Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q2 2021 Earnings Presentation

41 slides from Bakkafrost P/f's earnings presentation, Aug 24, 2021

  1. Slide 1: Q2 2021 Bakkafrost Group

    Q2 2021 BAKKAFROST GROUP Glyvrar 24 August 2021

  2. Slide 2: Disclaimer

    DISCLAIMER  This presentation includes statements regarding future  No representation or warranty (expressed or implied) is results, which are subject to risks and uncertainties. made as to, and no reliance should be placed on, the Consequently, actual results may differ significantly from fairnes

  3. Slide 3: Summary of Q2 2021

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Hvalba A23 Faroe Islands

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvest in the Faroe Islands (FO): 17,561 tgw in Q2 2021 (12,941 tgw in Q2 2020)  Harvest in Scotland (SCT): 10,634 tgw in Q2 2021 (7,937 tgw in Q2 2020) Operation  Feed sales of 27,272 tonnes in Q2 2021* (22,121 tonnes in Q2 2020*)  Raw material purchase of 59,290 tonnes in Q2 2021

  5. Slide 5: Summary of the quarter

    SUMMARY OF THE QUARTER IMPROVED OPERATIONAL EBIT DRIVEN BY FARMING SEGMENTS (DKK million) Q2 2021 Q2 2020 H1 2021 H1 2020 (FO)* Farming/VAP Operating revenue 1,618 1,134 2,793 2,389 15.34 26.93 (Q2 2020) (Q2 2021) Operational EBITDA 534 298 888 665 Operational EBIT 407 182 631 430 (SCT)* Farming Pro

  6. Slide 6: Markets and Sales

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Kunoyarnes, A12 Faroe Islands

  7. Slide 7: Markets & Sales

    MARKETS & SALES SALES TO NORTH AMERICA AND EASTERN EUROPE INCREASED – OTHER MARKETS DECREASED Sales & volume (FO only) Total sales of Q2 2021 Q2 2020 H1 2021 H1 2020 Western Europe salmon by markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 51% 73% 59% 64% 84% 72% 53% 79% 62

  8. Slide 8: Global Markets

    GLOBAL MARKETS HIGHER PRICES Y/Y AND Q/Q Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices increased y/y and q/q Q1 Q2 Q3 Q4 in Q2 2021 80,00 (NOK/KG) 70,00 59.36 6.7% 63.31 (Q2 2020) 3.96 (Q2 2021) y/y: 60,00 50,00 54.48 16.2% 63.31 (Q1 2021) 8.83 (Q2 2021) 40,00 q/q: 30,00 20,0

  9. Slide 9: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN (HEAD ON GUTTED – HOG)  Total quarterly harvest up 1% SUPPLY DEVELOPMENT Q2 2021 Q2 2020 Change %  Supply to the markets up 9% due to inventory Norway 287 271 5.9 % release in Chile UK 48 41 16.9 % Faroes 22 20 5.7 % Iceland 8 5 48.3 % Ireland 4

  10. Slide 10: Salmon Markets, Sold Quantity

    SALMON MARKETS, SOLD QUANTITY (HEAD ON GUTTED – HOG)  Moderate increase of 2% in the EU Salmon markets, sold quantity (head on gutted - HOG)  Compared to 7% harvest growth in Estimated volumes Q1 comparison Estimated volumes FY comparison Markets Q2 2021E Q2 2020 Volume % H1 2021E H1 2020 Volume %

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK  Expectation of drop in global harvest next quarters SUPPLY - TOTAL 1.400  Stable growth around 8% in Europe rest of 2021 20% 1.200  Drop expected in 1H 2022 1.000 10% 800 0%  Strong drop expected in Americas next quarters 600 -10%  Driven by Chile 400 -20% 200  Tempo

  12. Slide 12: Segment Information

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME INCREASED HARVEST IN FO AND SCT – INCREASED AVG. SMOLT SIZE Q2 Q2 H1 H1 Q2 2020 Q2 2021 Harvest Volumes tonnes [HOG] 2021 2020 2021 2020 Harvested volumes (tonnes HOG) FO - North Region 2,530 12,941 13,952 19,206 North: 14% FO: 12,941 36% 17,561 FO - West Region 13,135 0 15,

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE HIGHER OPERATIONAL EBIT AND HIGHER OPERATING REVENUE Faroe Islands (FO) Farming FO (DKK million) Q2 Q2 H1 H1 2021 2020 2021 2020 Operational EBIT (mDKK) Operating revenue 961 574 1,606 1,207 86 300% 343 Operational EBIT 343 86 486 289 (Q2 2020) (Q2 2021) Operational

