Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Investor Day (June 2016)
113 slides from Mowi Asa's investor day presentation, Jun 2, 2016
Slide 1: Marine Harvest Capital Markets Day, Brekstad, Norway
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 1
Slide 2: Agenda 2 June 2016
Marine Harvest Capital Markets Day Agenda 2 June 2016 - 0815-0835 Leading the Blue Revolution Alf-Helge Aarskog, CEO - 0835-0850 Aquaculture Shipping JV Jon Are Gummedal, CEO Deep Sea Supply - 0850-0910 Feed Ben Hadfield, COO Feed - 0910-0930 Farming Marit Solberg, COO Farming - 0930-0945 Break - 09
Slide 3: Leading the blue revolution
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Leading the blue Alf-Helge Aarskog, CEO revolution 3
Slide 4: Forward looking statements
Forward looking statements This presentation may be deemed to include forward-looking statements, such as statements that relate to Marine Harvest’s contracted volumes, goals and strategies, including strategic focus areas, salmon prices, ability to increase or vary harvest volume, production capaci
Slide 5: Did you know that…
DID YOU KNOW THAT… 2 billion 2x 47.5 90% Food supply million additional of the world more people must double tonnes of aquatic fisheries are by 2050 by 2050 food will be currently fully required exploited or overfished
Slide 6: Did you know that… wild vs aquaculture supply
DID YOU KNOW THAT… Wild fish supply Aquaculture supply (per person) (per person) 17 kg 13 kg 10 kg 2 kg 1988 2013 1988 2013
Slide 7: Did you know that…
DID YOU KNOW THAT… 70/2 Carbon–efficient source of protein (i.e. low feed conversion rate) 70% is ocean, but only 2% of the world’s food supply <1 Net producer of marine proteins (FIFO < 1)
Slide 8: Did you know that… obesity
DID YOU KNOW THAT… We live in a world where 1 billion people suffer from obesity...
Slide 9: Did you know that… eat fish twice a week
DID YOU KNOW THAT… Recommendation: Eat fish and seafood at least twice a week
Slide 10: Leading the Blue Revolution
Leading the Blue Revolution 10 02/09/15 Marine Harvest / Alf-Helge Aarskog
Slide 11: Marine Harvest in brief
Marine Harvest in brief The world’s largest producer One of the world’s leading of Atlantic salmon, 414,000 MT seafood companies per annum (2016e) #4 measured in turnover (5.9 million meals per day) (Revenues of EUR 3.1 billion in 2015) Fully integrated Headquartered in Bergen, value chain Norway Li
Slide 12: Our global operations in 24 countries
Our global operations in 24 countries –12 454 employees at year end 2015 Faroe Consumer Canada Islands Corporate Norway Products Markets Chile Ireland Scotland Markets Markets Europe Asia Americas 12
Slide 13: Fully Integrated from Feed to Plate
Fully Integrated from Feed to Plate We believe there are benefits to vertical integration due to the greater capacity it gives us to control our production process Farming/ Suppliers Secondary Customers Feed Primary Processing Processing KEY KEY MARINE HARVEST BUSINESS INTERACTIONS INTERACTIONS We b
Slide 14: Main focus: Improving products and operations
Main focus: Improving products and operations - New product development towards more consumer friendly products - Improving biology through R&D and best practice - Reducing cost on main input factors - Own fish feed production - expanding - Fish logistics – JV fish logistics - Central buying of big
Slide 15: Our Guiding Principles
Our Guiding Principles PRODUCT PLANET PEOPLE PROFIT & marineharvest
Slide 16: Products key drivers to capture untapped potential
Products key drivers to capture untapped potential TASTE CONVENIENCE HEALTH 16
Slide 17: Our products are tasty
Our products are tasty ® marineharvest
Slide 18: Our products are convenient
Our products are convenient 18
Slide 19: Our products are healthy
Our products are healthy Proteins and amino acids Omega-3 Vitamins Minerals High quality easy High content of Rich in D and B12 High content of digestible proteins Omega-3 fatty acids vitamins iodine and selenium 19
Slide 20: People – Providing safe and meaningful jobs
