Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q1 2019 Earnings Presentation

36 slides from Bakkafrost P/f's earnings presentation, May 6, 2019

  1. Slide 1: Q1 2019 Bakkafrost Group

    Q1 2019 BAKKAFROST GROUP Oslo 6 May 2019

  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 Q1 2019

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvested 13,707 tgw in Q1 2019 (12,237 tgw in Q1 2018) Operation  Feed sales of 16,264 tonnes in Q1 2019* (13,923 tonnes in Q1 2018*)  Raw material purchase of 115,530 tonnes in Q1 2019 (130,104 tonnes in Q1 2018)  Revenues of DKK 964 million in Q1 2019 (DKK 851 million in Q1 2018)

  5. Slide 5: Summary of the Quarter

    SUMMARY OF THE QUARTER Operational EBIT for the Farming segment at Q1 Q1 the same level. Positive operational EBIT for (DKK million) 2019 2018 2018 2017 the VAP segment, but lower EBITDA margin Operating revenue 964 851 3,177 3,770 for the FOF segment. Operational EBITDA 321 314 1,274 1,561  Farmin

  6. Slide 6: Markets and Sales

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  7. Slide 7: Markets & Sales

    MARKETS & SALES Sales distribution changed in Q1 2019, compared with Q1 Total sales of salmon Q1 Q1 2018, especially sales of fresh salmon. Sales to Eastern by markets 2019 2018 2018 2017 Europe decreased significantly, and all other markets EU 50% 31% 31% 45% increased in the fresh salmon sales. VA

  8. Slide 8: Global Markets

    GLOBAL MARKETS Higher prices in Q1 2019 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] 80,00 Q1 Q2 Q3 Q4  Prices increased 12%, compared with Q4-2018 70,00  y/y by 2.40 NOK/kg ~4% 60,00 - from NOK 60.94 to NOK 63.34 50,00  q/q by 5.33 NOK/kg ~9% - from NOK 58.01 to NOK 63.34 40,00 30,00 Growth

  9. Slide 9: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 5% global supply growth in Q1 2019 SUPPLY DEVELOPMENT Q1 Q1 Change % (HOG - 1,000 tonnes) 2019 2018 5% growth in European harvest Norway 267 262 2.0 %  Norway impacted by low harvest weights and reduced UK 37 30 24.6 % growth in northern areas Ir

  10. Slide 10: Salmon Markets, Sold Quantity (HOG)

    SALMON MARKETS, SOLD QUANTITY (HOG) Good momentum in most markets Salmon markets, sold quantity (head on gutted - HOG)  EU and US growth largely in line Estimated volumes Q1 comparison Estimated volumes FY comparison with global supply growth Markets Q1 2019E Q1 2018 Volume % FY 2018 FY 2017 Volume

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK  Temporary increase in global supply ahead SUPPLY - TOTAL  Sharp decline, however, expected from mid 2020 800 10% 700  Europe expected to average 7-8% growth in 2019/20 600 8%  Uncertainty linked to biological performance in Norway 500 6%  Strong growth in Scotland – r

  12. Slide 12: Segment Information

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes Q1 Q1 tonnes [HOG] 2019 2018 2018 2017  The expected harvest for 2019 is 54,500 tonnes gutted weight North Region 6,743 2,736 25,889 24,364  Harvested volumes increased by 12% in Q1 West Region 6,964 9,501 18,702 30,251 2019, compared with

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Increasing volumes drove up revenue Q1 Q1 (DKK million) 2019 2018 2018 2017  Operating revenue increased from DKK 667 million in Q1 2018 to DKK 755 million in Q1 Operating revenue 755 667 2,568 2,987 2019 – mainly because of higher volume Operational EBIT 230 228 9

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming operational EBIT decreased by NOK 2.29 per kg from NOK 24.15 in Q1 2018 to 35,00 NOK 21.86 in Q1 2019 30,00 30,02  Operational EBIT per kg in the North Region 25,00 27,89 was NOK 22.78 and i

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) VAP operational EBIT margin Q1 Q1 (DKK million) 2019 2018 2018 2017  Higher prices and higher volumes in Q1 2019 Operating revenue 261 93 365 999  Revenue nearly tripled to DKK 261 million in Q1 2019, Operational EBIT 1 -12 -22 -75 from DKK 93 million in Q1 2018 Operatio

  17. Slide 17: Fishmeal, Oil and Feed (FOF)

    FISHMEAL, OIL AND FEED (FOF) Reduced EBITDA margin Fishmeal, Oil and Feed  EBITDA of DKK 65 million in Q1 2019, Q1 Q1 compared with DKK 86 million in Q1 2018 (DKK million) 2019 2018 2018 2017 Operating revenue 283 300 1,269 1,303  EBITDA margin of 23.0% in Q1 2019, compared with 28.8% in Q1 2018 E

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED Volumes of raw material purchase and feed sale [tonnes] Increase in feed sales 35.000  Quantity of feed sold was 16,264 tonnes in Q1 2019, 160.000 30.000 compared to 13,923 tonnes in Q1 2018 140.000 Raw material (tonnes) 120.000 25.000 Feed sale (tonnes)  External feed sales

