Aker Biomarine Asa · OSL:AKBM
Aker Biomarine Asa — Investor Presentation (August 2022)
77 slides from Aker Biomarine Asa's investor presentation, August 2022
Slide 1: Company presentation
[Picture TBD] Company presentation Aker BioMarine ASA August 2022
Slide 2: Content
Content Page 3 This is Aker BioMarine Page 15 Sustainability Page 20 Krill harvesting in Antarctica Page 28 Animal Health & Nutrition (Qrill) Page 38 Human Health & Nutrition (Superba) Page 49 Brands Page 55 Innovations Page 63 Financials & targets 2
Slide 3: Krill biomass and Aker BioMarine's share of global production
Krill is among the species with Aker BioMarine’s share of global the largest biomass krill production 65% on earth 500 million tons 95 total weight of the global krill granted patents 3
Slide 4: Aker BioMarine at a glance
Aker BioMarine at a glance We’re in business to improve human and planetary health Antarctica Antarctic krill Animal Health Human Health Private label and Innovations harvesting & Nutrition & Nutrition consumer brands The world’s largest and most Krill meal as a sustainable Delivering essential omeg
Slide 5: Aker BioMarine is strongly positioned for growth and value creation
Aker BioMarine is strongly positioned for growth and value creation 1 Strongly positioned in attractive market for human and animal nutrition with high sustainability standards 2 Fully-integrated krill producer with cost leadership and high operational leverage 3 Poised for high sales growth across
Slide 6: Aker BioMarine is positioned in markets with strong and consistent growth
Aker BioMarine is positioned in markets with strong and consistent growth Global aquaculture Global supplements Global pet food Global retail protein production market market market Million tons 1 USD billion2 USD billion3 USD billion4 106 40 205 123 +2.6% p.a +7.0% p.a +4.6% p.a 34 +4.2% p.a 82 86
Slide 7: We control the entire krill value chain
We control the entire krill value chain from harvesting and production all the way to the consumer KRILL ANIMAL AND HUMAN RESEARCH & CONSUMER HARVESTING NUTRITION INGREDIENTS DEVELOPMENT BRANDS >65% 55,000T ~200 >13m of total global Annual expected published studies individual units sold to krill ca
Slide 8: Our process from krill to products
Our process from krill to products • 20-32% Fat • 55-69% Protein • 41% PL • 130 ppm Astaxanthin • 1.1-1.4% Choline • 98% fat (TG) • 8 – 15% % omega-3 FA • 0% protein • 650 – 1600 ppm Astaxanthin • 0.5-2% Cholesterol • 15-30% Fat • >54% Protein • 40% PL • >0.8-1.5% Cholesterol • 114 ppm Astaxanthin •
Slide 9: We have invested significantly in R&D and IP
We have invested significantly in R&D and IP to document the health and nutrition benefits and potential from krill ~200 published studies ~100 granted patents 9
Slide 10: The rich nutritional profile of krill
The rich nutritional profile of krill… 25 % FAT 58% CRUDE PROTEIN 10 % ASH 7 % WATER, OTHERS FATTY ACIDS LIPID COMPOSITION AMINO ACIDS TMAO CHITIN (g/100g extracted fat) (%) (%) 142 mg N/100g meal 4% 60 NaCl Aspartic acid Glutamic 2.7% Phospholipids acid Cholesterol 1.4 10 Others Alanine 13 30 11.2
Slide 11: Promotes improvement in health & nutrition across species
… promotes improvement in health & nutrition across species Human health & Aquaculture health & Pet health & nutrition ingredients nutrition ingredients nutrition ingredients ▪ Higher omega-3 uptake in the body compared to ▪ Functions as a feeding stimulant leading to ▪ Higher omega-3 uptake compare
Slide 12: Our agenda: Increase krill value and reduce cost
Our agenda: Increase krill value and reduce cost Driving up value of krill Driving down production cost Relative margin contribution per product Example krill oil production, USD/kg 35 40 30 35 30 25 25 20 20 15 15 10 10 5 5 - - Aqua feed 2016 Pet2017 food Protein 2018 Krill oil 2019 Lysoveta 2020 B
Slide 13: Our agenda: Profitable growth and exploit the large market potential
