Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q2 2024 Earnings Presentation
49 slides from Bakkafrost P/f's earnings presentation, Aug 26, 2024
Slide 1: Q2 2024 Bakkafrost Group
Q2 2024 BAKKAFROST GROUP Oslo 26th of August 2024
Slide 2: Disclaimer
HEALTHY LIVING DISCLAIMER This presentation includes statements regarding future results, which are subject to risks and uncertainties. Consequently, actual results may differ significantly from the results indicated or implied in these statements. No representation or warranty (expressed or implied
Slide 3: Summary of Q2 2024
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONS OUTLOOK APPENDIX
Slide 4: Highlights Q2 2024
HEALTHY LIVING HIGHLIGHTS Q2 24 (Q2 23) Revenues and Revenue of DKK 2,067 million (DKK 1,670 million) Operational EBIT Operational EBIT* of DKK 388 million (DKK 353 million) Harvest in the Faroe Islands: 10,226 tgw (8,658 tgw) Harvest in Scotland: 11,366 tgw (7,343 tgw) Feed sales: 32,949
Slide 5: Markets & Sales
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONS OUTLOOK APPENDIX
Slide 6: Global markets: high prices followed by sudden drop mid-quarter
GLOBAL MARKETS HEALTHY LIVING HIGH PRICES FOLLOWED BY SUDDEN DROP MID-QUARTER Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices increased in Q2 2024 Q1 Q2 Q3 Q4 150.00 (NOK/KG) 130.00 110.00 y/y: 108.50 3.1% 111.82 90.00 (Q2 2023) 3.32 (Q2 2024) 70.00 q/q: 110.92 0.8% 111.82 (Q1
Slide 7: Salmon markets, sold quantity
HEALTHY LIVING SALMON MARKETS, SOLD QUANTITY EU/UK: 3% consumption increase Salmon markets, sold quantity (head on gutted weight) Estimated volumes Q2 comparison Estimated volumes FY comparison In line with supply growth – good demand Markets Q2 2024 Q2 2023 Volume % FY 2023 FY 2022 Volume % EU+UK
Slide 8: Global harvested volume dropped
HEALTHY LIVING GLOBAL HARVESTED VOLUME DROPPED 5% 1% drop in global harvest volume Supply Development Q2 2024 Q2 2023 Change % Increase in Europe – drop in Americas Norway 279 284 -1.7 % UK 51 42 20.2 % Faroes 17 16 5.7 % Iceland 5 0 1175.0 % 3% increase in European harvest volumes Ireland 5 4 22.
Slide 9: Finance
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONS OUTLOOK APPENDIX Salmon farmers on Loch Fine Aug 18th 2024
Slide 10: Group profit and loss
GROUP PROFIT AND LOSS HEALTHY LIVING HIGHER REVENUE AND OPERATIONAL EBIT Q2 2023 Q2 2024 (DKK million) Q2 24 YTD 24 Q2 23 YTD 23 Operating revenue 2,067 4,273 1,670 3,720 Revenue (mDKK) Operational EBITDA* 556 1,435 508 1,221 1,670 24% 2,067 Operational EBIT* 388 1,098 353 919 Operational EBIT (mDKK
Slide 11: Operational EBIT and adjusted earnings per share
HEALTHY LIVING OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 710 587 565 407 418 376 388 353 356 325 248 269 Operational EBIT* 224 182 (mDKK) 120 103 89 71 2020 2021 2022 2023 2024 622 821 1,705 1,544 1,098 YTD 7.66 7.19 6.77 4.80 4.82 4.00 3.79 Adjusted EPS** 3.43 3.56 3.37 3.19 2.95 2.93 (DK
Slide 12: Balance sheet
HEALTHY LIVING BALANCE SHEET Headlines (mDKK) (DKK million) Q2 24 End 2023 End 2023 Q2 2024 Intangible assets 4,514 4,509 Property, plant and equipment 6,447 6,220 PPE: 6,220 227 6,447 Right of use assets 367 413 Financial assets 299 289 Biological assets: 3,336* -429 2,906* Deferred tax assets 513
Slide 13: Cash flow
HEALTHY LIVING CASH FLOW Q2 2023 Q2 2024 (DKK million) Q2 24 YTD 24 Q2 23 YTD 23 Cash flow, operations (mDKK) Cash flow from operations 1,036 1,712 376 949 376 659 1,036 Cash flow from investments -241 -479 -304 -507 Cash flow from financing -759 -1,037 -99 -618 Net change in cash 36 196 -26 -176 Ca
Slide 14: Net interest-bearing debt (NIBD)
NET INTEREST-BEARING DEBT (NIBD) HEALTHY LIVING NIBD DECREASED DURING Q2 2024 NIBD was increased by: Development in NIBD in DKK millions 4,000 • Net investments (mDKK 244) 3,500 244 3,180 111 2,966 • Operating Activities (mDKK 111) 3,000 -569 2,500 2,000 NIBD was decreased by: 1,500 • Change in work
Slide 15: Update on the 2024-2028 capex plan