People – Providing safe and meaningful jobs The safety, self-respect and personal pride of our employees cannot be compromised if Marine Harvest is to succeed as a company and maintain good relationships with local communities. 20
Slide 21: Planet – Sustainable and environmentally responsible development
Planet – Sustainable and environmentally responsible development Our operations and long-term profitability ultimately depend on sustainable and environmentally responsible interactions with the natural environment. We rely on qualified personnel to maintain fish health, avoid escapes and minimize t
Slide 22: Profit – Attractive financial results
Profit – Attractive financial results Our profits hinge on our ability to provide customer value from healthy, tasty and nutritious seafood, farmed both cost effectively and in an environmentally sustainable way that maintains a good aquatic environment and respects the needs of the wider society. 2
Slide 23: 5 year financial performance: revenue
5 year financial performance Revenue and other income (EUR million) 2011-2015 annual growth rate 10.8% 3,053 3,112 2,456 2,068 2,069 2011 2012 2013 2014 2015 23
Slide 24: 5 year financial performance: Operational EBIT
5 year financial performance Operational EBIT (EUR million) 2011-2014 annual growth rate 13.5% 2015 affected by challenges in Chile 508.7 411.0 348.3 346.8 86.1 2011 2012 2013 2014 2015 Operational EBIT is a non-IFRS financial measure. For a reconciliation of Operational EBIT to EBIT, 24 please see
Slide 25: 5 year financial performance: ROCE
5 year financial performance Return on Capital employed (ROCE %) 18.5% 20.2% 16.7% 13.1% 3.9% 2011 2012 2013 2014 2015 Target over a 4-5 year cycle is 12% 25 ROCE is a non-IFRS financial measure. The calculation of ROCE is presented in the appendix
Slide 26: The Blue Revolution in summary
THE BLUE REVOLUTION IN SUMMARY The future is in the ocean . - Just beneath the surface
Slide 27: Aquaculture Shipping Joint Venture
Marine Harvest & Capital Markets Day, Brekstad, Norway Deep Sea Supply 2 June 2016 Aquaculture Shipping Jon Are Gummedal, CEO Deep Sea Supply Joint Venture 27
Slide 28: Deep Sea Supply in brief
Deep Sea Supply in brief Company Overview: Main Clients: - Owns and manages a fleet of 37 Offshore Supply Vessels (OSVs) - Operating worldwide with Brazil, North Europe and South East Asia as main markets - Fully integrated Shipowner handling both commercial and ship management of owned vessels - Cy
Slide 29: Why establish a Joint Venture
Why establish a Joint Venture - Fragmented and dominated by mainly family owned shipping companies Aquaculture - Immature industry with significant room for efficiency gains shipping market - Financing cost of operators perceived as high - Expectation for continued increase in demand for vessels - C
Slide 30: The Joint Venture – DESS Aquaculture Shipping
The Joint Venture – DESS Aquaculture Shipping - Joint Venture owned 50/50 by Marine Harvest and Simplified structure Deep Sea Supply - Building the right vessels at a competitive price - Cost efficient operations - Management services provided by Deep Sea Supply - Focus on well boats, harvest boats,
Slide 31: The well boat market
The well boat market The global wellboat market (000’ m3 capacity) Average age and size distribution # of vessels Average size 80 49 25 747 000’ m3 70 67 20 565 20 862 60 1,337 16 50 15 Thousand m3 Average age (years) 50 15 14 40 37 30 10 13 20 4 6 1 11 5 10 4 3 3 0 0 Norway Chile UK & Faroe Canada
Slide 32: Strategy
Strategy - The JV will gradually enter both the well-boat market, fish feed delivery vessels, harvest boats, and service vessel for the aquaculture industry - The JV will change the market through standardization of Multi purpose well boats and new and efficient harvest boats - Harvest boat is a “ne
Slide 33: Progress
Progress - DESS AQUACULTURE SHIPPING will contract its first vessel with option for three more, within June - The company aims to be in the market place operating its first vessel during Q3 2017 at competitive terms - Financing of the company will be secured at good terms on a stand alone basis - DE
Slide 34: Feed
