Mowi Asa · OSL:MOWI
Mowi Asa — Q3 2022 Earnings Presentation
40 slides from Mowi Asa's earnings presentation, Nov 9, 2022
Slide 1: Q3 2022 presentation
Q3 2022 presentation CEO: Ivan Vindheim CFO: Kristian Ellingsen 9 November 2022
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 • Proposal from the Norwegian government of resource rent tax on salmon farming in Norway – 40% resource rent tax, and 62% including corporate tax • All-time high quarterly revenues of EUR 1.26 billion and third best Operational EBIT of 240 million • Continued favourable demand developmen
Slide 4: Key financials
Key financials Mowi Group - main figures Q3 2022 Q3 2021 YTD Q3 2022 YTD Q3 2021 2021 Unaudited EUR million Operational revenue and other income 1,257.1 21% 1,034.9 3,584.2 3,057.6 4,207.6 Operational EBITDA 1) 283.4 172.5 895.4 502.0 690.3 Operational EBIT 1) 239.5 84% 130.5 766.2 376.8 522.6 Net i
Slide 5: Salmon prices – weekly reference prices
Salmon prices – weekly reference prices • Prices in Q3 2022 up by 30% YoY in Europe. Prices up 1% in Miami and down 11% in Seattle for Chilean and Canadian salmon, respectively, in the American market 16 8 Q3-22 prices GWT/kg 14 7 • Norway EUR 6.89 (5.30) USD per lbs (Miami and Seattle) 12 6 • Chile
Slide 6: Price achievement and contract share
Price achievement and contract share 140% 125% 120% 111% 104% 102% 101% 96% 102% 100% 95% 80% 60% 40% 20% 0% Norwegian Scottish Chilean Canadian Q3 2021 Q3 2022 Norwegian Scottish Chilean Canadian Q3-22 Contract share 22% 61% 57% 0% Superior share 94% 95% 95% 93% Page 6
Slide 7: Operational EBIT comparison
Operational EBIT comparison • Third best ever Operational EBIT driven by Farming segment Page 7
Slide 8: Norway
Norway SALMON OF NORWEGIAN ORIGIN Operational EBITEBIT Operational Salmon of Norwegian Salmon Origin of Norwegian Origin EUR million Q3 2022 Q3 2021 Q3 Q3 2021 vs Q3 2022 2022 vs Q3 2021 Operational EBIT 221.1 98.4 300 EBIT 171.8 92.3 250 Harv est v olume (GWT) 87 415 71 024 200 Operational EBIT per
Slide 9: Norway: Operational EBIT/kg per region
Norway: Operational EBIT/kg per region 3.0 2.83 • Region North: Good performance on relatively 2.62 good biological performance. Costs increased 2.53 2.5 2.40 YoY due to underlying inflation and adverse site mix. 2.16 2.0 1.94 • Region Mid: Earnings improved on higher prices and harvest volumes, par
Slide 10: Norway: Sales contract portfolio
Norway: Sales contract portfolio 30,000 25,000 Contracted volumes (GWT) 20,000 15,000 10,000 5,000 0 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Realised contract volumes Contracted volumes (including prospects) • Low contract share of 22% in the quarter following our positive market view • Contract mar
Slide 11: Scotland
Scotland SALMON OF SCOTTISH ORIGIN Operational EBIT Operational Salmon EBIT Salmon of of Scottish Origin Scottish Origin EUR million Q3 2022 Q3 2021 Q3Q32021 2022vs Q3 2022 vs Q3 2021 Operational EBIT 4.2 13.4 40 EBIT -37.3 -6.3 Harv est v olume (GWT) 14 494 14 968 30 Operational EBIT per kg (EUR) 0
Slide 12: Chile
Chile SALMON OF CHILEAN ORIGIN Operational Operational EBIT Salmon EBIT Salmon of Chilean of Chilean Origin Origin EUR million Q3 2022 Q3 2021 Q3 2022 Q3 2021 vs Q3vs2022 Q3 2021 Operational EBIT 21.5 13.9 25 EBIT 24.5 1.2 20 Harv est v olume (GWT) 16 890 14 945 15 Operational EBIT per kg (EUR) 1.27
Slide 13: Canada
Canada SALMON OF CANADIAN ORIGIN Operational EBITEBIT Operational Salmon Salmonofof Canadian CanadianOrigin Origin EUR million Q3 2022 Q3 2021 Q3Q3 2021 vs Q3 2022 2022 vs Q3 2021 Operational EBIT -3.9 -0.1 10 EBIT -11.3 -39.1 5 Harv est v olume (GWT) 11 115 11 065 Operational EBIT per kg (EUR) -0.3