Our agenda: Profitable growth and exploit the large market potential Krill harvesting Krill meal Krill oil Private label and consumer brands in US Increase # of fishing days, improve Lift price and grow business Short- and long-term sales Capitalize on relationships operations and yield volume in aq
Slide 14: Roadmap for growth and value creation
Aker BioMarine - Roadmap for growth and value creation Operational leverage, margin uplift and unlocking the long-term growth potential Ambition to nearly double revenues the next four years Main value creation pillars Revenue, USD million1 600 ▪ Grow Qrill product value and prices Increase ▪ Signif
Slide 15: Sustainability
BILDE Sustainability 15
Slide 16: Sustainability is at the core of our business
Sustainability is at the core of our business Customer demands and increased awareness Planetary and Economic societal needs opportunities Regulatory push and 16 frameworks
Slide 17: We're in business to improve human and planetary health
We’re in business to improve human NUTRITION, HEALTH & ACTION ON and planetary WELLBEING CLIMATE CHANGE health RESPONSIBLE SUSTAINABLE CONSUMPTION FOOD & PRODUCTION PRODUCTION THE SUSTAINABLE OCEAN BLUE ECONOMY HEALTH COMMITTED TO A STRUCTURED ESG REPORTING SCHEME PROVIDING TRANSPARENCY ON OUR PROGR
Slide 18: Our 2030 commitments
Our 2030 commitments support our mission to improve human and planetary health… 1 BILLION EXTRA SUSTAINABLE 5 BILLION DECARBONIZE SERVINGS DIETS DOSES AQUA FEED Making aquaculture Developing innovative Combating lifestyle Decarbonizing aqua and production more products that play an diseases by deliv
Slide 19: Goals guiding responsible operations throughout the value chain
…with goals that guide us in responsible operations throughout the value chain IMPROVE KEEP FULL REDUCE CARBON SUSTAINABILITY CERTIFICATIONS CIRCULARITY INTENSITY Improve sustainability of Maintain unconditional Ensure full circularity Reduce our carbon fisheries through MSC certification and on all
Slide 20: Krill harvesting in Antarctica
Krill harvesting in Antarctica 20
Slide 21: Our operations in Antarctica
Our operations in Antarctica Large krill resource-base with strictly regulated fisheries Krill fishing in Area 48 %: max share of precautionary catch limit per area ▪ Large and growing krill biomass in Antarctica ▪ Scientific study 1 from 2019 showing a 17% increase from 2002 ▪ Minor share of biomas
Slide 22: A modern and effective krill vessel fleet
A modern and effective krill vessel fleet Aker BioMarine’s global market share of catch krill volumes ~65% in the 2020/2021 season Antarctic Endurance Antarctic Sea Saga Sea Antarctic Provider HARVESTING VESSEL HARVESTING VESSEL HARVESTING VESSEL SUPPORT VESSEL • In operation: 2019 • In operation: 1
Slide 23: Aker BioMarine operates the most efficient fleet in the industry
Aker BioMarine operates the most efficient fleet in the industry Leading to cost leadership >3x higher production per vessel… … and the leading global producer 2021 average catch per vessel in area 48.1 (MT) 34% 34% 35% 35% 46% >3x 66% 66% 65% 65% 54% 2017 2018 2019 2020 2021 Aker BioMarine’s global
Slide 24: Maximize production and reduce cost
Maximize production and reduce cost Produce more Produce cheaper Produce cleaner Cost efficiency program; Increase # of fishing days Energy efficiency minimize cost base Harvesting improvements Optimize logistics Fleet decarbonization and product yield 24
Slide 25: Offshore krill searching strategy to increase fishing days
Offshore krill searching strategy to increase number of fishing days Effective search with low carbon footprint Use of the Sounder USV* to optimize krill harvesting ▪ Remotely controlled from shore or ship ▪ Systems from Kongsberg Maritime’s range of sensors for hydroacoustic mapping, positioning, c
Slide 26: Important measures to increase fishing volumes
Important measures to increase fishing volumes However, there will be natural harvesting variations from year to year in Antarctica also in the future Fishing days Production per fishing day Days MT ▪ Increase no. of fishing days per year 360 300 1. Season duration ▪ More efficient yard stay logisti