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Feed Ben Hadfield, COO Feed 34
Slide 35: MHFF Bjugn in Trøndelag, Norway
MHFF Bjugn in Trøndelag, Norway (320,000t salmon feed) - The first feed plant in Marine Harvest’s continued integration of the salmon value chain - Central to Marine Harvest Norway’s Farming Regions - Minimal packaging, predominantly silo to silo feed delivery. Two lines 24t/hour, total feed storage
Slide 36: Process flow & storage capacity
Process flow & storage capacity Raw materials Process Finished product Macro raw Macro raw Weighing mat. dos-ing mat. silos silos Bulk silos Bulk silos Phase 1 Phase 2 Grinding Grinding Micro Mixing Mixing raw mat. Warehouse Extrusion Extrusion Drying Drying Oil tank Oil tank storage storage Phase 1
Slide 37: Facility overview
Facility overview lex ca at7), a Lh ee fst sabe rho of i & y <a H I <= & marineharvest
Slide 38: Formulation cost development and feed ingredients
Formulation cost development and feed ingredients - Fish meal inclusion reducing from ‘conservative’ start-up levels in 2014; and scope to reduce further - Fish oil inclusion remain consistent to deliver EPA/DHA targets set by the group. All Northern Hemisphere fish oil is cleaned prior to use - Exp
Slide 39: Formulation cost development and feed ingredients
Formulation cost development and feed ingredients Monthly weighted average (sales basis) formula cost contrasted with the contribution of the included fmarine ingredients to the - Formulation cost taken in formula cost USD as around 80% of 45 Mar Contr' 1400 ingredients are in that Contr' of fishmea
Slide 40: Quarterly Production, Sales and Operating EBIT
Quarterly Production, Sales and Operating EBIT Sales & Production since Start-up - Q4 14 operating EBIT was high due to the realisation of full scale 120 000 production and a bought position taken in Q2 14, which locked in raw material prices during a rising market for the remainder of the 100 000 y
Slide 41: Development of MHFF
Development of MHFF 2014 Feed produced (tonnes) - Bjugn commences production in June 350 000 2015 300 000 - Bjugn reaches 280 000 MT (Achieved 250 000 Metric tonnes 282,000t) 200 000 150 000 2016 100 000 - Bjugn production expanded to 310 000 MT 50 000 0 2017 2014 2015 2016e - Construction of Scotla
Slide 42: Site offices map, Scotland
SITE OFFICES SEAVVATER FARMS | Rosyth Marine Harvest (Scotland) Ltd **~" PROCESS! 4 Mallaig Harvest Station marineharvest | Glenfinnan 3 Loch Arkaig 4 Inchmore 5 Loch Garry 6 Inverpolly 7 Loch Lochy 8 Caindow Hatchery 9 Loch Ness South Uist PROPOSAL GPTIONS Akyle B Kishorn Key to Map @ Offices @ Pro
Slide 43: Preferred location Kyleakin Quarry, Isle of Skye
Preferred location Kyleakin Quarry, Isle of Skye - Numerous locations considered, however Kyleakin Quarry is proposed as the most central and cost effective location - The Kyleakin site is 183 acres, full ownership is secured by way of option agreement - The site is an operational quarry, with in ex
Slide 44: Scotland Fish Feed Ltd - Development Timescale
Marine Harvest Scotland Fish Feed Ltd - Development Timescale Board Preferred Public May 16 to Planning June Production Dec 15 approval Mar 16 Site Apr 16 exhibitions Nov 16 Planning process Nov 16 approval Jan 17 to Jun 18 Construction period 2018 starts Selected 44
Slide 45: Summary
Summary - Continued expansion at our Bjugn Factory in Norway is possible and a desirable way to maintain our supply to Marine Harvest Norway in the region of 80% to 90% - Scottish site identified and secured, with planning application to be submitted early in Q3 2016 - Logistics savings associated w
Slide 46: Farming
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Farming Marit Solberg, COO Farming 46
Slide 47: Farming - Global presence
Farming - Global presence 1 of 5 salmon produced in the world – 414,000 tonnes harvest guidance for 2016 Norway Volume: 262 000 Norway Region North Norway Faroe Islands Region Mid Volume: 10 000 Canada Volume: 44 000 Norway Scotland Region West Volume: 54 000 Ireland Norway Volume: 8 000 Region Sout
Slide 48: Marine Harvest number position in most regions
