Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q3 2023 Earnings Presentation
48 slides from Bakkafrost P/f's earnings presentation, Nov 7, 2023
Slide 1: Q3 2023 Bakkafrost Group
Q3 2023 BAKKAFROST GROUP Oslo 7 November 2023
Slide 2: Summary of Q3 2023
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Scotland
Slide 3: Highlights Q3-23 (Q3-22)
HEALTHY LIVING HIGHLIGHTS Q3-23 (Q3-22) Revenues and Revenue of DKK 1,859 million (DKK 1,867 million) Operational EBIT Operational EBIT* of DKK 269 million (DKK 325 million) Harvest in the Faroe Islands: 16,740 tgw (16,850 tgw) Harvest in Scotland: 4,100 tgw (8,100 tgw) Operation Feed sale
Slide 4: Markets & Sales
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Kolbeinagjógv, Faroe Islands
Slide 5: Global Markets: Higher prices y/y and lower q/q
GLOBAL MARKETS HEALTHY LIVING HIGHER PRICES Y/Y AND LOWER Q/Q Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices increased y/y and decreased q/q in Q1 Q2 Q3 Q4 130,00 Q3 2023 110,00 (NOK/KG) 90,00 70.25 12% 78.71 (Q3 2022) 8.46 (Q3 2023) y/y: 70,00 108.50 -27.5% 78.71 (Q2 2023) -2
Slide 6: Salmon Markets, Sold Quantity
HEALTHY LIVING SALMON MARKETS, SOLD QUANTITY EU/UK/US consumption below supply growth Salmon Salmon markets, markets, sold sold quantity quantity (head (head on gutted on gutted weight) - HOG) Indication of modest price sensitivity Estimated volumes Q3 comparison Estimated volumes H1 comparison Ma
Slide 7: Global Harvested Volume Reduced 3%
HEALTHY LIVING GLOBAL HARVESTED VOLUME REDUCED 3% 1% drop supply to the markets Supply Development Q3 2023 Q3 2022 Change % SUPPLY DEVELOPMENT Q3 2023 Q3 2022 Change % Norway 374 380 -1.6 % UK 39 43 -8.6 % 1% drop in European harvest volumes Faroes 25 23 9.7 % Norway – Low productivity Iceland 9 7
Slide 8: Financials
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Skálafjørður, Faroe Islands
Slide 9: Group Profit and Loss
GROUP PROFIT AND LOSS HEALTHY LIVING LOWER REVENUE AND OPERATIONAL EBIT Q3 2022 Q3 2023 (DKK million) Q3 23 YTD 23 Q3 22 YTD 22 Revenue (mDKK) Operating revenue 1,859 5,579 1,867 5,190 1,867 0% 1,859 Operational EBITDA* 424 1,645 461 1,739 Operational EBIT* 269 1,188 325 1,329 Operational EBIT (mDKK
Slide 10: Introducing New Segments
HEALTHY LIVING INTRODUCING NEW SEGMENTS 7 segments: • FOF • Freshwater FO • Freshwater SCT • Farming FO • Farming SCT • Services • Sales & Other 10
Slide 11: Revenue (mDKK) – New Segments
REVENUE (mDKK) HEALTHY LIVING NEW SEGMENTS FOF Freshwater FO Freshwater SCT Farming FO +55% +17% +36% - 9% 1.200 1.048 200 60 1.200 50 1.030 1.000 155 147 50 1.000 937 744 150 127 800 677 40 37 800 656 600 100 30 26 600 400 20 400 50 200 10 200 - - - - Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q3 22 Q4 22 Q1 23
Slide 12: Operational EBIT (mDKK) – New Segments
OPERATIONAL EBIT (mDKK) HEALTHY LIVING NEW SEGMENTS FOF (Op EBITDA) Freshwater FO Freshwater SCT Farming FO +165% -46% 50% - 61% 350 316 100 20 17 300 274 90 86 300 15 11 250 80 250 70 10 200 60 150 200 47 5 50 150 150 119 128 40 33 0 108 30 100 100 -5 20 50 -10 50 10 0 0 -15 -12 0 Q3 22 Q4 22 Q1 23
Slide 13: Operational EBIT and Adjusted Earnings per Share
HEALTHY LIVING OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 587 565 415 407 418 376 353 339 325 303 268 248 269 224 Operational EBIT* 182 (mDKK) 120 103 89 71 2019 2020 2021 2022 2023 1,325 622 821 1,705 1,188 7,19 6,77 5,89 4,98 4,83 4,80 4,82 4,07 4,00 3,79 3,19 3,43 Adjusted EPS** 2,95 2,9