Slide 14: Ireland and Faroes
Ireland and Faroes SALMON OF IRISH ORIGIN SALMON OF FAROESE ORIGIN EUR million Q3 2022 Q3 2021 EUR million Q3 2022 Q3 2021 Operational EBIT -2.6 4.1 Operational EBIT 1.8 2.5 EBIT -10.8 3.4 EBIT 0.8 2.1 Harv est v olume (GWT) 2 165 2 215 Harv est v olume (GWT) 1 730 2 899 Operational EBIT per kg (EUR
Slide 15: Consumer Products
Consumer Products CONSUMER PRODUCTS EUR million Q3 2022 Q3 2021 Operating rev enues 776.5 674.4 Operational EBIT 30.3 21.5 Operational EBI T % 3.9% 3.2% Operational EBI T % VAP only 4.9% 3.9% EBIT 30.4 17.8 Volume sold (tonnes prod. weight) 56 022 60 399 • Best third quarter results to date on solid
Slide 16: Feed
Norway Feed FEED EUR million Q3 2022 Q3 2021 Operating rev enues 339.3 217.0 Operational EBITDA 18.9 14.2 Operational EBIT 14.9 10.1 Operational EBI TDA % 5.6% 6.6% Operational EBI T % 4.4% 4.7% EBIT 14.9 10.1 Feed sold v olume 169 484 156 361 Feed produced v olume 149 898 136 867 Scotland • Best qu
Slide 17: Financials, Markets and Harvest volumes
Q3 2022 presentation Financials, Markets and Harvest volumes
Slide 18: Profit and Loss
Profit and Loss Mowi Group EUR million Q3 2022 Q3 2021 YTD Q3 2022 YTD Q3 2021 2021 • Negative net fair value Operational revenue and other income 1,257.1 21% 1,034.9 3,584.2 3,057.6 4,207.6 adjustment of biomass of Operational EBIT 1) 239.5 84% 130.5 766.2 376.8 522.6 EUR 103 million mainly due to
Slide 19: Financial position
Financial position Mowi Group EUR million 30.09.2022 30.09.2021 31.12.2021 • Strong financial position Non-current assets 3 612.2 3 403.0 3 542.2 Current assets 3 183.6 2 457.3 2 717.6 Total assets 6 796.0 5 860.3 6 259.5 Equity 3 516.5 3 053.5 3 131.4 Non-current liabilities 1 991.2 2 006.9 2 155.3
Slide 20: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Mowi Group EUR million Q3 2022 Q3 2021 YTD Q3 2022 YTD Q3 2021 2021 • Improved earnings NIBD beginning of period* -1 237.4 -1 151.5 -1 257.3 -1 458.4 -1 458.4 • Working capital tie-up Operational EBITDA* 283.4 172.5 895.4 502.0 690.3 Change in working capital
Slide 21: 2022 Cash Flow Guidance
2022 Cash Flow Guidance • Working capital build-up EUR ~350m, of which approx. 50% is temporary (inventory/receivables) – Support further organic growth across the value chain • Capital expenditure EUR ~300m – Freshwater investments EUR ~ 80m – Seawater investments EUR ~ 50m – Processing/Sales & Mar
Slide 22: 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 23: Supply development
Supply development Estimated volumes Compared to Q3 2021 Est. volumes Suppliers Q3 2022 Q3 2021 Volume % Q2 2022 Norway 377,600 371,400 6,200 1.7% 272,400 Scotland 46,400 47,400 -1,000 -2.1% 39,800 Faroe Islands 23,200 21,300 1,900 8.9% 18,400 Other Europe 10,400 11,400 -1,000 -8.8% 12,800 Total Eur
Slide 24: Global volume development
Global volume development Estimated volumes Compared to Q3 2021 Est. volumes 12 month comparison Markets Q3 2022 Q3 2021 Volume % Q2 2022 LTM PTM % EU+UK 328,100 311,000 17,100 5.5% 243,800 1,146,200 1,143,500 0.2% Russia 13,100 16,700 -3,600 -21.6% 6,700 58,600 87,800 -33.3% Other Europe 27,100 29,
Slide 25: Development in reference prices
Development in reference prices Q3 2022 Change vs Q3 2022 Change vs Market Q3 2021 EUR Q3 2021 Norway (1) EUR 6.89 30.2% EUR 6.89 30.2% Chile (2) USD 5.99 0.5% EUR 5.95 17.7% Chile, GWT (3) USD 6.87 0.4% EUR 6.83 17.6% Notes: (1) NASDAQ average superior GWE/kg (gutted weight equivalent) North Americ
Slide 26: Industry supply growth 2022e and 2023e
