Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Q2 2015 Earnings Presentation
50 slides from Mowi Asa's earnings presentation, Aug 13, 2015
Slide 1: Q2 2015 Presentation
Q2 2015 Presentation
Slide 2: salmon oes,
salmon oes, be we and gudlance fal NIBD ta ing update, Marine goals, target: trategies, beliefs, and expectation: urged to rea this sreeetistiont after today.
Slide 3: Operational EBIT of NOK 719m
Operational EBIT of NOK 719m - Good contribution from Norway Challenging iti: in America: Relatively good underlying demand in Europe Adjusted for Easter, depreciation of the NOK during Q2 and Russia Merger process with AquaChile terminated Restructuring process of MH Chile initiated Quarterly divid
Slide 4: Marine Harvest Group - main figures
Marine Harvest Group - main figures 02 2014 Operational revenue and other income 6581 6.563 12988 12401 25 496 Operational EBT” 719 4720 1550 2310 4254 Cash flow from operations 729 1324 1 266 2535 3944 Net interest-bearing debt (NIBD) 7 685 6990 7 685 6990 9 268 Inderlying EPS (NOK) 1.40 2.05 235 3
Slide 5: Weekly reference prices
Weekly reference prices | | th we =z «0 | ptt Na Mg 3 125 : Wal Aw 3 = BT WI NA = An |S rw en ° 8 ‘3 ——Reference price North America (GWE Seattle) fs SHAIRRVBRIMOBall 5 Aue eabove Prices in year Weak pri
Slide 6: Price achievement by origin
Price achievement by origin 140% 120% 120% 107% to0% go% 109% 99% 100% 99% f aa 80% — 60% 40% 20% 0% Norwegian Scottish Canadian Chilean mQ22014 Q2 2015 33% 45% 0% 17° 90% 96% 91% 905 Contract share Superior share
Slide 7: OpEBIT MH Feed Farming
1220 44 - 566 = OpEBIT MH Feed Farming Q2 2014 Markets Consumer Other Products Op EBIT Q2 2015
Slide 8: Salmon of Norwegian Origin
SALMON OF NORWEGIAN ORIGIN Q2 2015 a2 2014 nal EBIT Salmon of Norwegian Origi 2.2014 vs Q2 2015 perational EBIT 835 900 y— st volume (GWT, 03668 6 { | lume (GWT) | o— | Operational EBIT per kg (NOK) 980 12:16 | | - of which MH Markets 086 0.93 | | & - of which MH Consumer Products 064 0.28 T i al Ex
Slide 9: Contracted volumes (GWE tons)
Contnracted volumes (GWE tons) 35 00 30 000 25 000 20.000 15 000 10 000 5.000 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Slide 10: NOK per kg
NOK per kg South 14.13 Total Mid North West mQ2 2014 mQ2 2015
Slide 11: Operational EBIT Salmon of Scottish Origin
Operational EBIT Salmon of Scottish Origin @2 2044 vs Q2 2015 Operational EBIT 67 223 Harvest volume (GWT) 12361 18274 Operational EBIT per kg (NOK) 544 12.19 ie te h MH Markets 257 2.86 - of which MH Consumer Products 0.18 0.05 '$ incl in op. EBIT -3 0 Ecostore tone per kg (NOK) 07 0.00 Price i pei
Slide 12: Operational EBIT Salmon of Canadian Origin
Operational EBIT Salmon of Canadian Origin Q2.2014 vs Q2 2015 i = 0 -_™ Exceptional items incl in op. EBIT 3 2 Exceptional items per kg (NOK) 0.28 0.25 Voure feed oh aWante Wega Tenn OPER OP Price achievement/reference price 100% 99% Contract coverage 0% 0% Superior share 91% 83% = Low prices due to
Slide 13: Operational EBIT Salmon of Chilean Origin
Operational EBIT Salmon of Chilean Origin Q2 2014 vs Q2 2015 Operational EBL - 64 90 Harvest volume (GWT) 13240 © 16.425 0 Operational EBIT per kg (NOK) 4.64 5.50 ° - a van MH Markets 1.98 0.47 - ich MH Consumer Products 0.00 0.00 _ Exceptional items incl in op. EBIT 26 0 OO GPRS ue _Youre Few ORSiF
Slide 14: Salmon of Irish Origin / Faroese Origin
