Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q1 2015 Earnings Presentation
42 slides from Bakkafrost P/f's earnings presentation, May 12, 2015
Slide 1: Q1 2015 Bakkafrost Group
Q1 2015 BAKKAFROST GROUP Oslo May 12th 2015
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
Slide 3: Summary of Q1 2015
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX Bakkafrost’s salmon farm at Kunoyarnes A-12
Slide 4: Bakkafrost – the largest fish farming company in the Faroe Islands
BAKKAFROST – THE LARGEST FISH FARMING COMPANY IN THE FAROE ISLANDS Largest salmon farming company in the Faroe Islands ~82% of harvest volumes in Q1 2015 50% of farming licenses Harvested 9,726 tgw in Q1 2015 (9,269 tgw in Q1 2014) Feed sales of 14,400 tonnes in Q1 2015* (13,956 tonnes in
Slide 5: Summary of the quarter
SUMMARY OF THE QUARTER Q1 Q1 Positive contribution from all segments (DKK million) 2015 2014 2014 2013 Operating revenues 613.2 631.3 2,683.3 2,491.1 Farming/VAP division increased margin Operational EBITDA 261.1 208.1 930.9 673.7 from 21.37 NOK/kg in Q1 2014 to 26.12 Operational EBIT 234.9 185.5
Slide 6: Summary of the quarter
SUMMARY OF THE QUARTER Market High demand and low supply on salmon from the Faroe Islands in the quarter Benefit from market diversification and good market access Increased market share in Eastern Europe Operation Harvested volumes 5% higher, compared with Q1 2014 Transferred 2.2 mill
Slide 7: Markets and Sales
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 8: Global markets
GLOBAL MARKETS Spot prices on fresh salmon 4-5 [NOK/kg HOG] The NASDAQ salmon price for size 4-5: Decreased y/y Q1 2015 / Q1 2014 by ~12% - by 5.75 NOK/kg from 47.18 to 41.43 Increased q/q Q1 2015 / Q4 2014 by ~7% - by 2.55 NOK/kg from 38.88 to 41.43 The global supply growth was 9.6% ~42,000
Slide 9: Markets & Sales
MARKETS & SALES Total sales of salmon Q1 Q1 Bakkafrost benefits from the global salmon market by markets 2015 2014 2014 2013 EU 39% 47% 45% 47% Access to all markets USA 18% 26% 19% 19% Flexible and efficient market adaptation Asia 8% 21% 16% 27% Eastern Europe 35% 6% 20% 6% Strong market posi
Slide 10: 5% global growth expected in 2015
5% GLOBAL GROWTH EXPECTED IN 2015 The supply growth in 2015 is expected to be Global supply of Atlantic Salmon (head on gutted - HOG) 5%, compared with 2014. 2011 2012 2013 2014E 2015E Norway 904 1.066 1.029 1.076 1.137 The expected global supply growth in 2015 has UK 139 143 142 154 161 increas
Slide 11: Demand development split by markets
DEMAND DEVELOPMENT SPLIT BY MARKETS Salmon markets, sold quantity (head on gutted - HOG) The demand increased 10% in Q1 Estimated volumes Q1 comparison Estimated volumes FY comparison 2015, compared with Q1 2014. Markets Q1 2015 Q1 2014 Volume % FY 2014 E FY 2013 Volume % EU 216.100 187.300 28.800
Slide 12: Segment Information
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 13: Farming – harvest volume
FARMING – HARVEST VOLUME Harvest Volumes Q1 Q1 Harvested volumes tonnes [HOG] 2015 2014 2014 2013 Harvested volumes increased by 5% in Q1 2015, compared with Q1 2014. West 2,541 8,948 18,342 12,065 The North division harvested 74% of the total North 7,185 321 25,671 29,203 quantity in the quarte
Slide 14: Farming – operational performance
FARMING – OPERATIONAL PERFORMANCE Revenues and margin (DKK million) Q1 2015 Q1 2014 2014 2013 All time high Operational EBIT margin in Operating revenues 471 518 2,099 1,992 Q1 2015. Increased from 36% in Q1 2014 to 41% in Q1 2015 Operational EBIT 195 186 694 642 Good biology and fish health Ope
Slide 15: Farming – operational performance
FARMING – OPERATIONAL PERFORMANCE Margin - EBIT per kg total harvested quantity [NOK/kg] Operation 25.00 All time high EBIT/kg due to good biological 23.49 22.51 performance, low cost prices, good quality and 20.00 high value from sold products 17.65 15.00 16.27 10.00 5.00 0.00 Q1 2015 Q1 2014 201
Slide 16: Segment VAP
SEGMENT VAP Q1 Q1 VAP revenues and margin (DKK million) 2015 2014 2014 2013 Stable market conditions – despite lower revenues Operating revenues 189 232 913 666 from promotions Operational EBIT 22 -9 70 -90 Operating EBIT in Q1 2015 DKK 22 million, Operational EBIT margin 12% -4% 8% -14% compare
Slide 17: Segment VAP
SEGMENT VAP Margin - EBIT per kg total harvested quantity [NOK/kg] Record high combined earnings from VAP and Farming 25 20 VAP EBIT was 5.66 NOK/kg in Q1-2015. 15 Farming EBIT was 23.49 NOK/kg. 10 5 Best first quarter result. Seasonal results from VAP in first 0 quarter normally under pressure.
