Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Q4 2014 Earnings Presentation
53 slides from Mowi Asa's earnings presentation, Feb 6, 2015
Slide 1: Q4 2014 Presentation
Q4 2014 Presentation
Slide 2: Forward-looking statements
plant, trends in the seafood industry, including industry supply outlook, exchange rate and interest rate hedging policies and fluctuations, dividend policy and guidance, asset base investments, capital expenditures and net working capital guidance, NIBD target, cash flow guidance and fi financing u
Slide 3: Operational EBIT NOK 1,032m in a challenging quarter
EE = Operational EBIT NOK 1,032m in a challenging quarter * Quarterly dividend on NOK 1.20 per share
Slide 4: Marine Harvest Group - main figures
Marine Harvest Group - main figures 4.2014 a4. 2013 2018 2013 [unsuited NOK mon Operational revenue and other income 6863 6743 258-496 19.230 Operational BIT» 1032 4.037 4284 3212 Cash flow from operations 534 =10 3.944 2023 Net interest-bearing debt (NIBD) 9268 7791 9268 7701 Underlying EPS (NOK) ®
Slide 5: NOK per kg (Oslo)
NOK per kg (Oslo) 8 8 8 8 2007 2008 -«2009-|«2010«2011=2012«2013 2014 Weekly reference prices = Prices in Europe held up well despite weak Russian demand = Weak prices in Americas - massive Chilean supply growth
Slide 6: Contract and superior share by region
120% Canadian Chilean Norwegian Soottish Qs 2014 mQ42013 Contract share[__ 47 % % [| 0% | 12% 4 Superior share{ 93% | 90% | 88% | 88% | Chie (UB tars).
Slide 7: Operational EBIT bridge Q4 2013 to Q4 2014
84 -231 Op EBIT MH Feed Farming Markets VAP Morpol Other Op EBIT Q4 2013 Q4 2014
Slide 8: Operational EBIT Salmon of Norwegian Origin
Operational EBIT 881825 Operational EBIT Salmon of Norwegian Origin (Q4 2013 vs @4 2044 Harvest volume eo941 68581 2 Operational EBIT per kg 1269 1204 = of which MH Markets ost 084 + of which WH VAP Europe 022 035 - of which Morpo! 099 024 Exceptional ems rel in op. E8IT 123-80 Exceptional items per
Slide 9: Contract volume (HOG tonnes)
Contract volume (HOG tonnes) 35,000 30,000 25,000 20,000 15,000 a1 2014 92.2014 93 2014 a4 2014 Qt 2015 22015
Slide 10: Cost per kg by region
16 15.06 15.01 14.02 14 12.95 12. 0412-59 12 10.52 2 9.79 5 10 8.86 a Be. 729 z 6 4 2 o+J — — South West North Tol 201304 m2014Q4 Inelucngconinton tom Sales ana Marketing
Slide 11: Operational EBIT Salmon of Scottish Origin
pean EST Salmon of Sootsh Operational EBIT 2 120 Groin Gt soroveaa aoe Harvest vlume ears 11716 peratonal EBIT per kg saz 1028S: ~ of which MH Markets 0.93 298 be = of which MH VF a7 0.21 4 rt = of which Morpol 067 063 {a i | | :xceptional items incl in op. EBIT 7-17 ——— | = a ecetorl ome perk 20824
Slide 12: Operational EBIT Salmon of Canadian Origin
Operational EBIT Salmon of Canadian Origin Operational EBIT Bs 42013 v5042014 Harvest volume eso 875 ee perational EBIT per kg 39 1020 © + of which MH Markets oes 186 + of hich NHVAP Europe 00 000 - of which Morpol 0.00 0.00 o Exceptional items incl in op. EBIT 0 2 8 Exceptional items perky 000-043
Slide 13: Operational EBIT Salmon of Chilean Origin
Harvest volume Operational EBIT per kg of which MH Markets + of which NH VAP Europe - of which Morpol -xceptional items incl in op. EBIT Beret items per kg Price achievementreference price Contact covereoe ‘Superior 6 3 Operational BIT Salmon of Gilean Origin at z0tsveas 2014 oom 4799) oss as 32 1s
Slide 14: Salmon of Irish and Faroese Origin
ISALMON OF IRISH ORIGIN pers EIT Harvest volume 2069 1345 Operational EBIT per kg 449 26.76 + of which MH Markets 017 0.08 - of which MH VAP Europe 0 0.22 ~ of which Morpol Exceptional tems inclin op. EBIT 8 2B :xceptional items per kg 393 16.76 Price achievementireference price na Contract coverage