Industry supply growth 2022e and 2023e 2019 2020 2021 2022 Estim ate 2022 Estim ate 2023 GWT (1,000) Estim ate Low Y/Y grow th High Y/Y grow th Low Y/Y grow th High Y/Y grow th Norw ay 1,200 1,232 1,379 1,383 1,378 0% 1,388 1% 1,392 1% 1,432 4% UK 171 160 179 164 162 -10% 166 -7% 172 5% 182 11% Faro
Slide 27: Mowi volume guidance
Mowi volume guidance Atlantic salmon 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 2022 2023 GWT (1,000) Actual Actual Actual Actual Actual Actual Actual Actual Actual Guidance Guidance Guidance Norway 262.0 75.0 56.1 71.0 71.1 273.2 59.4 59.8 87.4 79.3 286.0 290.0 Scotla
Slide 28: Outlook
Outlook • Proposal from the Norwegian government of resource rent tax on salmon farming in Norway – 40% resource rent tax, and 62% including corporate tax • Supply growth constrained going forward and the salmon normally fares well in challenging economic times – Supportive of a tight market balance
Slide 29: Appendix
Q3 2022 presentation Appendix
Slide 30: 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 31: Mowi ranked #1 on sustainability amongst food producers
Mowi ranked #1 on sustainability amongst food producers Good progress on reducing GHG emissions in 2022 YTD (FY 2021) and ambitious long-term targets Scope 1 & 2 GHG emissions Scope 1 & 2 & 3 GHG emissions -35% -72% -22% 250 2,500 Tonnes (1,000) Tonnes (1,000) 200 2,000 150 1,500 100 1,000 50 500 0
Slide 32: 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 33: Nova Sea
Nova Sea Harv est v olume (GWT) EBI T per kg (EUR) NI BD EURm Ownership % 2020 2021 Q3 2021 Q3 2022 2020 2021 Q3 2021 Q3 2022 Q3 2022 Nova Sea 48.7 % 42 584 43 539 11 944 12 793 1.60 1.80 1.77 2.55 -102.0 • Leading integrated salmon producer in Northern Norway − 33.33 wholly owned licenses − 4 partl
Slide 34: 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 35: Contract coverage and sales contract policy
Contract coverage and sales contract policy SALES CONTRACT POLICY Min hedging rate Max hedging rate (1) • Q4 2022 contract shares (% of guided volume): Norway (2) 0% 50 % Scotland 0% 75 % − Norway 30% Chile (2) 0% 50 % − Scotland 67% Canada 0% 30 % Ireland 0% 100 % − Chile 40% Faroes 0% 30 % − Canad
Slide 36: Quarterly segment overview
Quarterly segment overview SOURCES OF ORIGIN QTD EUR million Norway Scotland Chile Canada Ireland Faroes Other 1) Group OPERATIONAL EBIT FARMING 176.8 -0.8 13.9 -6.2 -5.4 1.8 180.1 SALES AND MARKETING Markets 10.0 3.3 1.8 2.3 0.4 0.1 0.2 18.2 Consumer Products 20.0 1.1 5.8 0.0 2.3 0.0 0.9 30.3 SUBTO
Slide 37: YTD 2022 segment overview
YTD 2022 segment overview SOURCES OF ORIGIN YTD EUR million Norway Scotland Chile Canada Ireland Faroes Other 1) Group OPERATIONAL EBIT FARMING 533.0 23.2 37.1 41.9 5.3 13.9 654.4 SALES AND MARKETING Markets 14.1 9.0 5.0 8.6 1.4 0.2 0.7 39.0 Consumer Products 46.1 4.3 15.0 -0.7 2.8 0.0 2.3 69.7 SUBT
Slide 38: Development in harvest volumes
Development in harvest volumes GWT 2017 2018 2019 2020 2021 2022E 2023E (1,000) Total Total Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4E Total Total Norway 210.2 230.5 236.9 50.5 56.6 76.5 78.5 262.0 75.0 56.1 71.0 71.1 273.2 59.4 59.8 87.4 79.3 286.0 290.0 Scotland 60.2 38.4 65.4 9.0 14.6
Slide 39: Cash flow guidance and historic developments
Cash flow guidance and historic developments Net capital expenditure Net working capital 350 400 Maintenance level 300 350 250 300 200 250 EUR million EUR million 200 150 150 100 100 50 50 0 0 2017 2018 2019 2020 2021E 2022E 2017 2018 2019 2020 2021 2022E Financial commitments and cost of debt (*) 6
Slide 40: Thank you
Thank you