Slide 14: Balance Sheet
HEALTHY LIVING BALANCE SHEET Headlines (mDKK) (DKK million) Q3 23 End 2022 End 2022 Q3 2023 Intangible assets 4,512 4,509 Property, plant and equipment 6,063 5,647 PPE: 5,647 416 6,063 Right of use assets 448 439 Financial assets 250 234 Biological assets: 2,938* -173 2,766* Deferred tax assets 429
Slide 15: Cash Flow
HEALTHY LIVING CASH FLOW Q3 2022 Q3 2023 (DKK million) Q3 23 YTD 23 Q3 22 YTD 22 Cash flow, operations (mDKK) 127 59 185 Cash flow from operations 185 1,135 127 820 Cash flow from investments -235 -741 -237 -685 Cash flow, investments (mDKK) -237 3 -235 Cash flow from financing -124 -742 171 -76 Net
Slide 16: Net Interest-Bearing Debt (NIBD)
NET INTEREST-BEARING DEBT (NIBD) HEALTHY LIVING NIBD INCREASED DURING Q3 2023 NIBD was increased by: Development in NIBD in DKK millions • Net investments (mDKK 235) • Change in working capital (mDKK 186) NIBD was decreased by: • Cash flow, operating activities (mDKK 287) Financing end Q3 2023 • NIB
Slide 17: Segment Information
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Kolbeinagjógv, Faroe Islands
Slide 18: FOF (Fishmeal, Oil and Feed)
FOF (FISHMEAL, OIL AND FEED) HEALTHY LIVING EXCEPTIONALLY HIGH SOURCING IN ALL QUARTERS OF 2023 QonQ Raw material sourcing vs. Feed sale (tonnes) Volumes Q3 23 YTD 23 Q3 22 YTD 22 change 200.000 50.000 Marine raw material sourced +44% 109,685 413,485 76,182 251,763 40.000 150.000 Feed sold (tonnes)*
Slide 19: Freshwater – Faroe Islands
FRESHWATER – FAROE ISLANDS HEALTHY LIVING BENEFITING FROM LARGE CAPACITY IN HATCHERIES MADE AVAILABLE IN 2023 Comments QonQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Released number of smolt (million) -19% 3,3 9,0 4,1 9,4 • Good capacity in hatcheries Strond Glyvradal Norðtoftir Viðareiði Average wei
Slide 20: Freshwater – Faroe Islands: New Hatchery at Skálavík
FRESHWATER – FAROE ISLANDS HEALTHY LIVING CONTRACT SIGNED FOR NEW HATCHERY AT SKÁLAVÍK Comments Existing hatcheries Gjógv Húsar Strond Glyvradal Norðtoftir Viðareiði • Contract signed • Same design as Glyvradal and Applecross • 28,600 m3 / around 7 million smolt of 500g • Built in phases to allow ea
Slide 21: Freshwater – Scotland
FRESHWATER – SCOTLAND HEALTHY LIVING APPLECROSS RAMPING UP – SELF-SUFFICIENT IN 2024 Comments QoQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Released number of smolt (million) +2% 2.5 7.3 2.4 7,5 • Applecross hatchery: Average weight (g) +5% 112 117 107 110 • Ramp-up progressing well • May 23: First t
Slide 22: Farming – Faroe Islands
FARMING – FAROE ISLANDS HEALTHY LIVING POSTPONED HARVEST TO OPTIMISE VALUE Comments QoQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Total harvest volume (tonnes HOG) -1% 16,740 36,403 16,850 47,410 • Low harvest volumes Average harvest weight (kg) -7% 4.8 4,5 5.1 4,9 • Lower average harvest weight YoY
Slide 23: Farming – Scotland
FARMING – SCOTLAND HEALTHY LIVING IMPROVED BIOLOGY FROM MID-SEPTEMBER - POSTPONED HARVEST TO OPTIMISE VALUE Comments QoQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Total harvest volume (tonnes HOG) -49% 4,100 19,536 8,100 18,719 • Biological challenges in Q3 driving mortality Average harvest weight (k
Slide 24: Services