Slide 15: MH VAP Europe
IMH VAP EUROPE non a4. 14 04.18 Operational EBIT VAP Europe Q4 2013 us. Q4 2014 Operating revenues 1408 1359 Operational EBIT 3-37 Operatonal EBIT % 26% 27% ‘Volume sold (tons product weight) 16190 17247 . Exceptional items o 0 are salmon 65% 62% Revenue share saimon 73% 70% a Gross margin share sal
Slide 16: Morpol
Operating revenues 1998 1257 Operational EBIT at 63 Operational EBIT % 51% 4.6% Volume sold (tons product weight) 15785 15086 Exceptional items 0 0 Volume share salmon 92% 90% snue share salmon 88% — 90% = Result impacted by some unfavorable raw material purchases = Good | = Morpol to be i Product:
Slide 17: Feed
FEED INOK mil on 42014 Operating revenues 652 Operational EBIT et Operational EBIT % 9.3% Feed sold volume 66.824 Feed produced volume 67770 ® ivity and efficiency i - From ~60% to ~80% in Norway“) "Notes (1) Based on 2016 narvestvoume estimate
Slide 18: Fourth Quarter 2014: Financials, Harvest Volumes and Markets
Fourth Quarter 2014 Financials, Harvest Volumes and Markets
Slide 19: Operational EBIT and profit reconciliation
Operational EBIT ® Unrealized salm 9 Restucturing costs ‘Other nom-operatior Net financial items 4.2016 4. 2013 2019) Open jerational revenue and other income 6863 6743 25496 19230 1032 1087 4254 3.22 Sn dor 36 12 54 20 ange In uneszed ra Profit feed 8 0 92 ° Not fair value adjustment of biomass, on
Slide 20: Marine Harvest Group balance sheet
Marine Harvest Group 31.12.2014 31.12.2013 NOK rion Non-current assets 18.662 16 497 Current assets 18.204 16 172 Assets het for sale 19 1.059 36 974 8 Equity 14718 16 346 Non-current liabilities 16 572 12.051 Current liabilities 5684 5140 ioe ate s held tr sale ) 190 uity a 36 974 33.728 Net intere
Slide 21: Cash flow and net interest-bearing debt
rom dl Sierimesinents -72 76-812 rom investments 1465 AMG 2473 Net interest and francialteme paid 150 a2 +891 ‘Other items 8 378-162 Bonds converted to equity 0 O01 783 Duden citbutes oan 3-285 NBO tom consotdation of Noro! 0 0 1681 Net eauty pin Puchase cm stares 0 a 0 Translation efect on interest
Slide 22: 2015 cash flow estimates
2015 cash flow estimates Support further organic growth Copia expenditures NOK 1,700m — Maintenance 7 NOK 500m - Smolt and cleaner fish + NOK 200m - Oth Interest expenses Nok 300m Tax payables NOK Quarterly dividend in Q1 2015 of NOK 1.20 per share (repayment of paid in capital)
Slide 23: NIBD target and dividend policy
= To this end, a target level for i ing debt is determined, = When the target is dis at least 75% 7 ic annual free cash flow after operational ai dividends * Current NIBD i EUR 1,100m - EUR 1.85 Per kg harvest aallin AquaChile transaction
Slide 24: Financing update and debt facilities
2014 - EUR 555m Fact Agrement - Maturity - Q4 Covenants: + 35% equity ratio - Lenders: DNB, Nordea, = Convertible bonds EUR 350 'ssued in May 2013 Tenor 5 - EUR375 feoued in April 2014 + Tenor 5 years, 10.705: =» NOK1 Fi - Tenor 5 years, NIBOR + 3.5% ‘Note (1) Pai smi snnvaly in area
Slide 25: Estimated supply volumes
Estimated volumes [Compared to Q4 ED Est. volumes Q4.2014 Q42013] Volume Q3 2014 ‘Suppliers Norway Europe 363,900 370,200][ 6,300 B -1.7%| 337,100] Americas. 169,700 144,200] 28,500 TW 17.7% 160,500 ‘Source: Kentali = Reduction in Europe = Strong growth in the Americas Note (1 tani Sion (HOS tons)
Slide 26: Salmon prices by region