Marine Harvest number 1 position in most regions 2015 Operating EBIT/kg EUR Norway Scotland 2 2 1.26 1.15 0.96 0.81 0.72 1 0.43 1 0.50 0.23 0 0 MHN MHS* -1 -1 -1.02 -2 -2 #1 #2 #3 #4 #5 #1 #2 #3 #4 CANADA Canada Chile 2 2 1 1 0.33 MHC** 0 0 MHCa -0.09 -0.10 -1 -1 -0.43 -0.53 -0.86 -0.90 -2 -2 -1.41
Slide 49: Sea lice challenge and feed raw materials are driving production costs up
Sea lice challenge and feed raw materials are driving production costs up Cost initiatives Farming - Feed production – significant savings on purchasing internal feed, in addition to «taking out margin» on own feed - Project on centralized buying on big items, barges, nets, work boats, feeding equip
Slide 50: Marine Harvest Norway – Region South
Fjæra FW plant Marine Harvest Norway – Region South Share of harvest volume 2015 - The BU with best solutions for non-medical lice treatment – 6 years in Agder without chemical lice 4% 12% treatment - First region with ASC certification - Main challenge – Lice and PD - Main bottleneck for growth – s
Slide 51: Marine Harvest Norway – Region West
Steinsvik FW plant Marine Harvest Norway – Region West Share of harvest volume 2015 - Delivered excellent results last 3 years 7% after being the poorest performer in MHN 19% - Significant progress on survival after successful PD combat - Main challenge – lice - Main bottleneck for growth – smolt In
Slide 52: Marine Harvest Norway – Region Mid
Processing site Ulvan Marine Harvest Norway – Region Mid Share of harvest volume 2015 6% - Coastline same size as Chiles region X + XI 15% - Farms structured in larger units, scale effects - Main challenge is lice and PD - 100% capacity of non-medical treatment in place 2016 Industry volume MHG glob
Slide 53: Marine Harvest Norway – Region North
Lice skirt Marine Harvest Norway – Region North Share of harvest volume 2015 - Best production area, cost winner in the Group 6% - Potential for growth with new licenses 16% - Successful pioneers in mechanical lice treatment - 100% capacity of non-medical treatment in place 2016 - Main challenge – s
Slide 54: Marine Harvest Scotland
Marine Harvest Scotland Share of harvest volume 2015 - Challenging biological situation last two years, lice, AGD and blooms 12% 28% - Non-medical lice tools is in place 2016 - Restructuring in 2016, reduced cost base - Main challenge is sea lice - Main bottleneck for growth is smolt Industry volume
Slide 55: Marine Harvest Canada
Marine Harvest Canada Share of harvest volume 2015 10% - Well positioned in US and Canadian market – price 31% premium - Solved main challenge, Kudoa in 2013 - Challenging environment, both nature and people - Main challenge is Sea lions and Blooms Industry volume MHG global volume - Main bottleneck
Slide 56: Marine Harvest Chile
Algae “Chatonella” Marine Harvest Chile Share of harvest volume 2015 - Prudent organic growth since ISA crisis - Production in Region X and IX 12% 15% - MH relatively good biological performance - Comprehensive restructuring ongoing in 2016 - Main challenge – sanitary control and structure in indust
Slide 57: Organic growth supported by investments in cleanerfish and smolt capacity
Organic growth supported by investments in cleanerfish and smolt capacity - Organic growth opportunities - More than NOK 900m invested last 3 years in Freshwater capacity - solely RAS technology - Norway; Region West and Region South - Canada - Faroes - Will continue in Scotland, and in Norway Regio
Slide 58: Impact of smolt size on harvest volume
Impact of smolt size on harvest volume (90g-130g) - 8 % extra marginal production in Norway 100 tons per MAB - Reduces full cost in addition to extra volume/EBIT 58
Slide 59: Lice prevention strategy
Lice prevention strategy Region North Avoid internal and external lice infection, by - Internal infection is around 70% - Keep levels of lice below physical reproduction probability - 0.2 lice/fish gives a fertility success of 20% while 2 lice/fish gives 100% fertility success. - Treat immediately a
Slide 60: Organic growth with solid control of risks
