Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q4 2023 Earnings Presentation
48 slides from Bakkafrost P/f's earnings presentation, Feb 20, 2024
Slide 1: Q4 2023 Bakkafrost Group
Q4 2023 BAKKAFROST GROUP Oslo 20 February 2024
Slide 2: Summary of Q4 2023
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX Hov, Faroe Islands
Slide 3: Highlights Q4 23 (Q4 22)
HEALTHY LIVING HIGHLIGHTS Q4 23 (Q4 22) Revenues and Revenue of DKK 1,562 million (DKK 1,940 million) Operational EBIT Operational EBIT* of DKK 356 million (DKK 376 million) Harvest in the Faroe Islands: 16,005 tgw (19,276 tgw) Harvest in Scotland: 1,062 tgw (5,198 tgw) Operation Feed sale
Slide 4: Markets & Sales
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX
Slide 5: Global Markets: Average spot prices increased in Q4 2023
GLOBAL MARKETS HEALTHY LIVING HIGHER PRICES…IN NOK Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices increased in Q4 2023 (and 2024) Q1 Q2 Q3 Q4 130,00 110,00 (NOK/KG) 90,00 73.92 12% 83.02 y/y: (Q4 2022) 9.09 (Q4 2023) 70,00 78.71 5.5% 83.02 q/q: (Q3 2023) 4.31 (Q4 2023) 50,00 3
Slide 6: Salmon Markets, Sold Quantity
HEALTHY LIVING SALMON MARKETS, SOLD QUANTITY EU/UK: Drop in line with European supply Salmon markets, sold quantity (head on gutted weight) Salmon markets, sold quantity (head on gutted - HOG) Margin pressure for processing industry Estimated volumes Q4 comparison Estimated volumes Comparison Mark
Slide 7: Global Harvested Volume Reduced 2%
HEALTHY LIVING GLOBAL HARVESTED VOLUME REDUCED 2% 2% drop in global harvest – flat supply to the markets Supply Development Q4 2023 Q4 2022 Change % Norway 391 404 -3,4 % UK 26 32 -17,7 % 3% drop in European harvest volumes Faroes 32 27 17,9 % Norway: Challenging biological situation and cold temp
Slide 8: Financial Update
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX
Slide 9: Group Profit and Loss
GROUP PROFIT AND LOSS HEALTHY LIVING LOWER REVENUE AND OPERATIONAL EBIT Q4 2022 Q4 2023 (DKK million) Q4 23 YTD 23 Q4 22 YTD 22 Revenue (mDKK) Operating revenue 1.562 7.141 1.940 7.130 1,940 -19% 1,562 Operational EBITDA* 536 2.181 504 2.243 Operational EBIT* 356 1.544 376 1.705 Operational EBIT (mD
Slide 10: Operational EBIT and Adjusted Earnings per Share
HEALTHY LIVING OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 587 565 415 407 418 376 353 356 339 325 303 268 248 269 224 Operational EBIT* 182 (mDKK) 120 103 89 71 2019 2020 2021 2022 2023 1,325 622 821 1,705 1,544 7,19 6,77 5,89 4,98 4,83 4,80 4,82 4,07 4,00 3,79 3,56 3,19 3,43 Adjusted EPS**
Slide 11: Balance Sheet
HEALTHY LIVING BALANCE SHEET Headlines (mDKK) (DKK million) Q4 23 End 2022 End 2022 End 2023 Intangible assets 4,509 4,509 Property, plant and equipment 6,220 5,647 PPE: 5,647 573 6,220 Right of use assets 413 439 Financial assets 289 234 Biological assets: 2,938* 397 3,336* Deferred tax assets 512
Slide 12: Cash Flow
