Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q4 2020 Earnings Presentation

43 slides from Bakkafrost P/f's earnings presentation, Feb 23, 2021

  1. Slide 1: Q4 2020 Bakkafrost Group

    Q4 2020 BAKKAFROST GROUP Glyvrar 23 February 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 Q4 2020

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Klaksvík, Faroe Islands

  4. Slide 4: Highlights

    HIGHLIGHTS  Harvest in the Faroe Islands (FO): 15,957 tgw in Q4 2020 (17,930 tgw in Q4 2019)  Harvest in Scotland (SCT): 9,305 tgw in Q4 2020 (7,925 tgw in Q4 2019) Operation  Feed sales of 30,885 tonnes in Q4 2020* (28,398 tonnes in Q4 2019*)  Raw material purchase of 71,887 tonnes in Q3 2020 (

  5. Slide 5: Summary of the Quarter

    SUMMARY OF THE QUARTER Segments y/y YTD YTD (DKK million) Q4 2020 Q4 2019 2020 2019 (FO)* Farming/VAP Operating revenue 1,183 1,605 4,696 4,511 28.25 12.92 (Q4 2019) (Q4 2020) Operational EBITDA 215 544 1,068 1,635 Operational EBIT 89 415 621 1,325 Profit for the period -38 220 463 802 (SCT)* Farmin

  6. Slide 6: Markets and Sales

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Fuglafjøður, A57 and Havsbrún and GøtuvíkA25 in the background Faroe Islands

  7. Slide 7: Markets & Sales

    MARKETS & SALES SALES TO WESTERN EUROPE INCREASED – OTHER MARKETS DECREASED Sales & volume (FO only) Total sales of salmon Q4 2020 Q4 2019 YTD 2020 YTD 2019 Western Europe by markets FO SCT Total FO SCT Total FO SCT Total FO SCT Total Western Europe 59% 96% 74% 43% 93% 59% 56% 90% 70% 44% 93% 50% 43

  8. Slide 8: Global Markets

    GLOBAL MARKETS LOWER PRICES Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Average spot prices decreased in Q4 2020 Q1 Q2 Q3 Q4 (NOK/KG) 80,00 70,00 y/y: 58.28 -24.1% 44.23 -14.05 60,00 (Q4 2019) (Q4 2020) 50,00 q/q: 48.43 -8.7% 44.23 40,00 (Q3 2020) -4.20 (Q4 2020) 30,00 Spot prices were lower i

  9. Slide 9: Development in Harvested Quantity by Origin

    DEVELOPMENT IN HARVESTED QUANTITY BY ORIGIN (HEAD ON GUTTED – HOG) Global Harvest growth of 11% Supply Development Q4 2020 Q4 2019 Change Norway 365 335 8.8 % UK 45 38 16.9 % Faroes 21 24 -12.2 % Europe harvest up 9% Iceland 10 8 23.3 % Ireland 3 3 -1.5 %  Strong growth conditions in Norway Total E

  10. Slide 10: Salmon Markets, Sold Quantity

    SALMON MARKETS, SOLD QUANTITY GOOD GROWTH IN SEVERAL MARKETS – SIGNIFICANT DROP IN GREATER CHINA Global Supply growth of 10% Salmon markets, sold quantity (head on gutted - HOG) EU/UK grew 13% Estimated volumes Q4 comparison Estimated volumes FY comparison Markets Q4 2020E Q4 2019 Volume % FY 2020E

  11. Slide 11: Short Term Supply Outlook

    SHORT TERM SUPPLY OUTLOOK LIMITED SUPPLY GROWTH IN 2021 – ESPECIALLY IN H2 Expectation of limited global supply growth in 2021 SUPPLY - TOTAL 800 12%  Stable growth around 8% in Europe 700 10% 600  Release of inventory primarily during H1 2021 8% 500 400 6%  Tight supply growth in H2 2021 300 4%

  12. Slide 12: Segment Information

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Gravir, Lewis and Harris, Scotland

  13. Slide 13: Farming – Harvest Volume

    FARMING – HARVEST VOLUME DECREASED HARVEST IN THE FAROE ISLANDS – INCREASED AVG. SMOLT SIZE Q4 2019 Q4 2020 Harvest Volumes tonnes [HOG] Q4 2020 Q4 2019 YTD 2020 YTD 2019 Harvested volumes (tonnes HOG) North: 41% FO - North Region 6,486 0 31,029 18,252 FO: 17,930 11% 15,957 FO - West Region 6,965 13