|SALMON OF IRISH ORIGIN Q2 2015 22014 ON OF FAROESE ORIGIN 22015 @2 2014 Harvest volume (GWT) 2948 1296 Harvest volume (GWT) Oo 3.048 Operational EBIT per kg (NOK) 18.08 9.94 Operational EBIT per kg (NOK) O00 | 14.72 ~ of which MH Markets 0.03 -0.02 -ofw Md MH Markets 0.00 0.84 ofwhich MH Consumer P
Slide 15: Consumer Products
Consumer Products MH CONSUMER PRODUCTS Nor Qi 2 2015 02 2014 Operating revenues 2267 e2u Operational EBIT 48 20 Operational EBIT % 1% 0.9% Volume sold (tons product weight) «25541 25.866 Exceptional items 0 Volume share salmon 73% 74% Revenue share salmon 77% 79% over year, Easter earning: Strong gr
Slide 16: Feed
22015 22014 Operating revenues 602 25 Casinstay EBIT 2 18 rational EBIT % 5.3% na Feed sold volume 47 608 2525 Feed produced volume 68189 4.940 Exceptional items. 0 0 = Strong production efficiency and good earnings = Self-sufficiency exceeded 80% in the period
Slide 17: Second Quarter 2015 Financials, Harvest Volumes and Markets
Second Quarter 2015 Financials, Harvest Volumes and Markets
Slide 18: Marine Harvest Group
Marine Harvest Group Operational revenue and other income Operational EBIT ° ne 120 150 210 4254 Unrealized salmen dervathes 10 4 9 1 54 Chang uvenize oat pot ed 7 ° 8 -92 Nel firselue adusiment of biomass, onerous - 687 = 825 422 948 487 Rstoctang costs “127 “48 125 46 -53 ther nor-operalional tems
Slide 19: Marine Harvest Group balance sheet
larine Harvest Group 30.06.2015 30.06.2014 34.12.2014 M. NOK nrilion lon-current assets. 19 013 16 820 18 662 buen assets 15 985 14 789 18 294 Assets held for sale 8 43 19 Total assets 35 006 31651 36 974 Equity 17 831 14 477 147 Non-current liabilities 12 305 12 677 16 572 oe urreni m liabilities 4
Slide 20: Marine Harvest Group cash flow and NIBD
Marine Harvest Group amid = YTD 2.45 YTD 2. 14 NIBD beginning of period 7518 75 9268 7791 7791 Operational EBITDA, 1024 1445 2184 2761 5221 Change in working capital 118 63 -280 et 2 Taxes paid 345 $8 477 154 298 Other adjustments 68 126 132 -133 281 Cash flow from operations 729 4324 1265 2535 3.94
Slide 21: 2015 cash flow estimates
= 2015 cash flow estimates - Working capital buildup NOK va ° Support further organic growt aes ee iawes of NOK 1,900m a Maintenance + NOKS' * NOK 250m - Other - Interest expenses NOK 270m - Tax payables NOK 650m Quarterly dividend in Q2 2015 of NOK 1.30 per share (repayment of paid in capital) Due
Slide 22: EUR 805m Facility Agreement
= EUR 805m Facility Agreement - Maturity -Q4 2019 - Covenants: * 35% equity ratio - Accordion option EUR 45m - Lenders: DNB, Nordea, Rabobank and ABN Amro = EUR 375m issued in April 2014 - Tenor 5 years, annual coupon 0.875%), conversion price EUR 10.4235 = NOK 1,250m bond issued in February 2013 -
Slide 23: Estimated volumes
Estimated volumes | Compared to Q2 2014] Est. volumes Suppliers Q2 2015 Q22014§ Volume % Q1 2015 Norway 2 400 0.9% 258 600| Faroe Islands 16 900 18 200 1300 B -7.1% 12 200) rel 3 50 2900} 0 WF 20.7% 17( Total Europe 325000 327 600) 2600 B 0.8%) 305 100) hile 118 400 122 400) 4000 B -3.3% 128 rth Ame
Slide 24: Reference prices
Refei nce prices 2.2015 Change vs 22015 NOK 22.2014 Market (4) Norway (1) NOK 97.91 84% EUR 4.42 7.8% Chile 2) NOK 57.98 65% USD 7.48 27.8% North America (3) NOK 38.14 13.8% USD 492 33.5% Notes: (1) Average superior GWE price per kg (NASDAQ) (2) Average C trim price pe (3) Average superior GWE price
Slide 25: Estimated volumes by market
simated volumes | Compared to Q2 2014] Est. volum 12 month comparison ‘ea 2015 _a22014] Volume Q1 2015 LI™ PT™M 228 800 218 800] 9900 $ 4.5%] 217 400][ 930 600 00 Ikraine ther Europe Total Europe usA Asia All other markets sum 26 600} 12 100 EU adjusted for East Inflow to US from Europe 24700 Infow