Norway 1) Nok 28.41 69% EUR AAS 100% Chie NOK 5860 [7% uso79s f34% mesa NOK 38.18 150% — USD556. 25.5% sei HOS po sar, {hero tune png Se Ban Nat 231), euler NOK 9 and USO? HOC 6) erage super HOG pce pork ie Bary Set 126) (@) Market pie in ieal curency 60 so “0 20 0 2007 2008-2009 201020112012 201320
Slide 27: Estimated demand by market
simated volumes | Compared to Q4 2013] Est. volumes 12 month comparison 42014 @42013] Volume | __cs 2014] LM pT Markets eu USA Russia Brasil Japan China / Hong Kong South Korea/Talwan Total all markets Inflow to US from Europe: Inflow to EU from Chilo Strong consumption growth in the EU Source: Kent
Slide 28: Supply growth by region
Hos Nem ay or 70 a mete oe nie 33ST 19 RB ag 5858 50 2% Nott America sf a a re), a 1H 138 22% uc rr a a O% 105 1% Othoe 88 88 [ 145 6% Total sag “ise 4510 “a0 Fao as “oe. 0 0% Fos Eg Nem ay rT 00 om hie 80 2 30 2 e785 18 S12 2% Nort America 20 20 3 2 34 2 2 % 2% 30 a6 2 2 2 » 25 2 2 2 3k 2% Other 14
Slide 29: Strategy and outlook
aes 8
Slide 30: Consolidation in the Chilean industry
in the Chilean industry . F - Pp = Tilapi pacity aa = Major step bl an H 42.89 t = Tentative closing in Q3 2015 p Marine Harve: I Pp from Q1 2015 (4) Opton maybe exercises tom 18 June 2016 ub 18 Jone 2017
Slide 31: Chilean industry structure
a le ee 8 S100 97 92.89. a . eee ees 3 ABE 47 47 47 . 5 50 - Mil 42. 37.34..31--29--28 =| REEL PETE teens se © ee ry yy = st yé s ess ee yp Ae ss EEE Ao Aes 1250 concessions in total Fragmented industry structure Biological challenges Lack of coordination and logistics
Slide 32: Outlook
=F ut! - pply i 7 ppl F inabili - F for for 2015 = Aq hil expected = High hi = Feed iency in Norwa\ 80%") = Quarterly dividend of NOK 1.20 per share ‘Note (1) Bases on 2096 hanest vole estimate
Slide 33: Appendix
Appendix
Slide 34: Contract coverage by region
- way 35% - Scotland 80% - Canada 0% - Chile 9% Nonway @) @) 150% Chile @) 25% 50.0% ada 0.0% 00% Seatland 400% 73.0% roland 0.0% 00% Faroos 0.0% 200% Weighted average 8% 508% {iNest tes forth next unter, its doping or (2 tera interna carte (reign i ract rate can be increased to 65% under special ci
Slide 35: Global volume allocation to the US market
£ Enno | i AAR AARLGLA u BR # [PRICE 8 GLOBAL VOLUME ALLOCATION TOTHE US MARKET Nowvay (1) 69% EUR ile (2) NOK 54.60 47% — USD795 3.48% North America (3) NOK 38.18 458% © USD556 8% Notes: {p rage sper HO ps er to FA Ove (2) Average © tam pce por tg (rer Bory Mom! 2S), equnaere to NOK 3 5 end USO:2 H
Slide 36: Global farming cost Q4 2013 vs Q4 2014
‘bowctpment lh Gh bles Aches ‘Global Farming fu cost 4 2013 vs 04 2014 Be ans a | rT ] = r] rn Group Ct perk NOH) om 024 Catton om Fang NORD 663 sor rman ame ae sae 03 oa
Slide 37: Marine Harvest Group - main figures
Marine Harvest Group - main fi tonal revenue and other income ‘Operational EBIT® 1.082 1037 4254 3212 from operations. 534 =10 3044 2023 interest-bearing debt (NIBD) 9268 7791 9.258, 7791 Undoing EPS, OH)? 1.69 178 7. 532 ala (Now? 046 4.80 co 28 0% a 202 185% Hanest volume (gutted weight tons, salm
Slide 38: MH Farming guidance
MH PARUING Hanes volume (uted wiht oe, salmon) Saaty- sper rare eet fe OK min Exeoptoral ome perky NON)” UIDANCE ran Tanst ue (uted et tre) seins ne ies gh ee) ce) er) eee) or ea = a cH = = oa won eae sai seme aoe a5 2 ee ee eS 022 oo oaks Bast Fae “ar °: 071 000-001. a.00 om ai 00> aco on Cn a 110%
Slide 39: Operational EBIT MH Farming analytical data
‘OPERATIONAL EBIT MH ARMING ANALYTICAL Dx Pree soewrenetrence poe (6)? 00% 1088 «100% 100%, 107% 102% Genoc courage) 41% 50% o% 23% 3 20% Guay - superior share (4) | 2% ese (NOK mion® i 3 s 13 0 40 87 items per kg (NOK)® ast 485023 ott 2010 421 colons {G1 2015 hanest lume (outed weight tos) 5000 580