Organic growth with solid control of risks Well positioned to maintain Well positioned to lead further cost leader position sustainable development Risk management Top of the class technical experts Best practices Operational expertise in all regions Scale Key player in developing industry sustainab
Slide 61: Sales & Marketing
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Sales & Marketing Ola Brattvoll, COO Sales & Marketing 61
Slide 62: Salmon consumption growth over the last 19 years
Salmon consumption growth over the last 19 years 62 Source: Kontali analyse / NSC
Slide 63: Market evolution: from fine dining to everyday meals
Market evolution: from fine dining to everyday meals Fine dining Filling existing Penetrating Expanding channels retail retail & food service 63
Slide 64: Market size & market evolution
Market size & market evolution 400 000 12.00 350 000 10.00 9.53 300 000 8.00 250 000 Tons WFE Kg WFE 6.63 200 000 6.20 6.00 150 000 4.00 3.23 3.47 100 000 3.12 2.82 2.46 2.27 1.91 1.94 2.00 50 000 1.36 1.16 1.11 1.03 0.86 0.49 0.50 0.42 0.41 0 0.04 0.00 Total market Consumption per capita Source: Ko
Slide 65: Our commercial strategy
Our commercial strategy - What? - achieve a price/margin above our competitors in the market - How? - Strategic partnership with key clients based on MHG unique capabilities - Brands 65
Slide 66: Our global VAP processing, sales & marketing network
Our global VAP processing, sales & marketing network Scandinavia, Sales Poland, Sales UK & Ireland, & processing South Korea, Japan, Sales & Sales & Sales & processing processing processing DACH & CEE, Sales & Spain, Sales & processing Canada, processing China & Taiwan, Sales Sales & BeNeFra, Sales
Slide 67: Number 1 value added salmon producer in Europe
Number 1 value added salmon producer in Europe - 14 factories in Europe - 2015 turnover: NOK 10.4 billion Sales & processing facilities Sales offices - Processing capacity of ca 180.000 tonnes HOG - 6,504 FTE (2015) - Modern facilities - Smoked salmon and frozen salmon HUB in Poland - Fresh pre pack
Slide 68: Marine Harvest Consumer Products UK, recovery initiatives
Marine Harvest Consumer Products UK, recovery initiatives - Break even expected during Q3 2016 - Changed management (April 2016) - Key resources from group deployed in factory - 3 main areas of improvement - Yield/ raw material utilization - Efficiency and cost improvement - Commercial actions 68
Slide 69: Fresh pre packed fish in Germany: Taking the lead…
Fresh pre packed fish in Germany: Taking the lead… Fresh salmon consumption in Germany 2007-2015 8 000 7 000 6 000 MAT (Tonnes) 5 000 4 000 3 000 2 000 1 000 - 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 4 8 12 200 2007 2008 2009 2010 2011 2012 2013 2014 2015 6 69 Source: NSC
Slide 70: …and we would like the same thing to happen in the US
…and we would like the same thing to happen in the US The US salmon consumer: Market Size Kg/p cap Kg/p cap - 78% like the taste of salmon Market MT HOG (2014) 2007 2014 - Only eat 6% of the recommended seafood intake USA 333,750 0.95 1.16 - Millennials are consuming more fresh seafood - Main barrie
Slide 71: Mowi Salmon: a unique salmon based on our unique value chain
Mowi Salmon: a unique salmon based on our unique value chain 1st 2nd Breeding Feed Farming processing processing 50 years of Special Best New Special continuous improvement formula locations technology packaging 71
Slide 72: Mowi commercial film
Mowi commercial film & marineharvest
Slide 73: R&D
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 R&D Øyvind Oaland, Global Director R&D 73
Slide 74: R&D in Marine Harvest
R&D in Marine Harvest Global R&D Department - 16 FTEs, 6 PhDs - Veterinary medicine, aquaculture, nutrition, genetics, engineering, marine biology - 5 functional areas - Environment & Sustainability - Farming technology - Fish health & Welfare - Quality, Food Safety & Processing technology - Feed &
Slide 75: Our key focus areas
Our key focus areas 75 01.06.2016
Slide 76: Goals and ambitions guiding our R&D efforts
Goals and ambitions guiding our R&D efforts 76 01.06.2016
Slide 77: What characterizes our industry?