Slide 27: Roadmap for harvesting growth and value creation
Roadmap for harvesting growth and value creation We prepare for seasonal harvesting variations Offshore harvesting history and expectations Main value creation pillars Metric tons (MT) ▪ Use drones to improve the krill searching ▪ Expand krill holding tank capacity on vessels 80,000 Increase number
Slide 28: Animal and human health & nutrition
Animal and human health & nutrition 28
Slide 29: Better fish health, better quality and improved growth
Better fish health, better quality and improved growth 29
Slide 30: Qrill Aqua is a specialty performance ingredient in fish feed
Qrill Aqua is a specialty performance ingredient in fish feed Providing extra performance to secure profitability, sustainability and health Attractive market and large demand for krill-based nutrients Well documented and demonstrated benefits for farmers Sustainable and certified ingredient Well-fu
Slide 31: Scientific studies show excellent results of using QRILL Aqua
Scientific studies show excellent results of using QRILL Aqua FINAL BODY WEIGHT +18% Control QRILL Aqua 31
Slide 32: Engesund salmon
Qrill Aqua with positive effects on fillet quality and salmon health Example from Engesund salmon - unique feed recipe with high inclusion of Qrill Aqua Engesund salmon UNLIKE ANY OTHER SALMON A L L N AT U R A L Back to natures own diet. A new and unique feed recipe. High inclusion of Qrill Aqua DOC
Slide 33: Inclusion of QRILL Aqua provides solid return for salmon farmers
Inclusion of QRILL Aqua in the feed provides solid return for salmon framers ~3-4x Return on investment $ Incremental Incremental Total costs benefit benefit with QRILL Aqua with QRILL Aqua of QRILL Aqua Source: Industry data and Aker BioMarine science. 33 Assumptions in this example: Krill meal inc
Slide 34: Qrill Aqua in shrimp feed improves feed intake and production
Qrill Aqua in shrimp feed improves feed intake and production Shrimp feed diets containing 3% krill meal A minimum of 2% krill meal is needed achieved the highest final body weight with a lower FCR and higher yield in plant-based diets to significantly accelerate shrimp growth, while compared to die
Slide 35: Qrill Aqua has a diversified customer base
Qrill Aqua has a diversified customer base Last 30 China Americas Other 1 Marine Fish Rest of Asia Shrimp >70 6 3 2 Next 30 customers main regions main segments 3 Europe Oceanea 4 10 9 5 Salmon 8 India 7 6 35
Slide 36: High effect on omega-3 index from QRILL Pet
High effect on omega-3 index from QRILL Pet Increased omega-3 index after Qrill Pet supplementation compared with fish oil Krill-rich diet increased the omega-3 index of active dogs by 41% Omega-3 index (%) EPA(%) DHA(%) Choline levels ( µmol/L) Omega-3 index (%) 13.3 6.35 4.42 2.46 5.80 ▪ Objective
Slide 37: Qrill – Roadmap for growth and value creation
Qrill – Roadmap for growth and value creation Margin improvement mainly through price increase Delivering on our growth ambitions Main value creation pillars Revenue, USD million1 ▪ Improve margins through price ▪ Further grow business volume with companies in aqua feed industry 150 Qrill Aqua ▪ Foc
Slide 38: Krill oil is an efficient delivery form of vital nutrients
Krill oil is an efficient delivery form of vital nutrients, choline & omega-3s 38
Slide 39: A growing and attractive omega-3 market
A growing and attractive omega-3 market Superba krill oil will continue to outpace the general market growth Global market for omega-3 estimated growth by 3-4% annually USD billion CAGR CAGR CAGR 5 13% 2% 3.5% The global omega-3 market size is expected to continue to grow significantly Consumers are
Slide 40: Superba provides an attractive value proposition
Superba provides an attractive value proposition to consumers, brands and retailers Consumer friendly Retailers and brand owners sharing a much larger gross margin per unit €10.80 for €25.90 for 120 caps 60 caps VAT 18.4 Gross margin 7.2 Packaging Encapsulation Ingredient Fish oil Krill oil 40
