Slide 1: SalMar ASA Q3 2022 Presentation
SalMar ASA Q3 2022 Presentation 10 November 2022 CEO Frode Arntsen CFO Ulrik Steinvik
Slide 2: Frode Arntsen
Frode Arntsen CEO in SalMar from 24th of October 2022 • Joined SalMar in 2017 as COO for Sales and Industry. • Experience from the seafood industry since 2000 and has previously held management positions in Lerøy Midnor, HitraMat and Lerøy Midt. • Background from the Norwegian Armed Forces and has e
Slide 3: Agenda
Agenda • Highlights • Operational Update • Financial Update • Strategic Update • Outlook
Slide 4: Highlights Q3 2022
Harvest volume Highlights Q3 2022 (1,000 tons gw) Solid results due to strong operational performance • Total Group operational EBIT 1,313 MNOK and 1,309 MNOK from Norway – Continued solid results from farming segments in Norway despite cost inflation – Increased profitability within Sales & Industr
Slide 5: Operational Update
OPERATIONAL UPDATE (9 SALMAR
Slide 6: Farming Central Norway
Farming Central Norway KEY RESULTS Record high harvest volume Q3 2022 Q3 2021 YTD 2022 YTD 2021 • Cost level increased QoQ due to cost inflation on feed Operating income (NOKm) 2,540 1,940 6,574 4,451 Operational EBIT (NOKm) 977 597 3,115 1,503 • Continued strong operational performance Operational
Slide 7: Farming Northern Norway
Farming Northern Norway KEY RESULTS Continued solid performance Q3 2022 Q3 2021 YTD 2022 YTD 2021 • Cost level increased QoQ due to cost inflation on feed Operating income (NOKm) 946 785 3,126 2,320 Operational EBIT (NOKm) 428 272 1,749 813 • Autumn 2020 accounted for 40% of the volume in the period
Slide 8: Sales & Industry
Sales & Industry KEY RESULTS Profitability from fixed prices contracts improved and strong Q3 2022 Q3 2021 YTD 2022 YTD 2021 capacity utilization Operating income (NOKm) 4,734 3,929 13,126 10,031 Operational EBIT (NOKm) -34 -28 -1,186 -46 • Improved spot price achievement and increased profitability
Slide 9: Icelandic Salmon
Icelandic Salmon KEY RESULTS Reduced margins driven by reduction in spot price level Q3 2022 Q3 2021 YTD 2022 YTD 2021 • Continued trend on good price achievement in period compared to spot price Operating income (NOKm) 340 202 1,056 562 Operational EBIT (NOKm) 39 5 268 37 – Market prices lower comp
Slide 10: SalMar Aker Ocean
SalMar Aker Ocean KEY RESULTS Upgrade of Ocean Farm 1 progressing according to plan Q3 2022 Q3 2021 YTD 2022 YTD 2021 • Maintenance and upgrade of Ocean Farm 1 progressing according to plan Operating income (NOKm) - - - - Operational EBIT (NOKm) -34 -34 -107 -107 – Ocean Farm 1 currently at Aker Sol
Slide 11: Scottish Sea Farms
Scottish Sea Farms1 KEY RESULTS Results affected by biological challenges Q3 2022 Q3 2021 YTD 2022 YTD 2021 • Results negatively impacted by environmental issues related to micro-jellyfish Operating income (NOKm) 972 773 2,495 1,963 and gill health Operational EBIT (NOKm) 47 80 342 273 Operational E
Slide 12: Ulrik Steinvik
Ulrik Steinvik CFO in SalMar from 27th of October 2022 • Joined SalMar in 2006 • Held several leading positions in the executive management where he has been Director of Business Improvement the latest years • Before Steinvik joined SalMar, he served with Arthur Andersen Norway and Ernst & Young fro
Slide 13: Financial Update
FINANCIAL UPDATE
Slide 14: Operational EBIT deviation analysis (qoq)
Operational EBIT deviation analysis (qoq) Norway* EBIT per kg (NOK) Δ QoQ -6.05 • Net sales price decreased due to lower spot prices, reduction better than spot price reduction due to improved profitability on NOK per kg contracts and lower contract share • Improved capacity utilization within sales
Slide 15: Group profit and loss
Group profit and loss NOK million Q3 2022 Q3 2021 Δ% YTD 2022 YTD 2021 Δ% Q3 2022 vs. Q3 2021 Total operating revenues 4,898 4,019 22 % 13,753 10,371 33 % EBITDA 1,550 947 64 % 4,153 2,628 58 % • Revenue and operational EBIT increased following higher Depreciations and write-downs 237 199 695 592 sa
Slide 16: Group balance sheet
Group balance sheet Assets Equity ratio • Ongoing investments in the value chain progressing according to plan • Higher standing biomass QoQ and lower YoY • Net Interest-bearing debt incl. lease liabilities decreased with NOK 470 million during the quarter 52.5% – NIBD incl. lease liabilities at NOK
Slide 17: Movement in net interest-bearing debt
Movement in net interest-bearing debt • Net investments2 at NOK 833 million – Smolt and hatchery NOK 188 million – Farming1 NOK 289 million - 470 – Sales & Industry NOK 30 million – Icelandic Salmon2 NOK 193 million – SalMar Aker Ocean NOK 130 million – Other NOK 4 million • NIBD incl. leasing decre