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Margin - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg 30,00 25,00 20,00 FO: 9.79 NOK 16.73 NOK 26.52 NOK 15,00 (Q2 2020) (Q2 2021) 10,00 5,00 SCT: 5.36 NOK (Q2 2020) 1.39 NOK 6.75 NOK (Q2 2021) 0,00 Q2 FO Q2 SCT YTD FO YTD SCT 2021 2020 Frei

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) LOWER VOLUMES AND HIGHER COST OF RAW MATERIAL Q2 Q2 H1 H1 (DKK million) 2021 2020 2021 2020 Volumes (tonnes) Operating revenue 259 308 559 582 6,420 -23% 4,917 Operational EBIT 5 49 80 38 (Q2 2020) (Q2 2021) Operational EBIT margin 2% 16% 14% 6% Farming FO transferred to V

  17. Slide 17: Fishmeal, Oil and Feed (FOF)

    FISHMEAL, OIL AND FEED (FOF) LOWER RAW MATERIAL SOURCING AND HIGHER SALES OF FEED AND FISHMEAL Q2 Q2 H1 H1 (DKK million) 2021 2020 2021 2020 EBITDA (mDKK) Operating revenue 347 269 669 579 50 +14% 57 (Q2 2020) (Q2 2021) EBITDA 57 50 106 90 EBITDA margin 17% 19% 16% 16% EBITDA margin (%) Feed sold (t

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED SIGNIFICANT INCREASE IN INTERNAL FEED SALES Volumes of raw material purchase and feed sale [tonnes] Total feed sales increased (tonnes) 180.000 45.000 160.000 40.000 22,121 23% 27,272 140.000 35.000 Raw material (tonnes) (Q2 2020) (Q2 2021) 120.000 30.000 Feed sale (tonnes) 10

  19. Slide 19: Financials & ESG

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS HIGHER REVENUE AND OPERATIONAL EBIT, REDUCED PROFIT Revenue (mDKK) (DKK million) Q2 2021 Q2 2020 H1 2021 H1 2020 1,134 +43% 1,618 (Q2 2020) (Q2 2021) Operating revenue 1,618 1,134 2,793 2,389 Operational EBITDA 534 298 888 665 Operational EBIT 407 182 631 430 Operational EBIT (

  21. Slide 21: Operational EBIT and Adjusted Earnings per Share

    OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 459 415 408 407 335 331 339 303 252 268 268 231 248 Operational EBIT* 224 168 182 (mDKK) 103 89 2017 2018 2019 2020 2021 1,378 1,075 1,325 622 631 6,84 6,48 5,60 5,89 5,08 4,98 4,83 4,80 3,79 4,07 3,57 3,61 3,19 2,95 Adjusted EPS** 2,55 2,06 (DKK)

  22. Slide 22: Balance Sheet

    BALANCE SHEET Headlines (mDKK) (DKK million) Q2 2021 End 2020 Intangible assets: 4,495 Intangible assets 4,495 4,493 (Q2 2021) Property, plant and equipment 4,550 4,221 Right of use assets 315 353 PPE: 4,221 329 4,550 (End 2020) (Q2 2021) Financial assets 124 122 Long-term receivables 8 8 Biological

  23. Slide 23: Cash Flow

    CASH FLOW (DKK million) Q2 2021 Q2 2020 H1 2021 H1 2020 Cash flow, operations (mDKK) Cash flow from operations 532 111 669 477 111 532 (Q2 2020) (Q2 2021) Cash flow from investments -245 -196 -513 -297 Cash flow from financing -107 -262 -70 -1,034 Cash flow, investments (mDKK) Net change in cash 179

  24. Slide 24: Net Interest-Bearing Debt (NIBD)

    NET INTEREST-BEARING DEBT (NIBD) NIBD DECREASED DURING Q2 2021 NIBD was increased by: Development in NIBD in DKK millions  Net investments (mDKK 245)  Dividend (mDKK 216) NIBD was decreased by:  Cash flow, operating activities (mDKK -448)  Change in working capital (mDKK -49) NIBD and available

  25. Slide 25: Q2 ESG Update

    Q2 ESG UPDATE Published the 4th Sustainability Report, covering the entire Bakkafrost Group Purchased farming supply vessel M/S Bakkanes to strengthen the mechanical delousing capabilities in Scotland Havsbrún recognized with a “Best Aquaculture Practice” (BAP) certification BAKKAFROST / Q2 2021 PRE

  26. Slide 26: Outlook

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  27. Slide 27: Outlook

    OUTLOOK Market Contracts  Global harvest increased 1% in Q2 2021 vs Q2 2020  For 2021, Bakkafrost has signed contracts for around 31% of the total expected harvest volumes in the Faroe Islands  Global harvest in Q3 2021 expected to decrease 4% and Scotland  Global harvest in H2 2021 expected to