Slide 40: Boccetoood
Lt Boccetoood ‘pen Ee nel exin fom S2M Sct aa et atten ton at
Slide 41: Quarterly harvest volumes by region
Gniey) s06 Tea saz mas 20087 88 89 4D ane 88 59 Ai ms 7 164 167 168 Gmc SSI SSS BE OE pe Gs os ae 2 B7 BI Ge 65 74 68 Bana a7 saz 92 144 3087 ans rt) ° ey 3a 13 96 3 G8 47 a4 18 3 B76. Shere) 10S tie igo e033 ‘gp gras ay ‘a6 20428 264335 Total BRR “BREE “ALT “BAT “Hae — B67 BR? G2 OSE ET WOO Tad WS
Slide 42: Capital expenditure
CAPITAL EXPENDITURE 1000 30 s Maintenance level 400 200 0 2008 §=62009 «2010 2011S 2012, 2013. 2014S 2015
Slide 43: Working capital tie-up
2000 1500 Working capital tie-up (NOK million) -1000 2008 2009 2010 2011 2012 2013 2014 2016
Slide 44: Contractual repayments and interest expenses
‘Contractual repayments 200 Interest expenses 2011 2012 2013 2014 2015 Paso note te approximations are subetto changes
Slide 45: Nova Sea
Nova Sea 48% «34910-38739 13134 11.622 13.4 Leading negated salmon producer in Northern Norwé 33.33. wholly | owned licenses - 4 partly o = Marine Hones na is an ownership in Nova Sea of ~48% through direct and indirect shareholdings 2014 dividends of NOK 150m (Q2) - Marine Harvest’s share NOK ~73m
Slide 46: Interest rate swap contracts and hedging policy
IRS contracts in MNOK CUED are we rena aon e2etin a i ved ve toting ow Nah as the staring meth fl newinterestheging contacts {B bas steak tn oe ting rooscunency sve noes {3 Faavang arg nt reese (@ uate change n market value booked agains PL POLICY: 12%, : Marine Harvest ASA shall hedge 70%-100% of t
Slide 47: Currency hedging policy
her * EU - ane Harvest shall hedge between 0% and 30% of its assumed annual expenses in NOK against the EUR with a horizon en two years, The annual hedging shall be evenly ross distri = USD/ - Marine H = USD/CLP = Internal transacti - The operating - The purpose of the internal hedging is to allow f
Slide 48: P&L effect of contracts maturing in Q4
PIL effect of contracts maturing in Q4 23 (MINOK) ur Market value 30/09/2014 Change (1) 120 Market value 81/12/2014 a EUR uso uso cep EUR VAP EUR Morpot EUR Faroes EUR Cold Water Species NOK Asia uso
Slide 49: Currency rates and impact on profit and loss
60448" 8.5788" 108707, 6.8648 Average 42013” 5.707" 8.2347" 9.7950" 6.0513, JAverage rate 41CAD41EUR 1GBP. 1/USD| 0420146042013 48% = 42% 110% 13.4% End of quarter rat 1CAD 4EUR 1GBP 1USD| SUID14 6. 90914 11.0% 11.3% 108% 15.2% = Impact on Profit and Loss (versus Q4 2013) . yi : vu = in Financial
Slide 50: Fair value of biomass
alue. During the second half of 2011, the largest salmon farming companies in Norway, with support from audit firms, formed an industry working group where the objective was to reach a converged and improved common approach for estimating the fair value of the biomass in accordance with = Following
Slide 51: Biomass and financial position by country
usA 6 ° 6 Polar 248 st 298 France 35 258 201 Germany 14 0 14 Chile 0 310 310 aly ° 4 4 Other 3 at 24 Total 368 eat 1010 any cash effect financial position (etnis are avaiable nthe 2019 Annual Repo
Slide 52: Share issuance and convertible bond authorizations
Maximum price: NOK 120 per share Minimum price: NOK 7.5 per share - Issuance of new convent pond Maxiraum amount: NOK
Slide 53: Estimated sensitivities on annual results
JESTIMATED SENSITIVITIES ON ANNUAL RESULTS OP. EBITEFFECT CASHFLOW EFFECT DRIVER INOK million ‘Change in global average salmon price of NOK 1 (1) 40 400 (2) Annual hanest volume ‘Change in total harvest vlume of 10,000 tonnes (3) 6 87 @) Marginal volume ‘Change in global feed price of NOK 1 por kg 4