EUR) n/a - of which Feed 0.00 - of which Markets 0.00 - of which Consumer Products 0.00 Price achievement/reference price n/a Contract share 0% Supe
Slide 16: Consumer Products
Consumer Products CONSUMER PRODUCTS EUR million Q2 2023 Q2 2022 Operating rev enues 885.8 770.9 Operational EBIT 37.1 18.1 Operational EBI T % 4.2% 2.4% Operational EBI T % VAP only 4.8% 2.5% EBIT 36.7 15.1 Volume sold (tonnes prod. weight) 54 099 53 158 • Seasonally record-high results on strong op
Slide 17: Feed
Norway Feed FEED EUR million Q2 2023 Q2 2022 Operating rev enues 233.0 196.7 Operational EBITDA 9.7 6.0 Operational EBIT 5.4 2.0 Operational EBI TDA % 4.2% 3.1% Operational EBI T % 2.3% 1.0% EBIT 5.4 2.0 Feed sold v olume 115 513 110 782 Feed produced v olume 135 985 146 271 Scotland • Seasonally re
Slide 18: Financials, Markets and Harvest volumes
Q2 2023 presentation Financials, Markets and Harvest volumes
Slide 19: Profit and Loss
Profit and Loss Mowi Group Q2 2023 Q2 2022 YTD Q2 2023 YTD Q2 2022 2022 EUR million Operational revenue and other income 1,364.5 11% 1,231.7 2,726.9 2,327.1 4,946.0 • Negative net fair value Operational EBIT 1) 299.5 -6% 320.0 621.3 526.7 1005.1 adjustment of biomass of Change in unrealized internal
Slide 20: Resource rent tax in Norway with effect from 2023
Resource rent tax in Norway with effect from 2023 22% 22% 22% 22% + 25% = 47% 22% 22% Breeding Smolt Feed Products & Seawater Harvesting Processing Customer • On 31 May, the Norwegian Parliament approved 25% resource rent tax on salmon farming, i.e. 47% including corporate tax – Only seawater phase
Slide 21: FX: Mowi Norway EUR million hit in Q2-23 versus NOK peers
FX: Mowi Norway EUR 42 million hit in Q2-23 versus NOK peers • Mowi is a EUR company – removes currency risk EURNOK 13 • Significant weakening of NOK since 2012 12 – EUR 61%, USD 97% 11 EURNOK 10 Mowi Norway hedged away FX gain related to 61% • 9 timing difference between revenues and 8 expenses – c
Slide 22: FX: EUR financing historically cheaper than NOK
FX: EUR financing historically cheaper than NOK • Mowi’s financing is primarily sourced in EUR EURIBOR 3M vs NIBOR 3M • EUR interest rates historically significantly lower 6% than NOK interest rates 5% • Mowi saved approx. EUR 100 million over the past decade 4% 3% • We maintain that our FX hedging
Slide 23: Financial position
Financial position Mowi Group EUR million 30.06.2023 30.06.2022 31.12.2022 • Strong financial position Non-current assets 4 106.1 3 567.6 4 042.6 Current assets 3 401.2 3 185.8 3 488.7 Total assets 7 507.4 6 753.4 7 531.3 Equity 3 623.8 3 542.1 3 687.1 Non-current liabilities 2 853.0 1 986.4 2 355.7
Slide 24: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Mowi Group Q2 2023 Q2 2022 YTD Q2 2023 YTD Q2 2022 EUR million NIBD beginning of period* -1 641.2 -1 177.1 -1 758.9 -1 257.3 • Good earnings partially Operational EBITDA* 348.0 363.1 715.4 612.0 offset by phasing of taxes Change in working capital -52.2 -100.8
Slide 25: 2023 Cash Flow Guidance
2023 Cash Flow Guidance • Working capital build-up of EUR 100m in 2023 – Previous expected working capital reduction due to drop in non-marine feed raw materials offset by higher fish oil and fish meal prices – Further organic growth • Capital expenditure EUR ~380m (including Arctic Fish EUR ~ 40m)
Slide 26: Overview financing
Overview financing • EUR 200 million unsecured bond repaid in June Share of sustainable funding • Bank Facility: EUR 2,000m sustainability-linked facility – 5 years facility (Maturity: September 2026) – Covenant: 35% equity ratio (adjusted for IFRS 16 leasing effects) – Accordion option: EUR 100m –
Slide 27: Supply development
Supply development Estimated volumes Compared to Q2 2022 Est. volumes Suppliers Q2 2023 Q2 2022 Volume % Q1 2023 Norway 282,500 274,100 8,400 3.1% 286,200 Scotland 42,400 40,500 1,900 4.7% 32,700 Faroe Islands 15,800 18,400 -2,600 -14.1% 17,200 Other Europe 4,300 11,900 -7,600 -63.9% 14,200 Total Eu