  14. Slide 14: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE REVENUE AND OPERATIONAL EBIT DECREASED IN THE FAROE ISLANDS YTD YTD Farming FO (DKK million) Q4 2020 Q4 2019 2020 2019 Faroe Islands (FO) Operating revenue 603 945 2,340 3,152 Operational EBIT (mDKK) Operational EBIT 63 338 448 1,103 Operational EBIT margin 10% 36%

  15. Slide 15: Farming – Operational Performance, EBIT per kg

    FARMING – OPERATIONAL PERFORMANCE Margin - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg 30 20 FO: 25.49 NOK -19.84 NOK 5.66 NOK (Q4 2019) (Q4 2020) 10 0 SCT: 3.09 NOK (Q4 2019) -11.50 NOK -8.41 NOK (Q4 2020) -10 Q4 FO Q4 SCT YTD FO YTD SCT Solid fill: 2020 Increased transpar

  16. Slide 16: Value Added Products (VAP)

    VALUE ADDED PRODUCTS (VAP) STRONG QUARTER WITH HIGHER VOLUMES AND IMPROVED RESULTS (DKK million) Q4 2020 Q4 2019 YTD 2020 YTD 2019 Volumes (tonnes) Operating revenue 287 249 1.116 964 4,219 6,790 (Q4 2019) (Q4 2020) Operational EBIT 80 37 140 64 Operational EBIT margin 28% 15% 13% 7% Revenue (mDKK)

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

    FISHMEAL, OIL AND FEED (FOF) HIGHER RAW MATERIAL SOURCING, BUT LOWER EXTERNAL SALES OF FISHMEAL Q4 Q4 YTD YTD (DKK million) EBITDA (mDKK) 2020 2019 2020 2019 Operating revenue 359 338 1,419 1,388 58 48 (Q4 2019) (Q4 2020) EBITDA 48 58 208 276 EBITDA margin 13% 17% 15% 20% EBITDA margin (%) Feed sold

  18. Slide 18: Market Conditions Feed

    MARKET CONDITIONS FEED SIGNIFICANT INCREASE IN FEED SALES Volumes of raw material purchase and feed sale [tonnes] Total feed sales increased (tonnes) 180.000 45.000 160.000 40.000 28,398 9% 30,885 140.000 35.000 Raw material (tonnes) (Q4 2019) (Q4 2020) Feed sale (tonnes) 120.000 30.000 100.000 25.0

  19. Slide 19: Financials & ESG

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Bakkafrost HQ, Glyvrar

  20. Slide 20: Group Profit and Loss

    GROUP PROFIT AND LOSS LOWER REVENUE, REDUCED OPERATIONAL EBIT AND PROFIT Revenue (mDKK) (DKK million) Q4 2020 Q4 2019 YTD 2020 YTD 2019 1,605 1,183 Operating revenue 1,183 1,605 4,696 4,511 (Q4 2019) (Q4 2020) Operational EBITDA 215 544 1,068 1,635 Operational EBIT 89 415 621 1,325 Operational EBIT

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

    OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE 459 415 408 350 335 331 339 307 303 254 255 252 268 268 231 248 Operational EBIT* 168 182 (mDKK) 103 89 2016 2017 2018 2019 2020 1,165 1,378 1,075 1,325 622 6,84 6,48 5,64 5,60 5,89 5,08 4,98 4,83 4,72 3,79 4,07 3,59 3,62 3,57 3,61 3,19 Adjusted EPS

  22. Slide 22: Balance Sheet

    BALANCE SHEET Headlines (mDKK) (DKK million) Q4 2020 End 2019 Intangible assets: 4,493 Intangible assets 4,493 4,396 (Q4 2020) Property, plant and equipment 4,221 3,780 353 333 PPE: 3,780 440 4,221 Right of use assets (end of 2019) (Q4 2020) Financial assets 122 119 Long-term receivables 8 4 Biologi

  23. Slide 23: Inventory Changes

    INVENTORY CHANGES INVENTORIES INCREASED DURING Q4 2020 AND FY2020 Inventory total (mDKK) 614 162 776 (Q3 2020) (Q4 2020) 549 Volumes 227 776 (end of 2019) (end of 2020) Inventory volumes in the VAP and FOF segments increased during Q4 2020 as well as during FY2020 VAP segment (mDKK) 103 42 145 (Q3 2

