Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q4 2018 Earnings Presentation

36 slides from Bakkafrost P/f's earnings presentation, Feb 19, 2019

  1. Slide 1: Q4 2018 Bakkafrost Group

    Q4 2018 BAKKAFROST GROUP Oslo 19 February 2019

  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 Q4 2018

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvested 12,234 tgw in Q4 2018 (11,470 tgw in Q4 2017) Operation  Feed sales of 24,711 tonnes in Q4 2018* (18,955 tonnes in Q4 2017*)  Raw material purchase of 46,478 tonnes in Q4 2018 (50,852 tonnes in Q4 2017)  Revenues of DKK 750 million in Q4 2018 (DKK 906 million in Q4 2017) Re

  5. Slide 5: Summary of the Quarter

    SUMMARY OF THE QUARTER Operational EBIT for the Farming segment Q4 Q4 decreased due to lower achieved prices. (DKK million) 2018 2017 2018 2017 Positive operational EBIT for the VAP Operating revenue 750 906 3,177 3,770 segment, but lower EBITDA margin for the Operational EBITDA 282 378 1,274 1,561

  6. Slide 6: Markets and Sales

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  7. Slide 7: Markets & Sales

    MARKETS & SALES Sales distribution changed in Q4 2018, compared with Total sales of salmon Q4 Q4 Q4 2017 and the previous quarter, especially sales of by markets 2018 2017 2018 2017 fresh salmon. Sales to Eastern Europe decreased EU 44% 45% 31% 45% significantly, and all other markets increased in t

  8. Slide 8: Global Markets

    GLOBAL MARKETS Higher prices in Q4 2018 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Q1 Q2 Q3 Q4  Prices increased 12%, compared with Q4-2017  y/y by 6.20 NOK/kg ~12% - from NOK 50.16 to NOK 56.36  q/q by 1.05 NOK/kg ~2% - from NOK 55.31 to NOK 56.36 Increased global supply in Q4 2018  4.7%

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

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 5% global supply growth in Q4 2018 SUPPLY DEVELOPMENT Q4 Q4 Change (HOG ‐ 1,000 tonnes) 2018 2017 % 1% growth in European harvest Norway 321.0 321.8 -0.3 %  Low average harvest weights in Norway UK 40.6 40.4 0.4 % Ireland 3.9 3.7 4.9 %  Sea lice

  10. Slide 10: Salmon Markets, Sold Quantity (HOG)

    SALMON MARKETS, SOLD QUANTITY (HOG) Strong momentum in most markets Salmon markets, sold quantity (head on gutted - HOG) EU growth 2% higher than European Estimated volumes Q4 comparison Estimated volumes FY comparison Markets Q4 2018E Q4 2017 Volume % FY 2018E FY 2017 Volume % harvest EU 275,000 26

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK 4 - 6% supply growth expected in 2019 SUPPLY - TOTAL 700 7%  Europe – Increasing growth 600 6%  Uncertainty linked to biological performance in Norway 500 5%  Strong growth in Scotland – recovery to 2017 harvest levels 400 4%  Americas – Limited growth 300 3%  Chile ex

  12. Slide 12: Segment Information

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX Bakkafrost’s hatchery at Viðareiði viewed from the top of the mountain

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Harvested volumes Harvest Volumes Q4 Q4 tonnes [HOG] 2018 2017 2018 2017  Harvested volumes increased by 7% in Q4 2018, compared with Q4 2017 North Region 3,996 0 25,889 24,364  1,500 tonnes moved to 2019, increases West Region 8,238 11,470 18,702 30,251 expected harvest i

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE A challenging quarter Q4 Q4 (DKK million) 2018 2017 2018 2017  Operational EBIT decreased from DKK 229 million in Q4 2017 to DKK 204 million in Q4 Operating revenue 682 577 2,568 2,987 2018 Operational EBIT 204 229 966 1,308  Operational EBIT margin was 30% in Q4

  15. Slide 15: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE Operation Margin - EBIT per kg total harvested quantity [NOK/kg]  Farming operational EBIT decreased by NOK 4.20 per kg from NOK 25.76 in Q4 2017 to 35.00 NOK 21.56 in Q4 2018 30.00 30.02  Operational EBIT per kg in the North Region 25.00 27.89 25.76 was NOK 14.90

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) VAP operational EBIT margin Q4 Q4 (DKK million) 2018 2017 2018 2017  Same trend as in the previous quarter with substantial Operating revenue 109 288 365 999 decrease in revenue by 62% to DKK 109 million in Q4 2018, from DKK 288 million in Q4 2017 Operational EBIT 3 37 -2

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

    FISHMEAL, OIL AND FEED (FOF) Reduced EBITDA margin Fishmeal, Oil and Feed  EBITDA of DKK 60 million in Q4 2018, Q4 Q4 compared with DKK 94 million in Q4 2017 (DKK million) 2018 2017 2018 2017 Operating revenue 288 367 1,269 1,303  EBITDA margin of 21.0% in Q4 2018, compared with 25.5% in Q4 2017 E

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED Increase in feed sales Volumes of raw material purchase and feed sale [tonnes]  Quantity of feed sold was 24,711 tonnes in Q4 2018, 35,000 175,000 Raw material (tonnes) compared to 18,955 tonnes in Q4 2017 30,000 150,000 Feed sale (tonnes) 25,000 125,000  External feed sales