UPDATE ON THE 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 Reprioritising CAPEX (Scotland) will reduce short-term capex: 2023 52,408t 20,598t • A
Slide 16: Operations
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONS OUTLOOK APPENDIX Fuglafjørður, Faroe Islands
Slide 17: Performance per region
PERFORMANCE PER REGION HEALTHY LIVING Q2 CLOSING A STRONG 1H OF 2024 FOR THE GROUP 17
Slide 18: FOF (fishmeal, oil and feed)
FOF (FISHMEAL, OIL AND FEED) HEALTHY LIVING STRONG FEED SALES AND HIGH SOURCING Q/Q Q2 YTD Q2 YTD Raw material sourcing vs. Feed sale (tonnes) Volumes change 2024 2024 2023 2023 200,000 50,000 Marine raw material sourced -39% 90,575 227,449 147,785 303,800 150,000 40,000 Feed sold (tonnes)* 9% 32,94
Slide 19: Freshwater – Faroe Islands
FRESHWATER – FAROE ISLANDS HEALTHY LIVING RAMPING UP NEW CAPACITY FROM 2023 Q/Q Q2 YTD Q2 YTD Volumes 2024 2024 2023 2023 Good capacity in hatcheries change Released number of smolt (million) 11% 4.0 6.1 3.6 5.7 Strond Glyvradal Norðtoftir Viðareiði Average weight (g) -2% 391 398 400 409 Margin Oper
Slide 20: Freshwater – Faroe Islands: new hatchery at Skálavík
FRESHWATER – FAROE ISLANDS HEALTHY LIVING CONSTRUCTION STARTED OF NEW HATCHERY AT SKÁLAVÍK Existing hatcheries Gjógv Húsar Strond Glyvradal Norðtoftir Viðareiði Construction started of Skálavík hatchery • Same design as Glyvradal and Applecross • 3,500 tonnes capacity • Built in phases to allow earl
Slide 21: Freshwater – Scotland
FRESHWATER – SCOTLAND HEALTHY LIVING APPLECROSS RAMPING UP Q/Q Q2 YTD Q2 YTD Volumes change 2024 2024 2023 2023 Applecross hatchery: Released number of smolt (million) -52% 1.5 3.1 3.1 4.8 • Ramping up production Average weight (g) -24% 95 108 125 120 • 7.7 million released in 2024 at around 140g on
Slide 22: Farming – Faroe Islands
FARMING – FAROE ISLANDS HEALTHY LIVING LARGE FISH AND MORE BIOMASS IN THE WATER Q/Q Q2 YTD Q2 YTD Good biological development Volumes change 2024 2024 2023 2023 • Focus on growing larger fish Total harvest volume (tgw) 18% 10,226 24,520 8,658 19,663 • Increasing harvest volumes YoY Average harvest w
Slide 23: ISA outbreak in Vágur A-19 in May 2024
ISA OUTBREAK IN VÁGUR A-19 IN MAY24 All fish harvested by Aug27 – final results: Anouncement from BAKKA 26.05.2024 Harvested number pcs: 1,020,000 Average weight: 3.3 kg HOG ISA virus found in two pens at farming site Total harvest volume: 3.330 tonnes HOG A-19 Vágur (vs planned 5,100 tonnes) • Test
Slide 24: Farming – Scotland
FARMING – SCOTLAND HEALTHY LIVING DE-RISKING EXECUTED AND IMPROVED BIOLOGY Q/Q Q2 YTD Q2 YTD Volumes Biology improving change 2024 2024 2023 2023 • End of Q2: Harvested around 75% of annual harvest Total harvest volume (tgw) 55% 11,366 18,629 7,343 15,436 • Higher sea temperatures early in Q2 – lowe
Slide 25: Reducing costs in Scotland
REDUCING COSTS IN SCOTLAND HEALTHY LIVING ADAPTING CAPACITY TO NEED Processing facility at Marybank mothballed Sub-leasing excess • Around 75 employees affected (redundancy) vessel capacity: • Redundancy costs were accrued in Q2 2024 • Savings in H2 and onwards All harvest and processing will be at
Slide 26: Services
SERVICES HEALTHY LIVING EFFICIENT SEA LICE MITIGATION Q/Q Q2 YTD Q2 YTD Margin Services provided: change 2024 2024 2023 2023 Operational EBIT [DKKm] 719% 12 38 1 10 • Fish transportation Operational EBIT/KG (NOK) 501% 0.87 1.37 0.14 0.43 • Treatments Operational EBIT margin 5% 6% 8% 1% 3% • Farming
Slide 27: Sales & Other
SALES & OTHER HEALTHY LIVING LESS VOLUMES FOR VAP (CONTRACTS) Q/Q Q2 YTD Q2 YTD Services provided: Volumes change 2024 2024 2023 2023 • Sales & Marketing Volume transferred to VAP (tgw) -48% 2,576 5,872 4,957 10,055 • Freight & Logistics • Value added processing (VAP) Margin Operational EBIT [DKKm]
Slide 28: Outlook
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONAL UPDATE OUTLOOK APPENDIX Loch-a-Laip in South Uist
Slide 29: Outlook: moderate growth expected
