Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q4 2016 Earnings Presentation

36 slides from Bakkafrost P/f's earnings presentation, Feb 27, 2017

  1. Slide 1: Q4 2016 Bakkafrost Group

    Q4 2016 BAKKAFROST GROUP Oslo 27 February 2017

  2. 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

  3. Slide 3: Summary of Q4 2016

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX New Processing factory at Glyvrar in operation

  4. Slide 4: Highlights

    HIGHLIGHTS Highest operational EBIT and record prices  Harvested 12,940 tgw in Q4 2016 (13,675 tgw in Q4 2015)  Feed sales of 24,988 tonnes in Q4 2016* (19,797 tonnes in Q4 2015*)  Raw material purchase of 34,680 tonnes in Q4 2016 (63,582 tonnes in Q4 2015)  Revenues of DKK 868 million in Q4 201

  5. Slide 5: Summary of the Quarter

    SUMMARY OF THE QUARTER Highest operational EBIT and record high Q4 Q4 quarterly results per kg for the Farming (DKK million) 2016 2015 2016 2015 segment and the Farming/VAP segment Operating revenues 868 760 3,203 2,850 combined, although the VAP segment had a Operational EBITDA 393 285 1,298 1,109

  6. Slide 6: Markets and Sales

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX New Processing factory at Glyvrar in operation

  7. Slide 7: Markets & Sales

    MARKETS & SALES Same trend as in Q3 2016 continued in Q4 2016, sales Total sales of salmon Q4 Q4 to EU and USA increased and consequently sales to by markets 2016 2015 2016 2015 Asia and Eastern Europe decreased EU 48% 39% 43% 36% USA 23% 20% 23% 19%  EU market share increased from 39% in Q4 2015 t

  8. Slide 8: Global Markets

    GLOBAL MARKETS Undersupply leads to high market prices Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG]  The NASDAQ salmon price for size 4-5 Q1 Q2 Q3 Q4  Increased y/y by 23.04 NOK/kg ~51% - from 45.26 to 68.30  Increased q/q by 7.21 NOK/kg ~12% - from 61.10 to 68.30 Reduced global supply in Q4

  9. Slide 9: Market Environment Q4 2016

    MARKET ENVIRONMENT Q4 2016 Prices increased both in Norway and US, North East PRICE NORWAY  The NASDAQ salmon price in Q4 2016 was EUR 7.38, 7.4 8 60 compared to EUR 4.79 in Q4 2015, which corresponds to and 6.9 7 6.1 6.4 50 increase of approximately 54% 6 4.7 4.4 4.5 4.8 40 5 EUR DKK  The UB Nort

  10. Slide 10: Supply Development Q4 2016

    SUPPLY DEVELOPMENT Q4 2016 Change Decreased supply in Q4 2016 1,000 tonnes HOG Q4 2016 Q4 2015 % Norway 289.5 309.9 -6.6 %  Supply from Norway decreased from 310 thousand tonnes in Q4 2015 to 290 thousand tonnes in Q4 UK 37.2 40.8 -8.8 % 2016, corresponding to 6.5% Ireland 3.8 4.1 -8.7 % Faroe Isla

  11. Slide 11: Salmon Markets, Sold Quantity (HOG)

    SALMON MARKETS, SOLD QUANTITY (HEAD ON GUTTED – HOG) Supply decreased in Q4 2016 Reduced supply in Q4 2016 and YTD of Atlantic Salmon (head on gutted - HOG) Estimated volumes Q4 comparison Estimated volumes FY comparison  51,700 tonnes lower supply, Markets Q4 2016E Q4 2015 Volume % FY 2016E FY 201

  12. Slide 12: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK Supply decrease continues in Q1 2017 SUPPLY - TOTAL  9% drop in global supply expected for the next quarter, 600 8% compared to the same quarter last year 500 6% 4% 400 2%  Extended period of supply decrease coming to an end in 0% 300 -2% Q2 2017 -4% 200 -6%  Both Europe

  13. Slide 13: Segment Information

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  14. Slide 14: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes Q4 Q4  In Q4 2016, 69% of harvested volume came tonnes [HOG] 2016 2015 2016 2015 from the West and 31% from the North region North Region 3,983 4,907 24,768 27,619  Harvested volumes decreased by 5% in Q4 2016, compared with Q4 2015 West R

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE High prices and good margin Q4 Q4 (DKK million) 2016 2015 2016 2015  The operational EBIT increased 87% from DKK 215 million in Q4 2015 to DKK 402 million Operating revenues 777 635 2,841 2,274 in Q4 2016 Operational EBIT 402 215 1,315 841  Good biological perform

  16. Slide 16: Farming – ISA Suspicion at A-73 Hvannasund Norðuri

    FARMING – ISA SUSPICION AT A-73 HVANNASUND NORÐUR 14 July 21 July 20 January Today 2016 2016 2017 ISA suspicion ISA suspicion rises at A-73 from No confirmation again No confirmation surveillance test of ISA (cage 2 & 9) of ISA (cage 2) Farming site A-73 (remaining 12 Farming site A-73 Precautionary

  17. Slide 17: Strategy: Natural Treatments of Sea Lice

    STRATEGY: NATURAL TREATMENTS OF SEA LICE Increased farming operation requires steps to reduce sea lice  Lump fish  Fresh water SPA  Warm water SPA Lumpfish M/S Martin FSV (Farming Service Vessel) M/S Hans á Bakka BAKKAFROST / Q4 2016 PRESENTATION Page 17