SERVICES HEALTHY LIVING ABUNDANT FRESHWATER TREATMENT CAPACITY = EFFICIENT SEA LICE CONTROL Comments QoQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Renewable energy produced (MWh) -27% 863 3,233 1,179 4,551 • Services provided: • Fish transportation • Treatments Margin • Farming Support Operational EB
Slide 25: Sales & Other
SALES & OTHER HEALTHY LIVING LARGE FRESHWATER TREATMENT CAPACITY DELIVERING EFFICIENT SEA LICE CONTROL Comments QoQ Volumes Q3 23 YTD 23 Q3 22 YTD 22 change Volume transferred to VAP (tgw) +8% 6,997 17,052 6,462 19,457 • Services provided: VAP produced (tgw) -2% 6,529 16,281 6,636 19,516 • Sales & M
Slide 26: Outlook
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Scotland
Slide 27: No Harvest Growth Expected in 2023
HEALTHY LIVING NO HARVEST GROWTH EXPECTED IN 2023 SUPPLY - TOTAL Q3 2023 supply reduced 2.8%* 1.600 10% • Europe below and Americas above expectations 1.400 8% 6% 1.200 4% 4% supply growth expected in Q4 2023* 1.000 2% • Driven by Europe 800 0% 600 -2% -4% 400 3% supply growth expected in H1 2024* -
Slide 28: Outlook
HEALTHY LIVING OUTLOOK Global harvest Contracts • Decrease of 2.8% in Q3 2023 vs Q3 2022 • For 2023, Bakkafrost has signed contracts for around 23% of the total expected harvest volumes and 9% for 2024 • No global supply growth expected in 2023 • 3% growth expected in H1 2024 Fishmeal, Oil and Feed
Slide 29: Appendix
SUMMARY OF Q3 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX
Slide 30: Value Chain Insight – Hatcheries for Smolt
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT LARGE HIGH-QUALITY SMOLT ARE THE KEY TO GROWTH AND IMPROVEMENT Average smolt weight New hatchery Current capacity (June 2023) 18 million smolt of 500g Glyvradal expansion Norðtoftir expansion Viðareiði expansion 500 500 X 400 405 g Number of release
Slide 31: Large Smolt Strategy
LARGE SMOLT STRATEGY HEALTHY LIVING DELIVERING LARGE HEALTHY SMOLT SMOLT CAPACITY 11m 14-15m 15m RAS 2 design & build Fairlie Hatchery 2 build AP Fairlie - Planning 8m smolt at 500g Post smolt 2 build AP 32,300m³ capacity Post smolt 1 build AP 100% smolt from RAS No 3rd party smolt Applecross - Cons
Slide 32: 2024-2028 Capex Plan - Investing in Sustainable Growth
2024-2028 CAPEX PLAN - INVESTING IN SUSTAINABLE GROWTH HEALTHY LIVING 165,000 TONNES HARVEST IN 2028, FAROE ISLANDS AND SCOTLAND COMBINED 2024-2028 Capex* of DKK 6.3 bn Volumes Faroe Islands Scotland 1.800 16,00 2023 53,000t 20,000t 1.600 14,00 1.400 12,00 Investments per kg (DKK) 2026 95,000t 45,00
Slide 33: Markets & Sales
MARKETS & SALES HEALTHY LIVING SALES TO NORTH AMERICA INCREASED - SALES TO WESTERN EUROPE DECREASED Total sales of Q3 2023 Q3 2022 YTD 2023 YTD 2022 Sales & volume salmon by markets Q3 2022 Q3 2023 FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 53% 83% 58% 55% 92% 66% 60% 63% 61%
Slide 34: Development in Supply and Sold Quantity by Origin
HEALTHY LIVING DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - HOG) Expected supply growth in 2024 2019 2020 2021 2022 2023E 2024E 5% increase in Global supply* Norway 1,198 1,226 1,383 1,359 1,356 1,430 UK 171 160 179 145 153 160 6% increase
Slide 35: Q3 2023 Market Environment