Slide 41: 2022: improved documentation and claims on Superba krill oil
2022: improved documentation and claims on Superba krill oil Strengthened marketing capabilities as proprietary science enables new growth opportunities A new study shows that daily krill oil supplementation have beneficial effects on muscle function and size in healthy, older people1 A new study wi
Slide 42: Doubling of sales 2016-2020 – large drop in sales to South Korea in 2021
Doubling of sales 2016-2020 – large drop in sales to South Korea in 2021 High Superba growth ambitions maintained Superba sales volume Metric tons (MT) 2x ▪ Regulatory issues in South Korea ▪ Regulatory bodies tightened krill oil regulation impacting both the customers ability to market products and
Slide 43: Strengthening the organization to facilitate growth
Strengthening the organization to facilitate for growth Strengthening teams in all regions – focus on industry expertise with global & local marketing Q1-22 Q1-22 Simon Seward Q3-21 ▪ New leadership for Human Health & Charlie Ross New EVP & head of HH&N Thong Luu Nutrition (HH&N) New SVP Americas Ne
Slide 44: Renewed high-quality pipeline of new business prospects
Renewed high-quality pipeline of new business prospects Mid-2022 expected as turning point in Superba transition Large opportunity pipeline & existing customers; the cornerstone of our growth ambitions Expanding market Repositioning + new products & innovations Target CAGR +15-20% Rebuilt sales team
Slide 45: Superba turnaround identifies a set of sales opportunities
The Superba turnaround and plan has identified a set of sales opportunities, incl. short-term potential Metric tons (MT) >3.5 2021 sales Re-establish US accelerated Unlock potential Facilitate Targeted New claims Additional Near-term Identified volume South Korea growth plan in China growth in the c
Slide 46: New products for increased offering and growth
New products for increased offering and growth Introducing PL+ in Q4 2022: A phospholipid-based delivery platform for health ingredients, expanding the market for krill oil beyond omega-3 Expanding PL+ EPA & DHA to drive innovation in Absorption of CBD in plasma existing market omega-3 market Krill
Slide 47: Important portfolio addition with the launch of PL+
Important portfolio addition with the launch of PL+ Aker BioMarine’s addressable market for krill oil increases significantly Global omega-3 ingredient supplements market $800 million Global cannabidiol (CBD) market $1.6 billion Global curcumin Global coenzyme Q10 market market $200 million $600 mil
Slide 48: Superba - Roadmap for growth and value creation
Superba - Roadmap for growth and value creation Utilize the large volume potential for krill oil in core markets Superba turnaround to provide significant growth Main value creation pillars Revenue, USD million1 Quick ▪ Intensify sales prospect work turnaround and ▪ Close the 5-10 identified quick-w
Slide 49: Brands
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Slide 50: Consumer brands and private label brands
Consumer brands and private label brands Two different business models in the retail market Customer brands Private label brands ▪ Creating a position directly to the consumers ▪ Product produced by a third-party manufacturer, like Lang, and sold with prominent products under a retailer’s brand name
Slide 51: Lang Pharma Nutrition, our private label offering in the US
Lang Pharma Nutrition, our private label offering in the US Strategy of being a long-term partner for retailers and bring in products that differentiate ▪ Lang is an experienced and recognized company with a good track record and a high level of service ▪ In 2019, Aker BioMarine acquired Lang Pharma
Slide 52: Epion Brands, our retail and consumer brand company in the US
Epion Brands, our retail and consumer brand company in the US Two of the major retailer channels move to full distribution in stores during Q1 2022, further increasing the reach for the Kori krill oil brand ▪ In 2020, Aker BioMarine established the independent company Epion Brands Inc. to launch Kor