Slide 18: Segment Fishmeal, Oil and Feed (FOF)
SEGMENT FISHMEAL, OIL AND FEED (FOF) Fishmeal, Oil and Feed EBITDA DKK 63 million in Q1 2015, (DKK million) Q1 2015 Q1 2014 2014 2013 compared with DKK 22 million in Q1 2014 Operating revenues 205 178 971 1,083 EBITDA margin of 30.5% in Q1 2015, compared with 12.5% in Q1 2014 EBITDA 63 22 182 12
Slide 19: Raw material prices and feed sale
RAW MATERIAL PRICES AND FEED SALE Volumes of raw material purchase and feed sale [tonnes] Timing of raw material purchase affects profit 35,000 120,000 Feed sale Raw material (tonnes) Raw material intake increased 70% from 44,159 tonnes 30,000 100,000 Feed sale (tonnes) in Q1 2014 to 75,003 tonnes
Slide 20: Group Financials
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 21: Group profit and loss
GROUP PROFIT AND LOSS Q1 Q1 (DKK million) 2015 2014 2014 2013 Operating revenues 613 631 2,683 2,491 Revenues Q1 2015 is on the same level as Operational EBITDA* 261 208 931 674 in Q1 2014. Operational EBIT* 235 186 834 587 Operational EBIT increased due to improved Fair value adjustment on biol
Slide 22: Balance sheet
BALANCE SHEET Q1 End Investments in PPE of DKK ~ 106 million in Q1 (DKK million) 2015 2014 2015 Intangible assets 295 295 The carrying amount of biological assets has Property, plant and equipment 1,121 1,041 decreased due to lower salmon prices end Q1 Financial assets 124 126 2015, than end 201
Slide 23: Cash flow
CASH FLOW Cash flow from operation lower in Q1 2015 than Q1 Q1 Q1 2014: (DKK million) 2015 2014 2014 2013 Cash flow from operations 81 108 870 518 High operational earnings Cash flow from investments -106 -34 -232 -205 Increase in inventory Cash flow from financing 35 -13 -414 -156 Net change
Slide 24: Status on Investment
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 25: Investments – Programme 2014-2017
INVESTMENTS – PROGRAMME 2014 - 2017 Fishmeal & Oil Feed Hatchery Farming Wellboat Harvest Value Added Products Sales The investments will be made step by step in the relevant parts in the value chain to secure: Efficiency Biological risk Organic growth BAKKAFROST / Q1 PRESENTATION 2015 Page 25
Slide 26: Investments – Programme 2015-2017
INVESTMENTS – PROGRAMME 2015 - 2017 Status on main investments Harvest/VAP factory New Hatchery Viðareiði Hans á Bakka Construction of buildings started in Contracted Feb-2015 Wellboat under construction in Yalova, January 2015. Turkey Total investment DKK 125 mill Contracts for mach
Slide 27: Building new Harvest & VAP factory
BUILDING NEW HARVEST & VAP FACTORY New Harvest & VAP factory in Glyvrar Merging 7 factories into one facility Improve efficiency and create synergies Double capacity Significant reduction of internal transportation between own factories New products Reduce risk in farming Start-up in Q1
Slide 28: Building new hatcheries
BUILDING NEW HATCHERIES New Hatchery in Viðareiði (S-21) Significant capacity expansion in progress The goal is to increase average size of smolts from 100g to 300g in 2018. Reduce risk in farming Reduce total time of production cycle at sea Viðareiði facility to start-up in Q2 2016 New
Slide 29: Delivery of new wellboat in Q2 2015
DELIVERY OF NEW WELLBOAT IN Q2 2015 Hans á Bakka at the shipyard Hans á Bakka – Bakkafrost’s new wellboat about to be ready for delivery Building process in last phase Delivery mid June Expected starting up in July Five times capacity of existing vessel State of the art technology Final