  19. Slide 19: Group Financials

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenue higher in Q1 2019, due to higher Q1 Q1 volume in the Farming and VAP segments. (DKK million) 2019 2018 2018 2017 Revenue in Q1 2019 amounted to DKK 964 Operating revenue 964 851 3,177 3,770 million, compared to DKK 851 million in Q1 2018 Operational EBITDA* 321 314 1,

  21. Slide 21: Operational EBIT and Earnings per Share

    OPERATIONAL EBIT* AND EARNINGS PER SHARE 459 408 350 335 331 303 307 257 254 255 252 268 268 235 231 206 Operational EBIT* 168 (DKK million) 2015 2016 2017 2018 2019 1,001 1,165 1,378 1,075 11,44 8,19 7,13 7,32 6,96 6,56 5,60 Earnings per share 3,91 4,39 4,61 4,37 (DKK) 3.44 2.71 1,63 1,16 -0,45 -0,

  22. Slide 22: Balance Sheet

    BALANCE SHEET Q1 End 2018  Intangible assets increased by DKK 1 million during the (DKK million) 2019 year and amounts to DKK 391 million at the end of Q1 Intangible assets 391 390 2019 Property, plant and equipment 3,005 2,884  Investments in PPE of DKK 120 million in Q1 2019 and Financial assets

  23. Slide 23: Cash Flow

    CASH FLOW  Cash flow from operations amounted to DKK Q1 Q1 77 million in Q1 2019, compared to DKK 368 (DKK million) 2019 2018 2018 2017 million in Q1 2018 Cash flow from operations 77 368 913 1,458  Cash flow from investments amounted to Cash flow from investments -106 -111 -531 -636 DKK -106 mill

  24. Slide 24: Net Interest-Bearing Debt (NIBD)

    NET INTEREST-BEARING DEBT (NIBD) Net interest-bearing debt Development in NIBD in DKK millions  Cash flow from operating activities decreased the NIBD with DKK 297 million in Q1 2019  Net investments increased the NIBD with DKK 106 million in Q1 2019  Change in working capital in Q1 2019 increase

  25. Slide 25: Outlook

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  26. Slide 26: Outlook

    OUTLOOK Market VAP  Global supply in Q1 2019 increased around 5%, compared  Contracted around 33% of expected harvest for 2019 to Q1 2018  Bakkafrost’s long-term strategy is to sell 40-50% of  Global harvest in Q2 2019 is expected to increase 5%, the harvested volumes as VAP products at fixed pr

  27. Slide 27: Appendix

     SUMMARY OF Q1 2019  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  28. Slide 28: 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)  5% global supply growth in Q1 2019 2016 2017 2018 2019E 2020E Norway 1,054 1,087 1,128 1,190 1,291  5% growth in European harvest in Q1 UK 142 159 138 164 169 2019 Ireland 14 15 13 15 15 F

  29. Slide 29: Q1 Market Environment

    Q1 MARKET ENVIRONMENT PRICE NORWAY NORWAY  Minor price changes compared to Q1 2018 8,0 7,3 7,2 7,2 80,0 7,0 6,2 6,3 70,0 6,0 5,7 5,8 6,0 5,1 60,0 5,0 50,0 EUR DKK  Nasdaq Norway price EUR 6.3 in Q1 2019 4,0 40,0 3,0 30,0  2% up vs. Q1 2018 2,0 20,0 1,0 10,0  10% up vs. Q4 2018 - - Q1 Q2 Q3 Q4 Q1

  30. Slide 30: Superior Biology Combined with State of the Art Infrastructure

    SUPERIOR BIOLOGY COMBINED WITH STATE OF THE ART INFRASTRUCTURE FISHMEAL, OIL AND FEED BROODSTOCK SMOLT SEA WATER PROCESSING SALES/MARKETING Equivalent to 100k (tgw) None 12 million @ 200 grams 21 farming sites/17 fjords 130k primary (tgw) Central sales Faroes annual harvest @ 55k (tgw) @100g smolt/

  31. Slide 31: Development per Quarter

    DEVELOPMENT PER QUARTER Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 (mDKK) 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 Revenue 613 800 677 760 905 790 640 868 854 1206 804 906 851 954 622 750 964 Operational EBIT 235 303 206 257 254 307 255 350 335 459

  32. Slide 32: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • Dividend for 2018 of DKK 8.25 (NOK 10.65) per share 99% is paid out on 26 April 2019. Totalling 403.1 DKK million (NOK 520.3 million) 49%** 49% 50% 50% 50% 49% 46% 40% Dividend policy 19%  Competitive return through:  Dividends  Increase in

  33. Slide 33: Page 33

    BAKKAFROST / Q1 2019 PRESENTATION Page 33

  34. Slide 34: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  51,540 inhabitants (Mar 2019)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2018)  Service/public admin.: ~36%  Private service: ~33%  Construction: ~15%  Fish & aquacul

  35. Slide 35: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development Rank Holding Percentage Name Citizenship Type of account 12 months development Traded daily 1 4.594.437 9,40 JACOBSEN Oddvør Faroe Islands Ordinary NOK/share 2 4.495.669 9,19 JACOBSEN Regin Faroe Islands Ordinary 3 4.477.627 9,16 FOLKETR

  36. Slide 36: Page 36

    BAKKAFROST / Q1 2019 PRESENTATION Page 36

Bakkafrost — Q1 2019 Earnings Presentation on 6ix