Slide 53: Introducing new innovations in 2022
Introducing new innovations in 2022 Introducing Kori krill oil gummies Introducing Kori Mind & Body ▪ Heart healthy omega-3s ▪ Omega-3 – heart health & building blocks for a healthy ▪ 1st Pure Krill Gummy in brain the market ▪ Vitamin B-12 – nervous ▪ Non-GMO Krill oil with no system health & health
Slide 54: Brands - Roadmap for growth and value creation
Brands - Roadmap for growth and value creation Grow both private label and own consumer brand activities Steady growth the past years of 15% p.a. Main value creation pillars Revenue, USD million1 ▪ Capitalize on strong relationships with the seven 250 Further develop largest retail chains; 85% of to
Slide 55: Innovations
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Slide 56: Innovation is at the core of Aker BioMarine's DNA
Innovation is at the core of Aker BioMarine’s DNA It is embedded in our culture and driven by a skilled and diverse team and extensive external networks PhDs working on R&D Network of external Patents protecting academic research new innovations institutes 35 14 15+ 7 Employees dedicated Number of c
Slide 57: We innovate in all areas of the business
We innovate in all areas of the business with three new launches in 2021 Innovation across the business - new products, New launches in 2021 new business models and new technologies New business model 1 A new era of innovation in brain and eye health with LPC-EPA/DHA ™ 2.0 2 Best-in-class protein pe
Slide 58: Lysoveta is at the forefront of brain health innovation
Lysoveta is at the forefront of brain health innovation EP EPA/DHA is important for brain EPA/DHA is transported into the brain Growing focus on brain health development and functioning in LPC form - Lysoveta product family ▪ The body is starting to outperform the brain Cell survival EPA/DHA linked
Slide 59: Focus in 2022
Focus in 2022 Key next steps Regulatory approval US approval by year end 2022 Supplement – ready to market Scientific studies Supplement entry & build new segment opportunities Nutraceutical commercial production Building the LPC-EPA/DHA space Dedicated production line at Houston facility Scale comm
Slide 60: Entrance into the market for protein in human nutrition
Aker BioMarine’s entrance into the large and growing market for protein in human nutrition Protein products continue to grow in Growth driven by increasingly Attractive market landscape for the popularity from a large market size informed and demanding consumers launch of INVI protein peptides Prote
Slide 61: Focus in 2022
Focus in 2022 Scaling INVI protein peptides with construction of Key next steps launch plant Product and process development at NORTH AMERICA lab-scale and mid-scale Lab-scale product and process development (grams) SCANDINAVIA Construction and planning operational Lab and small-scale start-up of la
Slide 62: AION is scaling circular solutions for industrial plastic products
AION is scaling circular solutions with tech at the core for industrial B2B plastic products Ocean 14 Capital (with operational control) and Aker BioMarine will cooperate in the development of the company AION offers CaaS (Circularity as a Service) for To scale the potential and impact of CaaS, AION
Slide 63: Financials and targets
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Slide 64: Financial development
Financial development After years of growth, Aker BioMarine delivered unsatisfactory sales and profitability in 2021 USD million Revenue Adj. EBITDA1 and margin Net interest-bearing debt 350 100 30% 450 400 300 25% 350 75 250 20% 300 200 250 50 15% 150 200 10% 150 100 25 100 5% 50 50 0 0 0% 0 2016 2
Slide 65: Reporting segments
Reporting segments Ingredients segment Brands segment Revenue Adj. EBITDA and margin Revenue Adj. EBITDA* and margin 250 100 45% 250 100 40% 40% 35% 200 200 75 30% 35% 32% 75 25% 29% 30% 27% 27% 150 150 50 20% 25% 14% 50 15% 20% 10% 100 100 25 10% 15% 2% 5% 25 -1% 10% 50 50 0 0% 5% -5% 0 0 0% 0 -25