Slide 30: Outlook
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 31: Outlook
OUTLOOK Market VAP Reduced supply growth going forward Contracted 80% of available capacity for 2015 Forward prices 2H 2015 now around 38.50 NOK Fishmeal, oil and feed per kg Forecast for feed sales 83,000 - 87,000 tonnes Global supply growth estimated to 5% in 2015 in 2015 and only 2-4% in
Slide 32: Appendix
SUMMARY OF Q1 2015 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS STATUS ON INVESTMENT OUTLOOK APPENDIX
Slide 33: Bakkafrost – preparing for the future
BAKKAFROST - PREPARING FOR THE FUTURE Financing of the investments 2015-2017 Use free cash flow from operations Unused financing of approximately DKK 971 million Partly new financing if advantageous Flexibility to postpone investment in case of adverse events Profiles from the National Footb
Slide 34: Financing
FINANCING Financing of the Group NIBD NIBD and andfunding available avaible funding Total funding to DKK ~ 1,197 million 1600 Bonds NOK 500 million due Feb 2018 (swapped into 1400 DKK) 1200 Instalment loan of DKK 175 million, repayable with DKK 1000 25 million each quarter 800 Revolving cred
Slide 35: Faroe Islands
FAROE ISLANDS 18 islands – 1,387 km2 48,618 inhabitants (November 1st 2014) Home rule – within the Kingdom of Denmark Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2014) Service/public admin.: ~40% Private service: ~31% Construction: ~12% Fishi
Slide 36: Faroe Islands – excellent conditions for cost effective farming
FAROE ISLANDS – EXCELLENT CONDITIONS FOR COST EFFECTIVE FARMING Average Seawater Temperatures Natural growth area for wild salmon ºC Faroe Islands Norway (Trøndelag) GEOGRAPHY Faroese fjords provide separation between locations 16 Improves biological control and area management 14 12 Stable
Slide 37: Bakkafrost – preparing for the future
BAKKAFROST - PREPARING FOR THE FUTURE New Harvest and VAP operation The new plant and HQ 7 factories merged into one BAKKAFROST / Q1 PRESENTATION 2015 Page 37
Slide 38: Development per quarter Q1 2012 – Q1 2015
DEVELOPMENT PER QUARTER Q1 2012 – Q1 2015 (mDKK) Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Revenue 613 757 584 711 631 667 741 610 473 582 457 416 400 Op. EBIT 235 227 209 212 186 124 187 169 105 99 86 78 60 Profit/Loss 132 222 211 126 87
Slide 39: The value of a strict sanitary regime
THE VALUE OF A STRICT SANITARY REGIME Margin EBIT/kg last 15 years (NOK/kg) Margin EBIT/kg last 5 years (NOK/kg) Margin EBIT/kg 2014E (NOK/kg) During the last 15 years, 2000 - 2014, The last five years - 2010-2014 In 2014, BAKKA had a farming Norway had the highest margin of the BAKKA had a strong a
Slide 40: Largest shareholders
LARGEST SHAREHOLDERS 20 largest shareholders Share development 20 largest shareholders Last 12 months Traded daily No of shares % Name Origin NOK/share M NOK 4.594.437 9,4 Jacobsen Oddvør FRO 4.491.217 9,2 Jacobsen Johan Regin FRO 2.289.431 4,7 Skandinaviska Enskil A/C C LIENTS AC C OUNT NOM SWE 1.9
Slide 41: Dividend
DIVIDEND Dividend DPS in % of adj. EPS * Dividend of DKK 6.00 (NOK 6.78) per share paid out in Q2 2015 100% 99% 90% 80% Dividend policy 70% Competitive return through: 60% 49%** 49% 49%** Dividends 50% 40% Increase in the value of the equity 40% 30% Generally, the company shall pay dividen
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