  18. Slide 18: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming EBIT of NOK 37.70 per kg in Q4 2016, 40.00 compared to 19.67 in Q4 2015 35.00 37.70 34.50  High prices and good biological performance 30.00 25.00  Similar performance in North and West Reg

  19. Slide 19: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) VAP revenues and margin Q4 Q4 (DKK million) 2016 2015 2016 2015  Revenues increased by 65% to DKK 313 million in Q4 2016, from DKK 190 million in Q4 2015 Operating revenues 313 190 881 737 Operational EBIT -61 24 -201 86  Operating EBIT in Q4 2016 was DKK -61 million, co

  20. Slide 20: Fishmeal, Oil and Feed (FOF)

    FISHMEAL, OIL AND FEED (FOF) High margin and high activity Fishmeal, Oil and Feed  EBITDA DKK 71 million in Q4 2016, Q4 Q4 compared with DKK 45 million in Q4 2015 (DKK million) 2016 2015 2016 2015 Operating revenues 330 239 1,158 1,048  EBITDA margin of 21.5% in Q4 2016, compared with 18.7% in Q4

  21. Slide 21: Market Conditions Feed

    MARKET CONDITIONS FEED Feed sales higher Volumes of raw material purchase and feed sale [tonnes]  Quantity of feed sold was 24,988 tonnes in Q4 2016, 35,000 120,000 compared with 19,797 tonnes in Q4 2015 Raw material (tonnes) 30,000 100,000 Feed sale (tonnes) 25,000  Faroe Farming being part of Ba

  22. Slide 22: Group Financials

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  23. Slide 23: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenues increased from DKK 760 million in Q4 Q4 Q4 2015 to DKK 868 million in Q4 2016. (DKK million) 2016 2015 2016 2015 Harvested volumes were lower, but the prices Operating revenues 868 760 3,203 2,850 were higher Operational EBITDA* 393 285 1,298 1,109  Operational EBIT

  24. Slide 24: Balance Sheet

    BALANCE SHEET  The acquisition of Faroe Farming (acquired farming licenses) increased intangible assets DKK 82 million in Q3 (DKK million) 2016 2015 2016, and is unchanged in Q4 2016 Intangible assets 377 295 Property, plant and equipment 2,118 1,531  Investments in PPE of DKK ~ 214 million in Q4

  25. Slide 25: Cash Flow

    CASH FLOW Q4 Q4  Cash flow from operations higher in Q4 2016, (DKK million) 2016 2015 2016 2015 compared to Q4 2015 due to improved operations, Cash flow from operations 72 -7 850 768 but changes in working capital and tax payment had negative effect Cash flow from investments -193 -218 -740 -602 C

  26. Slide 26: Dividend

    DIVIDEND Dividend per share in % of adj. EPS * Dividend 100% 99% • Proposed dividend of DKK 8.70 (NOK 10.36) per 90% share to be paid in Q2 2017 80% 70% 60% 49%** 49% 50%*** 48% 50% 46% 40% Dividend policy 40% 30% 19%  Competitive return through: 20% 10%  Dividends 0%  Increase in the value of th

  27. Slide 27: Outlook

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  28. Slide 28: Outlook

    OUTLOOK Market VAP Contracted around 36% of expected harvest for 2017  Global supply in 2017 expected to increase only around 2%, compared to 2016 Farming Fishmeal, -oil and feed  Bakkafrost expects to harvest 55,500 tonnes in  Forecast for feed sales in 2017 is 85,000 tonnes 2017  Expected smol

  29. Slide 29: Appendix

     SUMMARY OF Q4 2016  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  30. Slide 30: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - HOG) 2013 2014 2015 2016E 2017E Tight supply situation for 2017 Norway 1,029 1,079 1,111 1,054 1,059 UK 142 153 150 142 152  Total supply growth – sold quantity is expected Ireland 10 11 14 13 15

  31. Slide 31: Investment Programme 2016 - 2020

    INVESTMENT PROGRAMME 2016 - 2020 Investments will be made step by step in the relevant parts of the value chain to secure:  Efficiency  Biological risk  Organic growth BAKKAFROST / Q4 2016 PRESENTATION Page 31

  32. Slide 32: Investment Programme 2016 - 2020 (From CMD June 2016)

    From CMD June-2016 INVESTMENT PROGRAMME 2016 - 2020 Investment Programme 2016 – 2020 (mDKK) Investment program of DKK 2.2b from 2016 to 2020 590 570 Fishmeal, Oil & Feed (380 mDKK)  New salmon meal and –oil plant  New feed line to increase capacity 410  Advanced feed line capabilities 360 280 Smo

  33. Slide 33: Development per Quarter Q1 2013 – Q4 2016

    DEVELOPMENT PER QUARTER Q1 2013 – Q4 2016 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (mDKK) 2016 2016 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 2013 2013 2013 2013 Revenue 868 640 790 905 760 677 800 613 757 584 711 631 667 741 610 473 Operational EBIT 350 255 307 254 257 206 303 235 22

  34. Slide 34: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  49,820 inhabitants (Dec 2016)  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%  Fishing : ~17%

  35. Slide 35: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development 12 months development Traded daily NOK/share 5 years development Traded Monthly NOK/share Subscribe Oslo Stock Exchange Releases from BAKKA by e-mail on: http://www.bakkafrost.com/en/frontpage/ BAKKAFROST / Q4 2016 PRESENTATION Page 35

  36. Slide 36: Page 36

    BAKKAFROST / Q4 2016 PRESENTATION Page 36

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