Slide 26: Industry supply outlook
Industry supply outlook Ss marineharvest 2011 2012203, ah GWE tons (thousands) Norway 905 108510291079 hile 199 328 421 525 North America 128 140 22 108 1 143 1 1 Other 103 128 133 137 Total 747018004637 ____ 2004 932011 32012 a32013 a32014 a3 2015, ESTIMATES @3 2015, |Gwetons (thousands) a oa PEGS
Slide 27: Harvest guidance
a4 2014 Actual Canada 33 6 6 7 7 om o 2 . on 2 Scotland a8 on) oy 6 4 7 2 6 52 other units 2 3 4 6 5 8 1 3 3 5 2 ua 2 14 or 108, at ee = Reduced guidance from 440,000 tons GWE to 430,000 tons GWE - Norway reduced by 9,000 tons mainly due to low summer seawater temperatures - Chile increased by 1,000
Slide 28: Favourable supply outlook
Favourable supply outlo Future prices (NASDAQ) next 12 months at ca NOK 42 per kg Relatively good underlying demand in the European and Asian markets = Developments in the American market remains a concern = pI Successful new long term retail contracts at good prices Quarterly dividend of NOK 1.30 p
Slide 29: Appendix
Appendix
Slide 30: Dividend policy
The quarterly dividend level shall reflect the present and expected future cash flow generation of the Compan To this end, a target level for net ee “iis debt is determined, reviewed and updated on a regular When the target is met, at least 75% orine annual free cash flow after operational and finan
Slide 31: Sales contract policy
Norway 38% - Scotland 28% - Can OY - Chile 9% |SALES CONTRACT POLICY Min hedging rate (1)_Max hedging rate (1) Norway (2) (3) 5.0 % Chile (3) 22.5% Canada 0.0 Scotland 40.0% Ireland 0.0 Faroes 0.0% Weighted average 17.6% Note:
Slide 32: Reference prices
mn UAT ANNE: g22E222282228 8223 335585595353 3333 mesic si mtorr ie Non, GEO Reference prices 0221 Change vs. N 022014 Norway (1) Nox a 5.4% Chile (2) \K 87.98 6.5% North America (3) NOK 38.14 13.8% ae2me. azn aa] il Mul | 2EGE222 222 a@agaaqassaa8 ener hl Fes a) Q22015 Change vs| Market (4) Q2 2014
Slide 33: Development in Global Price Achievement
Development in Global Price Achievement (at source of origin) NOK por kg poraorlovenunz and other income a8 proton can 19 a 27% 2% Global Farming - full cost Q2 2014 vs Q2 2015 Group 81 per kg (NOK) ‘Contttion ro Faxing (NOK “ceeauten roma 80H) ontuton far Consume rogue (NOK) Group Harestvolume (6H
Slide 34: Marine Harvest Group - main figures
ine Harvest Group - main figures Mar 2 2015 22014 My Me unaudited NOK mon 7 ° 022015 22014 (Operational reverue and other income 6581 6563 12.088 12431 25 496 Operational EBIT” 719 1220 1990 2310 4294 Cash fow rom operations 72 1328 1286 2535 3944 Net interest-bearing debt (NIBD) 7685 6990 7685 6990
Slide 35: Operational EBIT
OPERATIONAL EBT MH FARMING 529 1% 88 82 a 581 MH SALES AND MARKETNG. MH Markets 5 32 10 28 ° = 7 129 MH Consumer Product 4 2 ° ° 1 0 nt 48 SUBTOTAL oz El 6 53. 1 12 MH Feed 2 a Other entities ® 8 -38 SH Gl = cs =i 2 7s volume ii tons, semen) 64098 1235111588 13240248 0 104 188 Operational EBIT por k
Slide 36: party stron nt allocates ta source af engin
é 2 19 488, 18 000 52.000 8% party stron nt allocates ta source af engin 19.000 87.000 9%
Slide 37: marineharvest
marineharvest pest eso peat Ea et eeeton tom 624 90%)
Slide 38: marineharvest
marineharvest $002 471 27 mmm a2 SA 228 551 87 G2 2G hao 852 ‘908 652 660 S80 718 2870 4 W218 780 40.283 52 161 m3 177 184 167 168 6S 161 132 190 187 670 35 31 «5 «SHO 42122« BSG? G7 «HAGA GS T1887 «OS 16 G0 we wo S423 «T3342 BH_CGG_«19—«NT7 aS 1ST BA S71 12H THO 1S RO ona) 40518160 180 153163, 2738