Slide 28: Global volume development
Global volume development Estimated volumes Compared to Q2 2022 Est. volumes 12 month comparison Markets Q2 2023 Q2 2022 Volume % Q1 2023 LTM PTM % EU+UK 240,700 245,600 -4,900 -2.0% 221,100 1,106,300 1,131,200 -2.2% Russia 11,400 6,700 4,700 70.1% 12,800 52,800 64,000 -17.5% Other Europe 22,000 20,
Slide 29: Development in reference prices
Development in reference prices Q2 2023 Change vs Q2 2023 Change vs Notes: Market Q2 2022 EUR Q2 2022 (1) NASDAQ average superior GWE/kg (gutted weight equivalent) Norway (1) EUR 9.12 -14.2% EUR 9.12 -14.2% (2) Urner Barry average D trim 3-4 lbs FOB Miami Chile (2) USD 6.02 -13.6% EUR 5.53 -15.5% (3
Slide 30: Industry supply growth 2023e
Industry supply growth 2023e 2020 2021 2022 2023 Estim ates 2023 GWT (1,000) Norw ay 1,233 1,380 1,365 Estim ate 1,383 Low 1,375 Y/Y grow th 1% High 1,391 Y/Y grow th 2% • Low supply growth of 1% expected for UK Faroe Islands 160 73 179 95 145 90 156 91 154 89 6% -1% 158 93 9% 3% 2023 Other Europe*
Slide 31: 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 Q2 2023 Q3 2023 Q4 2023 2023 GWT (1,000) Actual Actual Actual Actual Actual Actual Actual Actual Guidance Guidance Guidance Norway 273.2 59.4 59.8 87.4 87.1 293.7 65.6 61.5 87.0 75.9 290.0 Scotland 6
Slide 32: Outlook
Outlook • Second quarter another record-breaking quarter on strong operational performance in a good market • Salmon normally fares well in challenging economic times • Modest supply growth of 1% expected in 2023 (3% in H2-23) • Mowi harvest volume guidance maintained at 484k GWT in 2023 – Equivalen
Slide 33: Appendix
Q2 2023 presentation Appendix
Slide 34: 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 35: 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 2023 YTD and since 2019 Scope 1 & 2 GHG emissions Scope 3 GHG emissions -10% 400 -38% 2,000 Tonnes (1,000) Tonnes (1,000) -3% 350 1,900 300 -8% 1,800 250 1,700 200 1,600 150 1,500 2019 2020 2
Slide 36: Nova Sea
Nova Sea Harv est v olume (GWT) EBI T per kg (EUR) NI BD EURm Ownership % 2021 2022 Q2 2022 Q2 2023 2021 2022 Q2 2022 Q2 2023 Q2 2023 Nova Sea 48.7 % 43 539 44 027 9 377 9 614 1.84 2.90 4.67 3.82 -82.5 • Leading integrated salmon producer in Northern Norway − 33.33 wholly owned licenses − 4 partly o
Slide 37: 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 38: Contract coverage and sales contract policy
Contract coverage and sales contract policy SALES CONTRACT POLICY Min hedging rate Max hedging rate (1) • Q3 2023 contract shares (% of guided volume): Norway (2) 0% 50 % Scotland 0% 75 % − Norway 21% Chile (2) 0% 50 % − Scotland 56% Canada 0% 30 % Ireland 0% 100 % − Chile 33% Faroes 0% 30 % − Canad
Slide 39: 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 160.4 34.7 17.1 12.0 2.1 12.3 -0.5 238.0 SALES AND MARKETING Markets 15.5 3.4 0.8 0.1 0.4 0.4 0.0 0.0 20.5 Consumer Products 23.4 4.8 7.4 0.0 -0.1
Slide 40: YTD 2023 segment overview
YTD 2023 segment overview SOURCES OF ORIGIN YTD EUR million Norway Scotland Chile Canada Ireland Faroes Iceland Other 1) Group OPERATIONAL EBIT FARMING 362.9 58.1 25.6 27.9 3.1 19.2 9.8 506.6 SALES AND MARKETING Markets 29.3 4.9 1.0 0.5 0.6 0.5 0.0 0.0 36.8 Consumer Products 47.6 8.4 14.6 0.0 0.3 0.
Slide 41: 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 Q1 Q2 Q3E Q4E 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 65.6 61.5 87.0 75.9 290.0 Scotland 38.4 65.4 52.7 18.3 19.2 15.0 12.0 64.4
Slide 42: Cash flow guidance and historic developments
Cash flow guidance and historic developments Net capital expenditure Net working capital 450 600 Maintenance level 400 500 350 300 400 250 EUR million EUR million 200 300 150 200 100 50 100 0 2018 2019 2020 2021 2022 2023E 0 2018 2019 2020 2021 2022 2023E Financial commitments and cost of debt (*) 1
Slide 43: Thank you
MQOWI Thank you