What characterizes our industry? Feed conversion - Uniquely effective - Uniquely healthy - Great potential for growth (Kg feed per kg produced) CO2 -footprint (Kg CO2 eq/kg) 77
Slide 78: What characterizes our industry?
What characterizes our industry? - We do not own our production area - crossing interests - Open environment – farm to farm impacts - Young industry- knowledge gaps 78
Slide 79: Criteria to ensure a sustainable growth
Criteria to ensure a sustainable growth - Access to key input factors - Production areas - Sustainable, available and accepted feed raw materials - Know-how - Biological challenges - Fish welfare and robustness - losses need to be reduced - We need to get control of the sea lice situation - Margins-
Slide 80: Sea lice control - what are the challenges
Sea lice control - what are the challenges - Increased medicine use and greater attention to medicine discharge and environmental safety - Increasing impact on production cost, mainly driven by medicine use and treatment losses - Reduced sensitivity and increasing resistance to medicines - Wild salm
Slide 81: Sea lice control - our approach
Sea lice control - our approach - R&D, field testing and implementation Cleanerfish - From medicinal control to biological solutions and non- Wrasse medicinal technologies - development of the lice flusher (“Hydrolicer”) - commercial testing of laser - freshwater treatment in wellboats Lumpfish - se
Slide 82: Sea lice control - our approach
Sea lice control - our approach - New strategy for lice management - Cleanerfish in all farms - Weekly lice counts in all pens - Measures at lower trigger limits “zero adult female” - Single pen approach - Goal; reduce lice pressure increase cleanerfish success reduce treatment needs 82 01.06.20
Slide 83: We benefit by having our own breeding program
We benefit by having our own breeding program - All important economic traits have a genetic component; growth, feed utilization, flesh quality and disease resistance - Marine Harvest’s Mowi: - Ensures access to fish stocks developed to satisfy the specific needs of MH - Reduces risk and gives MH co
Slide 84: Potential future technology platforms
Potential future technology platforms
Slide 85: “The Egg” – a new enclosed technology
“The Egg” – a new enclosed technology - New enclosed technology (2016-2018 testing and verification) - Many advantages to conventional farmed salmon production - Application for 14 development licenses 85 01.06.2016
Slide 86: “The Egg” – commercial film
“The Egg” – commercial film 86
Slide 87: “Beck Cage” – offshore submersible concept
“Beck Cage” – offshore submersible concept Normal conditions Stormy conditions- submerged - Flexible submersible offshore farming cage - Taking the unit below the roughest weather and below the top layer sea-lice belt - Stronger than other known concepts due to the axial structure - Application for
Slide 88: “The Blue Revolution Centre”- R&D facility at Frøya
“The Blue Revolution Centre”- R&D facility at Frøya - Developing technological solutions for optimal fish welfare - Application for 6 R&D licenses 88 01.06.2016
Slide 89: “Marine Donut” – closed-end farming concept