  19. Slide 19: Group Financials

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX Bakkafrost in Glyvrar at night

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS  Revenue on lower level in Q4 2018, due to Q4 Q4 lower prices and lower external sales in FOF (DKK million) 2018 2017 2018 2017 segment. Revenue in Q4 2018 amounted to Operating revenue 750 906 3,177 3,770 DKK 750 million, compared to DKK 906 million in Q4 2017. Operational EB

  21. Slide 21: Operational EBIT and Earnings per Share

    OPERATIONAL EBIT* AND EARNINGS PER SHARE 459 408 350 335 331 303 307 257 254 255 252 268 235 231 206 Operational EBIT* 168 (DKK million) 2015 2016 2017 2018 1,001 1,165 1,378 1,075 11.44 8.19 6.56 7.13 6.96 7.32 5.60 Earnings per share 4.39 4.61 3.91 (DKK) 3.44 2.71 1.63 1.16 -0.45 -0.14 2015 2016 2

  22. Slide 22: Balance Sheet

    BALANCE SHEET  Intangible assets increased by DKK 13 million during the year and amounts to DKK 390 million at the end of Q4 (DKK million) 2018 2017 2018 Intangible assets 390 377 Property, plant and equipment 2,884 2,570  Investments in PPE of DKK 147 million in Q4 2018 and PPE amounts to DKK 2.9

  23. Slide 23: Cash Flow

    CASH FLOW  Cash flow from operations amounted to DKK Q4 Q4 -59 million in Q4 2018, compared to DKK 261 (DKK million) 2018 2017 2018 2017 million in Q4 2017 Cash flow from operations -59 261 913 1,458  Cash flow from investments amounted to Cash flow from investments -147 -169 -531 -636 DKK -147 mi

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

    NET INTEREST-BEARING DEBT (NIBD) Net interest-bearing debt Development in NIBD in DKK millions  Cash flow from operating activities decreased the NIBD with DKK 256 million in Q4 2018 116 256  Net investments increased the NIBD with 202 DKK 147 million in Q4 2018 147  Taxes paid increased the NIBD

  25. Slide 25: Outlook

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  26. Slide 26: Outlook

    OUTLOOK Market VAP  Global supply in Q4 2018 increased around 5%, compared  Contracted around 33% of expected harvest for 2019 to Q4 2017  Bakkafrost’s long-term strategy is to sell 40-50% of  Global harvest in Q1 2019 is expected to increase 5%, the harvested volumes as VAP products at fixed pr

  27. Slide 27: Appendix

     SUMMARY OF Q4 2018  MARKETS AND SALES  SEGMENT INFORMATION  GROUP FINANCIALS  OUTLOOK  APPENDIX

  28. Slide 28: Development in Harvested and Sold Quantity by Origin

    DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - HOG) 2015 2016 2017 2018E 2019E  5.4% supply growth expected in 2018 Norway 1,111 1,054 1,087 1,128 1,195 UK 150 142 159 138 160  1% in Europe Ireland 14 14 15 13 15 Faroes 68 70 72 65 67  16%

  29. Slide 29: Q4 2018 Market Environment

    Q4 2018 MARKET ENVIRONMENT  Increased prices, compared to Q4 2017 PRICE NORWAY 8.0 7.4 60.0 7.3  Nasdaq Norway price EUR 5.8 in Q4 2018 7.0 7.2 7.2 6.2 50.0 6.0 5.7 5.8  12% up vs. Q4 2017; 1% up vs. Q3 2018 6.0 5.1 40.0 5.0  Low average harvest weight in Norway EUR DKK 4.0 30.0 3.0  11% increa

  30. Slide 30: Superior Biology Combined with State of the Art Infrastructure

    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 annual harvest @ 55k (tgw) @100g smolt/

  31. Slide 31: Development per Quarter Q1 2015 – Q4 2018

    DEVELOPMENT PER QUARTER Q1 2015 – Q4 2018 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 (mDKK) 2018 2018 2018 2018 2017 2017 2017 2017 2016 2016 2016 2016 2015 2015 2015 2015 Revenue 750 622 954 851 906 804 1,206 854 868 640 790 905 760 677 800 613 Operational EBIT 231 168 408 268 331 252 459 335

  32. Slide 32: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • Dividend for 2018 of DKK 8.25 (NOK 10.70****) 99% per share will be paid out in Q2 2019 49%** 49% 50% 50% 50% 49% 46% Dividend policy 40%  Competitive return through: 19%  Dividends  Increase in the value of the equity  Generally, Bakkafro

  33. Slide 33: Page 33

    BAKKAFROST / Q4 2018 PRESENTATION Page 33

  34. Slide 34: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  51,371 inhabitants (Jan 2019)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK) Key sectors (% of wage earners, 2017)  Service/public admin.: ~36%  Private service: ~33%  Construction: ~16%  Fish & aquacul

  35. Slide 35: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share development Traded daily Ranking Holding Percentage Name Citizenship 12 months development 1 4.594.437 9,40 JACOBSEN ODDVØR Faroe Islands NOK/share 2 4.491.217 9,19 JACOBSEN REGIN Faroe Islands 3 3.765.640 7,71 FOLKETRYGDFONDET Norway 4 2.528.383 5,

  36. Slide 36: Page 36

    BAKKAFROST / Q4 2018 PRESENTATION Page 36

Bakkafrost — Q4 2018 Earnings Presentation on 6ix