Slide 66: Revenue per product
Revenue per product Last twelve months (LTM), excluding eliminations between Ingredients and Brands USD million 104 100 66 64 109 83 71 106 92 73 96 88 94 75 83 85 83 83 67 72 82 70 108 112 109 108 105 110 118 113 105 99 82 12 13 14 14 15 14 14 16 15 15 14 LTM per Q4-19 LTM per Q1-20 LTM per Q2-20 L
Slide 67: Aker BioMarine roadmap for growth and value creation
Aker BioMarine roadmap for growth and value creation Operational leverage, margin uplift and unlocking the long-term growth potential Ambition to nearly double revenues the next four years Main value creation pillars Revenue, USD million1 600 ▪ Increase number of fishing days Harvesting ▪ Increase o
Slide 68: Upside potential to our 2025 target scenario
Upside potential to our 2025 target scenario Examples which demonstrate the impact of success exceeding our target range EBITDA, USD million ~5-10 ~20-25 Our private label offering in the US, Lang Pharma Nutrition, supplies around 70 dietary supplement and nutrition products to the largest retail ch
Slide 69: Financial building blocks to support the growth strategy
Financial building blocks to support the company’s growth strategy ▪ Cash flow ▪ Operational cost per unit ▪ Project CAPEX Profitable Efficient ▪ Cost program ▪ Operational leverage growth operations ▪ Innovations ▪ M&A ▪ Cash position ▪ Funding availability Financial Investment ▪ Solidity ▪ Leverag
Slide 70: Operational leverage: 2x growth impact on EBITDA
Operational leverage: 2x growth impact on EBITDA Realizing the company’s sales target will unlock the underlying operational leverage Index, 2017 = 100 900 ▪ Improved production volumes, particularly in our onshore plant, 800 3.0- 3.5x last 5 years have demonstrated our operational leverage when sal
Slide 71: Large historical investments in operational assets and acquisitions
Large historical investments in operational assets and acquisitions Around USD 700 million in fixed asset investments past 10 years Total capex ▪ Over the past 10 years, Aker BioMarine has invested around USD million, estimates from 2021 USD 700 million in fixed assets, including the Houston plant a
Slide 72: Cost per unit a key efficiency driver
Cost per unit a key efficiency driver Onshore facility in Houston with large efficiency gain the past years. Offshore to follow suit Offshore volume and unit cost Onshore volume and unit cost Tons and cost per unit (line), estimates from 2021 Tons and cost per unit (line), estimates from 2021 80,000
Slide 73: Cost reductions in 2021
Cost reductions in 2021 Lowering total cost in Ingredients segment with 3% Ingredients cost base per main area* USD million 166 161 ▪ USD 10 million in reduced cost base 154 for 2021 from above 50 implemented initiatives 124 ▪ Led to a reduction in total cost base compared to 2020 despite several 98
Slide 74: Deleveraging from 2022 provides significant financial flexibility
Deleveraging from 2022 provides significant financial flexibility Low leverage in the targeted development Potentially large additional debt capacity towards 2025 USD million, for illustrational purposes Leverage ratio* USD million, for illustrational purposes Leverage ratio* 400 7.0 600 7.0 6.0 6.0
Slide 75: Focus on cash generation
Focus on cash generation Further investments in growth opportunities outside current plans and direct returns Targeting increased free cash flow Aker BioMarine will… Annual FCF, USD million, for illustrational purposes 120 80 … continue to expand its business through organic and inorganic growth 40
Slide 76: Our short-term priorities
Our short-term priorities Significantly increasing sales is job # 1 1 Superba turnaround 20%-25% targeted 2022 revenue growth 2 Accelerate growth in US brands 20%-25% 3 High and efficient harvesting targeted 2022 adj. EBITDA margin 76
Slide 77: Aker BioMarine
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