“Marine Donut” – closed-end farming concept - Robust closed concept protecting fish from sea lice and other pathogens, certified for up to 3 meters wave height - Flow concept exercising fish resulting in top fish quality - Produced of HDPE a 100% reusable material - Application for 8 development lic
Slide 90: Cleanerfish
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Cleanerfish Petter Arnesen, Breeding Director 90
Slide 91: Cleanerfish farmed by Marine Harvest
Cleanerfish farmed by Marine Harvest Ballan wrasse Lumpsucker 91 01.06.2016
Slide 92: Numbers and production sites in Norway
Numbers and production sites in Norway Sourcing of cleanerfish by year 12 10 Lovund: Lumpsucker (20% ownership in Nordland CF) Million cleanerfish 8 Flatanger 6 (25% ownership Namdal CF) Rissa: Wrasse and lumpsucker 4 (LS from 2016) Vanylven: Lumpsucker 2 Øygarden: Wrasse 0 2015 2016e 2017e 2018e St
Slide 93: Numbers and production sites in Scotland
Numbers and production sites in Scotland Sourcing of cleanerfish by year - Main MH wrasse sites are Machrahanish and Otter Ferry 4 3.5 3 Million cleanerfish 2.5 Otter Ferry Machrahanish Lumpsuckers & Wrasse 2 Wrasse 1.5 1 Weymouth Anglesey Lumpsuckers 0.5 Lumpsuckers 0 Swansea 2015 2016e 2017e 2018e
Slide 94: Checking if the lumpsucker has eaten lice!
Checking if the lumpsucker has eaten lice! 94 01.06.2016
Slide 95: Why use cleanerfish?
Why use cleanerfish? - Managed well they can control sea lice from stocking of smolts until harvest (5 years and 7 months without other treatments in Agder) - Nature’s own way to control parasites - No danger of creating resistance - Related to other methods they do the job without disturbing welfar
Slide 96: There are still several challenges with cleanerfish
There are still several challenges with cleanerfish Significant R&D effort is needed to: - Need to better understand their biology, nutritional requirements and disease problems - enables development of improved vaccines and feed - Optimize general rearing conditions - Focused on how to improve thei
Slide 97: Thank you!
Thank you! Lumpsucker farm at Vanylven Ballan wrasse farm at Rissa 97 01.06.2016
Slide 98: Finance
Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 Finance Ivan Vindheim, CFO 98
Slide 99: Key financials
Key financials Marine Harvest Group - main figures Q1 2016 Q1 2015 2015 Unaudited EUR million Operational revenue and other income 809.5 10% 735.3 3121.1 Operational EBIT 1) 111.9 17% 95.3 346.8 Cash flow from operations 150.1 61.6 233.3 Net interest-bearing debt (NIBD) 960.1 866.5 999.7 Underlying
Slide 100: Financial position
Financial position Marine Harvest Group 31.03.2016 31.03.2015 31.12.2015 EUR million Non-current assets 2 122.7 2 218.7 2 134.9 Current assets 2 129.0 1 917.0 2 059.4 Assets held for sale 1.8 0.9 1.8 Total assets 4 253.5 4 136.6 4 196.1 Equity 1 952.7 2 114.5 1 895.6 Non-current liabilities 1 709.1
Slide 101: Cash Flow and Net Interest Bearing Debt
Cash Flow and Net Interest Bearing Debt Marine Harvest Group Q1 2016 Q1 2015 2015 EUR million NIBD beginning of period -999.7 -1 032.6 -1 032.6 . Operational EBITDA 147.7 129.7 486.6 Change in working capital 34.5 -45.6 -146.2 Taxes paid -26.0 -15.2 -68.3 Other adjustments -6.2 -7.3 -38.8 Cash flow
Slide 102: 2016 Cash Flow Guidance