Slide 18: Proposed new tax from 2023 in Norway
Proposed new tax from 2023 in Norway • Proposal announced by Norwegian Government 28th of September 2022 – Additional tax on aquaculture of 40% for volumes above 4-5,000 tonnes MAB, up from 22 per cent to 62 per cent – Cash flow based taxation model with taxation subject commercial farming assets in
Slide 19: Strategic Update
STRATEGIC UPDATE — 9 SALMAR
Slide 20: The principles of the transaction
The principles of the transaction1 NRS acquires SalmoNor and is merged with SalMar, Voluntary offer for NTS and 51.28% stake in Arctic Fish to be sold Before the transaction Post transaction Subsidiary Joint venture/associate Significant holding 1) For further details see separate stock exchange not
Slide 21: Clearance received from competition authorities
Clearance received from competition authorities Transactions completed in November 2022 • Consideration payable in voluntary offer for NTS and merger with NRS1 – The voluntary offer for NTS is NOK 26.86482 in cash plus 0.143241 SalMar shares – The merger of NRS is NOK 52.84 in cash plus 0.303933 Sal
Slide 22: Overlapping industrial interest across the value chain
Overlapping industrial interest across the value chain Potential for significant synergies across the value chain in all regions GENETICS & SMOLT FARMING HARVESTING & VAP1 SALES 1) Value added processing
Slide 23: Strong strategic and operational rationale
Strong strategic and operational rationale Catalyst for further sustainable growth in the local communities where both parties operate • SalMar has consistently delivered stronger margins – Over time new assets can perform at the same level as SalMar – Expect gradual improvements in line with the pr
Slide 24: Outlook
OUTLOOK
Slide 25: SalMar has a solid track record for growth
SalMar has a solid track record for growth Significant volume growth in 2023 with further growth potential in all regions +30% • SalMar has several growth alternatives and untapped potential within existing licenses in all regions – Untapped potential in coastal operations in Norway, Iceland and UK
Slide 26: Outlook
Outlook • Offer for NTS and merger with NRS approved in Q4 2022 – Strong strategic and operational rationale – Mandatory offer for NTS will be made in accordance with applicable legislation • Continued strong strategic and operational focus with dedicated employees and strong corporate culture set f
Slide 27: Thank you for your attention
THANK YOU FOR YOUR ATTENTION Financial Calendar: Q4 2022 presentation – 22 February 2023 Annual Report 2022 – 28 April 2023 Q1 2023 presentation – 11 May 2023 Annual General Meeting – 8 June 2023 Q2 2023 presentation – 24 August 2023 Q3 2023 presentation – 9 November 2023 Investor contact: Håkon Hus
Slide 28: Forward looking statements
Forward looking statements The statements contained in this presentation may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect current expectations and assumptions as to future events and circumstances that may not prove
Slide 29: Appendix
Appendix Proposed M&A For further details see separate stock exchange notices, voluntary offer document and merger plan
Slide 30: Financial reporting structure after completion of the transactions
Financial reporting structure after completion of the transactions Frøy to be included as a new segment • Activities within SalmoNor and NRS to be reported into respective similar segments from SalMar in Norway Fish Farming Fish Farming Overhead/ Sales & Industry Icelandic Salmon SalMar Aker Ocean F
Slide 31: One of the largest salmon farmers in Norway
One of the largest salmon farmers in Norway Combined potential over 280,000 tonnes1 Northern MAB 38,251 tonnes • Both parties have long-standing presence in, and considerable Norway Production Areas: competence from, salmon farming in Northern Norway and 10, 11, 12 and 13 Central Norway MAB 36,085 t
Slide 32: Leading and pioneering the way offshore
Leading and pioneering the way offshore Ambition for 150,000 tonnes1 within 2030 • The combination will be in the forefront for the most developed offshore farming initiatives in the world • Significant growth opportunities to utilize the potential offshore • Two units in operation with Ocean Farm 1
Slide 33: Strong potential for further sustainable growth on Iceland
Strong potential for further sustainable growth on Iceland Potential over 25,000 tonnes1 • Arnarlax have operations in the West Fjords of Iceland Volume 2022E • Combined potential over 25,000 tonnes1 through unutilized 16,000 tonnes potential in existing licenses – Arnarlax2 holds licenses of 23,700