  28. Slide 28: Appendix

    SUMMARY OF Q2 2021 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Quarry Point, Scotland

  29. Slide 29: Land Based Farming Expansion to 14 kt

    LAND BASED FARMING EXPANSION TO 14 KT S16 Glyvradalur capacity expansion in progress S24 Strond capacity expansion finalised  In operation in 2023  Full operation 2021 ~ 9m smolt á 500g 1.9kt ~ 3.8m smolt á 500g  10 unrelated departments, building of 320m x 80m S03 Norðtoftir capacity expansion i

  30. Slide 30: Scotland Site Overview

    SCOTLAND SITE OVERVIEW 7,742 TONNES CONSENT INCREASE SINCE THE ACQUISITION Total consent has increased by 11.6% (7,742 tonnes) since the acquisition in Q4 2019 Total consent is 74,765 tonnes in 44 farming sites: North: 24 sites / 44,415 tonnes consent  Uist, 5 sites  Sky & mainland, 6 sites  Loch

  31. Slide 31: Scotland – Strategic Rationale

    SCOTLAND – STRATEGIC RATIONALE 1. Provides access to the attractive Scottish farming region  Niche and differentiated region  High quality salmon from Scottish Provenance priced at a premium 2. Creating a differentiated global leader in premium salmon  Exposure to two geographies, Faroe Islands a

  32. Slide 32: Scotland – Strategic Rationale

    SCOTLAND – STRATEGIC RATIONALE 3. Potential for significant improvement  Scottish Salmon profitability to improve over a five-year period through transfer of best practices  Synergies  Targeted investment programmes 4. Financially attractive  Acquiring the business at a reasonable value, multipl

  33. Slide 33: Faroe Islands - Growing to 100kt

    FAROE ISLANDS - GROWING TO 100KT SUPERIOR BIOLOGY COMBINED WITH STATE-OF-THE-ART INFRASTRUCTURE FISHMEAL, OIL AND FEED BROODSTOCK SMOLT SEA WATER PROCESSING SALES/MARKETING Equivalent to 100k (tgw) None 12 million @ 200 grams 21 farming sites/17 fjords 130k primary (tgw) Central sales Faroes CAPACIT

  34. Slide 34: Development in Supply and Sold Quantity by Origin

    DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - HOG) Expected supply growth in 2021  6% growth in Global supply 2018 2019 2020 2021E 2022E Norway 1,129 1,198 1,223 1,331 1,372 UK 137 171 160 188 181  11% growth in European supply Ireland 13 14 1

  35. Slide 35: Q2 2021 Market Environment

    Q2 2021 MARKET ENVIRONMENT PRICE NORWAY  Increased market prices compared to Q2 2021 in spite of 7,0 6,4 6,6 6,3 60,0 6,0 5,6 5,2 50,0  Strong supply growth 5,0 5,0 4,5 5,1 4,0 40,0  Continued but diminished impact from Covid-19 4,0 EUR DKK 30,0 3,0  Nasdaq Norway price EUR 6.3 in Q2 2021 2,0 20

  36. Slide 36: Development per Quarter

    DEVELOPMENT PER QUARTER Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (mDKK) 2019 2019 2019 2020 2020 2020 2020 2021 2021 Revenue 947 996 1,605 1,255 1,134 1,123 1,183 1,176 1,618 Operational EBIT 339 303 415 248 182 103 89 224 407 Profit/Loss 189 181 220 -148 472 177 -38 408 428 Harvest FO (tgw) 12,609 12,938 17,930

  37. Slide 37: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • The dividend for 2020 of DKK 3.65 (NOK 4,96) per 99% share was paid out on 30 April 2021. • Dividend payment equals 59% of adjusted EPS. 59% 49%* 49% 50% 50% 50% 46% 40% Dividend policy  Competitive return through: 19%  Dividends 0%  Increa

  38. Slide 38: Page 38

    BAKKAFROST / Q2 2021 PRESENTATION Page 38

  39. Slide 39: Facilities and locations

    Facilities and locations BAKKAFROST / Q2 2021 PRESENTATION Page 39

  40. Slide 40: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2 TAXES  Total percent of GDP: 41.8% (2016)  53,399 inhabitants (July 2021)  Corporate tax: 18%  Farming revenue tax: 5.0% of revenues after 1 January 2019  Home rule – within the Kingdom of Denmark The tax is applied as follows (IMP ~ International market p

  41. Slide 41: Page 41

    BAKKAFROST / Q2 2021 PRESENTATION Page 41

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