  24. Slide 24: Cash Flow

    CASH FLOW YTD YTD (DKK million) Q4 2020 Q4 2019 Cash flow, operations (mDKK) 2020 2019 -150 -107 Cash flow from operations -107 -150 474 1,033 (Q4 2019) (Q4 2020) Cash flow from investments -343 -3,791 -816 -4,598 Cash flow from financing 471 2,639 -500 4,557 Cash flow, investments (mDKK) Net change

  25. Slide 25: Net Interest-Bearing Debt (NIBD)

    NET INTEREST-BEARING DEBT (NIBD) NIBD INCREASED DURING Q4 2020 NIBD was increased by: Development in NIBD in DKK millions  Net investments (mDKK 343)  Taxes paid (mDKK 189)  Change in working capital (mDKK 118) NIBD was decreased by:  Cash flow, operating activities (mDKK -154) NIBD and availabl

  26. Slide 26: Q4 ESG Update

    Q4 ESG UPDATE Healthy Living Plan We believe that by investing in the health of our business, our people, our salmon, the Healthy Business Healthy People environment and the communities in which we operate, we will enable healthy living for millions of people globally. Bakkafrost named top three Pro

  27. Slide 27: Outlook

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX Plocrapol, Harris, Scotland

  28. Slide 28: Outlook

    OUTLOOK Market Contracts  Global harvest increased 10.8% in in Q4 2020  For 2021, Bakkafrost has signed contracts for around 28% of the total expected harvest volumes in the Faroe Islands  4% increase expected in global harvest in Q1 2021 and Scotland  2-3% increase in global harvest expected in

  29. Slide 29: Appendix

    SUMMARY OF Q4 2020 MARKETS AND SALES SEGMENT INFORMATION FINANCIALS & ESG OUTLOOK APPENDIX

  30. Slide 30: Changes to Management in The Scottish Salmon Company

    CHANGES TO MANAGEMENT IN THE SCOTTISH SALMON COMPANY Ian Laister appointed new Managing Director as of 1 March 2021 Mr. Laister has more that 20 years’ experience creating value and restoring performance across diverse sectors both as a Director and as a Management Consultant. Mr. Laister joined SSC

  31. Slide 31: Land Based Farming Expansion

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

  32. Slide 32: 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

  33. Slide 33: 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

  34. Slide 34: 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

  35. Slide 35: 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

  36. Slide 36: Development in Supply and Sold Quantity by Origin

    DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Expected supply growth in 2021 Global Supply of Atlantic Salmon (head on gutted - HOG) 2017 2018 2019 2020E 2021E  6% growth in Global supply Norway 1.078 1.129 1.198 1.223 1.328 UK 159 137 171 163 183  9% growth in European supply Ireland 15 13 14

  37. Slide 37: Q4 2020 Market Environment

    Q4 2020 MARKET ENVIRONMENT DECREASING MARKET PRICES PRICE NORWAY 6,6  Further decrease in market prices 7,0 6,3 6,4 60,0 5,8 5,6 6,0 50,0 5,2  Further disruption to food service demand (COVID-19) 5,0 5,0 4,5 4,0 40,0  Temporary high global supply growth (10%) 4,0 EUR DKK 30,0 3,0  Nasdaq Norway

  38. Slide 38: Development per Quarter

    DEVELOPMENT PER QUARTER Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (mDKK) 2018 2019 2019 2019 2019 2020 2020 2020 2020 Revenue 750 964 947 996 1,605 1,255 1,134 1,123 1,183 Operational EBIT 231 268 339 303 415 248 182 103 89 Profit/Loss -7 213 189 181 220 -148 472 177 -38 Harvest FO (tgw) 12,234 13,707 12,609 12,93

  39. Slide 39: Dividend

    DIVIDEND Dividend Dividend per share in % of adj. EPS* • The Board proposes dividend for 2020 of DKK 3.65 per 99% share to be paid out in Q2 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

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    BAKKAFROST / Q4 2020 PRESENTATION Page 40

  41. Slide 41: Facilities and locations

    Facilities and locations BAKKAFROST / Q4 2020 PRESENTATION Page 41

  42. Slide 42: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2 TAXES  Total percent of GDP: 41.8% (2016)  52,920 inhabitants (December 2020)  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 mark

  43. Slide 43: Page 43

    BAKKAFROST / Q4 2020 PRESENTATION Page 43

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