OUTLOOK HEALTHY LIVING MODERATE GROWTH EXPECTED Low single-digit growth expected in Europe TOTAL HARVEST 1,600 10% • Strong Q3 growth expected to diminish in Q4 2024 8% 1,400 6% • Moderate growth expected in 2025 1,200 4% 1,000 2% 800 0% General reduction in Americas driven by Chile 600 -2% -4% • Dr
Slide 30: Outlook: growing volume
OUTLOOK HEALTHY LIVING GROWING VOLUME Farming Contracts Harvest [gwt] Faroe Islands Scotland Total • For 2024, Bakkafrost has signed contracts for around 9% of 2024 plan 63,500 25,000 88,500 the total expected harvest volumes Harvest plan 2024 Fishmeal, Oil and Feed FO 20,336 18,620 • Following the
Slide 31: Appendix
SUMMARY OF Q2 2024 MARKETS & SALES FINANCE OPERATIONAL UPDATE OUTLOOK APPENDIX
Slide 32: Value chain insight – hatcheries for smolt
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT HEALTHY LIVING 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 500 500 395 Number of
Slide 33: 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 34: Bakkafrost's new segments
HEALTHY LIVING BAKKAFROST’S NEW SEGMENTS Previous segments New segments: • FOF • Freshwater FO • Freshwater SCT • Farming FO • Farming SCT • Services • Sales & Other 34
Slide 35: Segment overview
SEGMENT OVERVIEW HEALTHY LIVING VOLUMES, MARGINS AND KEY RATIOS FOF Freshwater Farming Services Sales & Other Q2 2024: Q2 2024: Q2 2024: Q2 2024: Q2 2024: Revenue = 687M Revenue = 183M Revenue = 746M Revenue = 206M Revenue = 2,582M Internal Feed sale = 32,624t Smolt transferred = 4.0M Harvest Volume
Slide 36: Development in supply and sold quantity by origin
HEALTHY LIVING DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Expected supply growth in 2024 Global Supply of Atlantic Salmon (head on gutted – HOG) 4% increase in Global supply* 2019 2020 2021 2022 2023E 2024E Norway 1,198 1,226 1,383 1,359 1,329 1,369 UK 171 160 179 145 137 158 6% increase
Slide 37: Q2 2024 prices
HEALTHY LIVING Q2 2024 PRICES Nasdaq spot price reflecting marginal pricing per week PRICE NORWAY (NOK/kg) 120 12 10 100 8 Statistics Norway (SSB) publish average price for all whole fish sold 6 per week 80 4 2 Incorporates bilateral contracts of variable duration 60 0 -2 40 -4 -6 20 -8 “Productio
Slide 38: Development per quarter
HEALTHY LIVING DEVELOPMENT PER QUARTER Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (mDKK) 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024 Revenue 1,639 1,684 1,867 1,940 2,050 1,670 1,859 1,562 2,206 2,067 Operational EBIT 418 587 325 376 565 353 269 356 710 388 Profit/Loss 405 845 249 -154 467 -123 219 392 4
Slide 39: Dividend
HEALTHY LIVING DIVIDEND Dividend per share in % of adj. EPS* Dividend 99% • On 30 April 2024, the AGM decided to pay out a dividend on 8.70 DKK per share for the year 2023 59% 53% 49% 49% 50% 50% 50% 50% 50% 46% • Dividend payment equals 50% of adjusted EPS 40% • Dividend of 515M DKK was paid out on
Slide 40: Bakkafrost – Overview
HEALTHY LIVING BAKKAFROST – OVERVIEW 40
Slide 41: Bakkafrost – Farming site overview
HEALTHY LIVING BAKKAFROST – FARMING SITE OVERVIEW 41
Slide 42: Our pillars and values
HEALTHY LIVING OUR PILLARS AND VALUES 42
Slide 43: 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 44: 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 FCR 2023 Employees ultimo 2023 ~1,700 ~1.09 Converting low food value proteins into high volume & value healthy proteins in the Faroes Revenue 2023 (DKK) ~7.1 bn 100% ASC certified in the Faroes 750
Slide 45: 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 46: Improvements of large-smolt quality, Faroes
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT HEALTHY LIVING 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) 46
Slide 47: Farming cycles getting shorter with large high-quality smolt
VALUE CHAIN INSIGHT HEALTHY LIVING 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 395g (2023) 47
Slide 48: ~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 49: Bakkafrost
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