HEALTHY LIVING Q3 2023 MARKET ENVIRONMENT Increased prices in Q3 PRICE NORWAY 12,0 90,0 10,5 Nasdaq Norway spot price up 9% in EUR and 14% in NOK 9,7 80,0 10,0 8,9 8,4 70,0 European harvest volume down 1% 8,0 7,2 7,3 60,0 6,7 6,1 50,0 EUR DKK 6,0 5,3 SSB price up 15% (proxy of blended spot/contr
Slide 36: Q3 2023 – Spot and Contract Pricing Aligned
HEALTHY LIVING Q3 2023 – SPOT AND CONTRACT PRICING ALIGNED PRICE NORWAY (NOK) Nasdaq spot price reflecting marginal pricing per week 120 10 8 100 6 80 4 Statistics Norway (SSB) publish average price 2 for all whole fish sold per week 60 0 40 -2 Incorporates bilateral contracts of variable duration
Slide 37: Development per Quarter
HEALTHY LIVING DEVELOPMENT PER QUARTER Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (mDKK) 2021 2021 2022 2022 2022 2022 2023 2023 2023 Revenue 1,272 1,488 1,639 1,684 1,867 1,940 2,050 1,670 1,859 Operational EBIT 71 120 418 587 325 376 565 353 269 Profit/Loss 131 -3 405 845 249 -154 467 -123 219 Harvest FO (tgw) 14
Slide 38: Dividend
HEALTHY LIVING DIVIDEND Dividend per share in % of adj. EPS* Dividend 99% • The AGM, which was held 28 April 2023, decided to pay out dividend for 2022 of DKK 10.00 per share. The payment was paid out on 22 May 2023. 59% 53% 49% 49% 50% 50% 50% 50% 46% • Dividend payment equals 53% of adjusted EPS 4
Slide 39: Bakkafrost – Overview
HEALTHY LIVING BAKKAFROST – OVERVIEW 39
Slide 40: Bakkafrost – Farming Site Overview
HEALTHY LIVING BAKKAFROST – FARMING SITE OVERVIEW 40
Slide 41: Our Pillars and Values
HEALTHY LIVING OUR PILLARS AND VALUES 41
Slide 42: Bakkafrost salmon at a glance
Bakkafrost salmon at a glance NUTRITION OMEGA-3 LEVELS OMEGA-3 70.6 VITAMIN D MEA RATIO. 2.58 1.4 10.1 ug PROTEIN LEVELS VITAMIN E LEVELS wht 21.0¢ 5.0 ug ver 1008 ver ob polseais fot2va SELENIUM YoDINE WEAN cons 0. 18 mg 0.05 mg ROI 0.06 mg ROIO.15 mg
Slide 43: State-of-the-art and Fully Integrated Value Chain
STATE-OF-THE ART AND FULLY INTEGRATED VALUE CHAIN HEALTHY LIVING STRONG CONTROL IN THE FAROE ISLANDS NOK 31 bn USD 2.8 bn 73,000t 43
Slide 44: Performance
PERFORMANCE HEALTHY LIVING BEST PRACTICES & WELL-INVESTED VALUE CHAIN DRIVES PERFORMANCE Smolt weight (g) (2021 Full Gen.) Biological Feed Conversion Ratio (2021 Full Gen.) Economic Feed Conversion Ratio (2021 Full Gen.) Bakkafrost Faroes 382 Bakkafrost Faroes 1,06 Bakkafrost Faroes 1,16 Norway 187
Slide 45: Value Chain Insight – Improvements of Large-Smolt Quality, Faroes
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT IMPROVEMENTS OF LARGE-SMOLT QUALITY, FAROES (2021G VS. 2020G) 54% 13% Lower mortality Higher growth (number of fish) 4% Lower Feed Converstion Ratio (bio) 16% Lower Feed Converstion 32% Ratio (Eco) Lower mortality (biomass) 45
Slide 46: Farming Cycles Getting Shorter with Large High-Quality Smolt
VALUE CHAIN INSIGHT FARMING CYCLES GETTING SHORTER WITH LARGE HIGH-QUALITY SMOLT Large Smolt Strategy - Reduced biological risk - Increased production efficiency - Enables Sustainable Growth Faroes: Currently at 13 months in the sea 409g (H1 2023) 46
Slide 47: ~6.3BN Planned Investments 2024-2028
~ 6.3BN PLANNED INVESTMENTS 2024-2028 HEALTHY LIVING REDUCE BIOLOGICAL RISK, IMPROVE EFFICIENCY AND INCREASE ORGANIC GROWTH Faroe Islands: 2024-2028 capex plan vs. 2022-2026 capex plan 1.800.000 • Hatchery capacity of 24m smolt at 500g in 2028 1.600.000 • Cost-efficient broodstock (repurposing old h
Slide 48: Bakkafrost
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