HEALTHY LIVING CASH FLOW Q4 2022 Q4 2023 (DKK million) Q4 23 YTD 23 Q4 22 YTD 22 Cash flow, operations (mDKK) 382 -494 -112 Cash flow from operations -112 1,023 382 1,202 Cash flow from investments -302 -1,044 -570 -1,255 Cash flow, investments (mDKK) -570 267 -302 Cash flow from financing 456 -287
Slide 13: NIBD Increased During Q4 2023
NET INTEREST-BEARING DEBT (NIBD) HEALTHY LIVING NIBD INCREASED DURING Q4 2023 NIBD was increased by: Development in NIBD in DKK millions • Net investments (mDKK -303) • Change in working capital (mDKK -399) NIBD was decreased by: • Cash flow, operating activities (mDKK 214) Financing end Q4 2023 • N
Slide 14: Q4 2023 ESG Update
Q4 2023 ESG UPDATE HEALTHY LIVING “COLLABORATION” IS A KEY WORD FOR REDUCING GHG EMISSIONS Bakkafrost Supplier Day, Scotland: Bakkafrost salmon on world’s first transatlantic test flight with • Collaborate to reduce Greenhous Gas Emmission 100% Sustainable Air Fuel (SAF) • 42 suppliers attended Scot
Slide 15: Operational Update
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX Nes, Faroe Islands
Slide 16: Performance per Region Q4 2023
PERFORMANCE PER REGION HEALTHY LIVING STRONG PERFORMANCE IN THE FAROES – WEAK BUT IMPROVING IN SCOTLAND Q4 2023 Q4 2022 2023 2022 Faroe Faroe Faroe Faroe DKK million Group Scotland Islands* Scotland Islands* Group Scotland Islands* Scotland Islands* Total operating revenues 1,562 84 1,478 298 1,641
Slide 17: FOF (Fishmeal, Oil and Feed)
FOF (FISHMEAL, OIL AND FEED) HEALTHY LIVING EXCEPTIONALLY HIGH SOURCING IN ALL QUARTERS OF 2023 Q/Q Raw material sourcing vs. Feed sale (tonnes) Volumes Q4 23 2023 Q4 22 2022 change 200.000 50.000 Marine raw material sourced +16% 53,552 467,037 46,051 297,814 40.000 150.000 Feed sold (tonnes)* +21%
Slide 18: Freshwater – Faroe Islands
FRESHWATER – FAROE ISLANDS HEALTHY LIVING BENEFITING FROM LARGE CAPACITY IN HATCHERIES MADE AVAILABLE IN 2023 Q/Q Volumes Q4 23 YTD 23 Q4 22 YTD 22 change Good capacity in hatcheries Released number of smolt (million) +4% 5.2 14.2 5.0 14.4 Strond Glyvradal Norðtoftir Viðareiði Average weight (g) +23
Slide 19: Freshwater – Faroe Islands: New Hatchery at Skálavík
FRESHWATER – FAROE ISLANDS HEALTHY LIVING CONTRACT SIGNED FOR 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 early st
Slide 20: Freshwater – Scotland
FRESHWATER – SCOTLAND HEALTHY LIVING APPLECROSS RAMPING UP – SELF-SUFFICIENT IN 2024 Q/Q Volumes Q4 23 YTD 23 Q4 22 YTD 22 change Applecross hatchery: Released number of smolt (million) -52% 1.7 9.0 3.5 11.0 • Ramping up production Average weight (g) -2% 113 117 115 107 • Close to all smolt (9.1 mil
Slide 21: Farming – Faroe Islands
FARMING – FAROE ISLANDS HEALTHY LIVING POSTPONED HARVEST TO OPTIMISE VALUE Q/Q Volumes Q4 23 YTD 23 Q4 22 YTD 22 change Good biological development Total harvest volume (tonnes HOG) -17% 16,005 52,408 19,276 66,686 • Building biomass and larger fish in the water Average harvest weight (kg) 0% 4.7 4.