Slide 39: Capital Expenditure
CAPITAL EXPENDITURE ra = 200 o = | |_| 2008 2009 2010 2011 2012 2013 2014 2015
Slide 40: Working capital tie-up (NOK million)
2° 3S 3S Working capital tie-up (NOK million) a 3 s -1000 2008 2009 2010 2011 2012 2013 2014 2015
Slide 41: Contractual repayments
800 700 Contractual repayments Interest expenses 2011 2012 2013 2014 2015 Please ncte the epproximations are subjedt to
Slide 42: Nova Sea
Nova Sea 48% 34910 38739 © 86208715 oe grate salmon producer in None way ably une licenses 4 partly owned licenses Marine Harvest has an ownership in Nova Sea of ~48% through direct and indirect shareholdin 2014 dividends of NOK 150m (paid in Q2- 15) Marine Harvest’s share NOK ~6! Proportion of inco
Slide 43: Interest rate hedging policy
{him ies vac stint en eet apr cet Bet aoa aie ergs cacy oes Hoe ree ag ee Som ie east Pa. POLICY: . USD 13%, GBP 4%, other currencies 14%. Marine Harvest ASA shall hedge 70%-100% of the Group's long-term interest-bearing de! currency with fixed interest or interest rate derivatives for the first 4 y
Slide 44: Currency hedging policy
POLICY = EUR/NO distributed across the months of USD/CAD Marine Harvest shall hedge between 0% and 30% of its assumed annual expenses in NOK against the EUR with a horizon ee years. The annual hedging shall be evenly the = USD/CLP = Internal As of 1 April 2011, all bilateral sales n th The operating
Slide 45: P/L effect of contracts maturing
2015 88 8.50 2016 178 9.43 2017 3 08 P/L effect of contracts maturing in @2 +8 (MNOK) MNOK Market value 31/03/2015 19 Change (1) 8 Market value 30/06/2015 “ Norway EUR Chile usp Canada uso Scotland GBP Feed EUR VAP EUR Morpol EUR Faroes EUR Cold Water Species NOK Asia
Slide 46: Currency rates and impact
Average Q2 2015 6.3067 8.5673 11.8845 7.7548, Average Q2 2014 5.4911 8.2068 10.0752 5.9856 Average rates 4CAD _1EUR_1GBP__1USD 2 2015 vs Q2 2014 14.9% 4.4% 18.0% + — 29.6% End ofquarterrates 1CAD 1EUR 1GBP 1USD 30/6/15 vs. 31/3/15 0.3% 1.0% 3.3% — -2.9% Impact on Profit and Loss (versus Q2 2014) Cur
Slide 47: Biomass fair value
value. ing the second half of 2011, the largest salmon farming cot in Norway, support fon audit firms, formed an industry wording group where She aie was to rat, A comerged and Improved common approach for estimating the fair value of the biomass in accordance with Following the working group's conc
Slide 48: Deferred tax assets on tax losses
Marine Harvest Group 31.12.2014 Recognised Unrecognised Total 0 69 Poland 248 St 298 France 256 201 jermany 14 0 14 Chile 0 310 310 Italy 0 4 ‘< ther 3 a4 24 Total 368 oat 1010 any cash effect Most of the deferred tax assets have been d on the stat it of financial position The NOL's will be d to off
Slide 49: Board proxies given at the AGM
The Board was given the following proxies at the AGM - General share capital increase (up to 10% of share capital) - Purchase: of own shares an to 10% of share capital) ad ‘0 per snare * Minimum price: Woke: 7 per share - Issuance of new convertible bond Maximum amount: NOK 3,201 - Authorisation to
Slide 50: Estimated sensitivities on annual results
ESTIMATED SENSITIVITIES ON ANNUAL RESULTS. OP. EBITEFFECT CASHFLOW EFFECT DRIVER NOK million Change in global average salmon price of NOK 1 (1) (2) 430 384 Annual harvest volume Change in total harvest volume of 10,000 tonnes (2) (3) 100 92 Marginal volume Change in global feed price of NOK 1 perkg