2016 Cash Flow Guidance - Working capital buildup EUR ~30m - Support further organic growth - Capital expenditures EUR ~190m - Freshwater expansion projects EUR ~50m - Interest expenses EUR ~30m - Tax payables EUR ~75m - Long term NIBD target of EUR 1,050m - Quarterly dividend in Q2 2016 of NOK 1.70
Slide 103: Overview financing
Overview financing - EUR 805m Facility Agreement - Maturity – Q4 2019 - Covenants: - 35% equity ratio - Accordion option EUR 45m - Lenders: DNB, Nordea, Rabobank and ABN Amro - EUR 340m issued in November 2015 - Tenor 5 years, annual coupon 0.125%(1), conversion price EUR 15.7020 - EUR 375m issued i
Slide 104: Net capital expenditure guidance
Net capital expenditure guidance 300 250 200 EUR million 150 Maintenance level 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016E 104
Slide 105: Net working capital guidance
Net working capital guidance 250 Working capital tie-up (EUR million) 200 150 100 50 0 -50 -100 2008 2009 2010 2011 2012 2013 2014 2015 2016E 105
Slide 106: Guidance on financial commitments and cost of debt
Guidance on financial commitments and cost of debt 120 100 Contractual repayments 80 EUR million 60 40 20 Interest expenses 0 2011 2012 2013 2014 2015 2016E 106
Slide 107: Dividend policy
Dividend policy - The quarterly dividend level shall reflect the present and expected future cash flow generation of the Company - To this end, a target level for net interest bearing debt is determined, reviewed and updated on a regular basis - When the target is met, at least 75% of the annual fre
Slide 108: Supply development
Supply development Estimated volumes Compared to Q1 2015 Est. volumes Suppliers Q1 2016 Q1 2015 Volume % Q4 2015 Norway 243 700 259 600 -15 900 -6.1% 309 900 Scotland 31 000 28 400 2 600 9.2% 40 800 Faroe Islands 15 900 12 600 3 300 26.2% 22 500 Ireland 2 300 1 700 600 35.3% 4 100 Total Europe 292 9
Slide 109: Development in reference prices
Development in reference prices Reference prices Q1 2016 Change vs Q1 2016 Change vs Market Q1 2015 NOK Q1 2015 Norway (1) EUR 6.15 31.9% NOK 58.58 43.9% Notes: Chile (2) USD 4.30 6.7% NOK 37.04 18.5% (1) NASDAQ average superior GWE/kg (gutted weight equivalent) Chile, GWE (3) USD 4.36 9.8% NOK 37.5
Slide 110: Global volume by market
Global volume by market Estimated volumes Compared to Q1 2015 Est. volumes 12 month comparison Markets Q1 2016 Q1 2015 Volume % Q4 2015 LTM PTM % EU 221 300 221 700 -400 -0.2% 273 300 978 100 942 800 3.7% Russia 20 500 18 400 2 100 11.4% 25 400 100 900 121 600 -17.0% Other Europe 17 300 20 200 -2 90
Slide 111: Industry supply outlook: declining growth of -9% to -5% for 2016
Industry supply outlook: Guidance of declining growth of -9% to -5% for 2016 2013 2014 2015 2016 Estim ates 2016 GWE tonnes (thousands) Low Y/Y grow th High Y/Y grow th Norw ay 1 029 1 079 1 111 1066 1 055 -5% 1 077 -3% UK 142 153 150 155 151 1% 159 6% Faroe Islands 65 74 69 74 72 4% 76 10% Total Eu
Slide 112: MHG 2016 volume guidance
MHG 2016 volume guidance Salmon species 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Q1 2016 Q2 2016 2016 GWE tons (1000) Actual Actual Actual Actual Actual Actual Actual Guidance Guidance Norway 258 65 64 59 67 255 54 56 262 Chile 68 16 13 18 15 62 15 7 36 Canada 27 10 12 9 9 40 12 12 44 Scotland 49 7
Slide 113: Q&A
Q&A Marine Harvest Capital Markets Day, Brekstad, Norway 2 June 2016 113