Slide 22: Farming – Scotland
FARMING – SCOTLAND HEALTHY LIVING IMPROVED BIOLOGY FROM MID-SEPTEMBER - POSTPONED HARVEST TO OPTIMISE VALUE Q/Q Comments Volumes change Q4 23 YTD 23 Q4 22 YTD 22 Total harvest volume (tonnes HOG) -80% 1,062 20,598 5,198 23,917 • Significantly improved biology since mid-September Average harvest weig
Slide 23: Services
SERVICES HEALTHY LIVING EFFICIENT SEA LICE MITIGATION Q/Q Margin Q4 23 YTD 23 Q4 22 YTD 22 change Services provided: Operational EBIT (NOK/kg) +1,867% 1.18 0.93 0.06 0.22 • Fish transportation Operational EBIT margin +6% 7% 6% 1% 2% • Treatments • Farming Support Sea Lice – Faroe Islands 1,10 • Harv
Slide 24: Sales & Other
SALES & OTHER HEALTHY LIVING LESS VOLUMES FOR VAP - GROWING SALE TO THE US MARKET Q/Q Services provided: Volumes Q4 23 YTD 23 Q4 22 YTD 22 change • Sales & Marketing Volume transferred to VAP (tgw) -17% 5,735 22,787 6,944 26,401 • Freight & Logistics • Value added processing (VAP) Margin Operational
Slide 25: Outlook
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX Edinburgh,Scotland
Slide 26: Outlook: Supply Volume Coming Down
OUTLOOK HEALTHY LIVING SUPPLY VOLUME COMMING DOWN 2% reduction in global harvest in Q4 2023 TOTAL HARVEST 1.600 10% • Europe far below expectations 1.400 8% (biological challenges in Norway and low feed sales) 6% 1.200 4% 4% 1.000 No supply growth in H1 2024* 2% 800 0% 0% • 6% reduction in Americas
Slide 27: 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 2023 52,408 20,598 73,006 the total expected harvest volumes 2024 plan 66,000 25,000 91,000 Harvest plan 2024 Fishmeal, Oil and Feed 18.480
Slide 28: Appendix
SUMMARY OF Q4 2023 MARKETS & SALES FINANCIAL UPDATE OPERATIONAL UPDATE OUTLOOK APPENDIX
Slide 29: 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 30: 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 31: 2024-2028 Capex Plan
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 52,408t 20,598t 1.600 14,00 1.400 12,00 2024 66,000t 25,000t Investments per kg (DK
Slide 32: 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 32
Slide 33: Segment Overview
SEGMENT OVERVIEW HEALTHY LIVING VOLUMES, MARGINS AND KEY RATIOS FOF Freshwater Farming Services Sales & Other Q4 2023 Volumes: Q4 2023 Volumes: Q4 2023 Volumes: Q4 2023 Volumes: Q4 2023 Volumes: Revenue = 966M Revenue = 187M Revenue = 909M Revenue = 198M Revenue = 2,355M Internal Feed sale = 38,734t
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 4% increase in Global supply* Norway 1,198 1,226 1,383 1,359 1,329 1,376 UK 171 160 179 145 138 151 Ireland 14 14
Slide 35: Q4 2023 Market Environment
HEALTHY LIVING Q4 2023 MARKET ENVIRONMENT Nasdaq Norway spot price flat PRICE NORWAY (Nasdaq Norway) 12,0 European harvest volume down 2.5% 10,5 9,7 10,0 8,9 8,4 8,0 7,2 7,3 7,1 6,7 Urner Barry East Coast price down 16% 6,1 EUR 6,0 American harvest volumes up 1% 4,0 2,0 Signs of consumer price s
Slide 36: Q4 2023 – Spot and Contract Pricing Aligned
HEALTHY LIVING Q4 2023 – SPOT AND CONTRACT PRICING ALIGNED Nasdaq spot price reflecting marginal pricing per week PRICE NORWAY (NOK) 120 10 8 100 6 Statistics Norway (SSB) publish average price for all whole 80 4 fish sold per week 2 60 Incorporates bilateral contracts of variable duration 0 40 -2
Slide 37: Development per Quarter
HEALTHY LIVING DEVELOPMENT PER QUARTER Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (mDKK) 2021 2022 2022 2022 2022 2023 2023 2023 2023 Revenue 1,488 1,639 1,684 1,867 1,940 2,050 1,670 1,859 1,562 Operational EBIT 120 418 587 325 376 565 353 269 356 Profit/Loss -3 405 845 249 -154 467 -123 219 392 Harvest FO (tgw) 2
Slide 38: Dividend
HEALTHY LIVING DIVIDEND Dividend per share in % of adj. EPS* Dividend 99% • The Board of Directors propose to the AGM, that the dividend for 2023 shall be 8.70 DKK per share, corresponding to 50% of adjusted EPS 59% 53% 49% 49% 50% 50% 50% 50% 50% 46% • The AGM will be held on 30 April 2024 40% 19%
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: 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) 45
Slide 46: 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) 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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