Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q4 2022 Earnings Presentation
34 slides from Bakkafrost P/f's earnings presentation, Feb 21, 2023
Slide 1: Q4 2022 Bakkafrost Group
Q4 2022 BAKKAFROST GROUP Oslo 21 February 2023
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
Slide 3: Summary of Q4 2022
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Hvannasund ,Faroe Island
Slide 4: Highlights
HIGHLIGHTS All-time high full-year revenue of DKK 7,130 million and all-time high full-year Operational EBIT Revenues and of DKK 1,705 million Operational EBIT All-time high quarterly revenue of DKK 1,940 million and Operational EBIT of DKK 376 million Harvest in the Faroe Islands: 19,276 tgw
Slide 5: Markets & Sales
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Edinburgh, Scotland
Slide 6: 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 130,00 in Q4 2022 110,00 (NOK/KG) 90,00 y/y: 60.71 21.8% 73.92 (Q4 2021) 13.21 (Q4 2022) 70,00 50,00 q/q: 70.25 5.2% 73.92 (Q3 2022) 3.67 (Q4 2022) 30,00 1
Slide 7: Harvested and Sold Quantity by Origin
HARVESTED AND SOLD QUANTITY BY ORIGIN 2% drop in global quarterly harvest volumes SUPPLY DEVELOPMENT Q4 2022 Q4 2021 Change % Norway 404 401 0.8 % Stable when including inventory movements UK 35 36 -3.0 % Faroes 27 30 -10.9 % Iceland 12 10 15.0 % Ireland 3 3 -11.8 % Total Europe 481 481 0.0 % Stab
Slide 8: Salmon Markets, Sold Quantity
SALMON MARKETS, SOLD QUANTITY Salmon markets, sold quantity (head on gutted - HOG) Stable consumption in EU/UK Estimated volumes Q4 comparison Estimated volumes FY comparison Markets Q4 2022 E Q4 2021 Volume % FY 2022E FY 2021E Volume % In line with harvest development in EU 324,200 324,300 -100 0
Slide 9: Financials
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Gravir, Scotland
Slide 10: Group Profit and Loss
GROUP PROFIT AND LOSS HIGHER REVENUE AND OPERATIONAL EBIT Q4 2021 Q4 2022 (DKK million) Q4 22 Q4 21 YTD 22 YTD 21 Operating revenue 1,940 1,488 7,130 4,066 Revenue (mDKK) Operational EBITDA 504 270 2,243 1,352 1,488 30% 1,940 Operational EBIT 376 120 1,705 821 Fair value adjustment of biological ass
Slide 11: Margins
MARGINS HIGHER OPERATIONAL EBIT MARGIN DRIVEN MAINLY BY FARMING FAROE ISLANDS Q4 2021 Q4 2022 Q4 22 Q4 21 YTD 22 YTD 21 Operational EBITDA margin 26.0% 18.2% 31.5% 33.2% OPERATIONAL EBIT/Kg (NOK) Operational EBIT margin 19.4% 8.0% 23.9% 20.2% Farming Faroe Islands 18.29 27.56 Operational EBIT/Kg (Fa
Slide 12: Operational EBIT and Adjusted Earnings per Share
OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 587 408 415 407 418 376 Operational EBIT* 339 325 303 (mDKK) 268 268 231 248 224 168 182 103 89 120 71 2018 2019 2020 2021 2022 1,075 1,325 622 821 1,705 6,77 6,48 5,89 4,98 4,83 4,80 4,82 4,07 4,00 3,79 3,61 Adjusted EPS** 3,19 3,43 2,95 (DKK) 2,5
Slide 13: Balance Sheet
BALANCE SHEET Headlines (mDKK) (DKK million) Q4 22 End 2021 End 2021 Q4 2022 Intangible assets 4,509 4,496 Property, plant and equipment 5,647 4,889 PPE: 4,889 758 5,647 439 302 Right of use assets Financial assets 234 149 Biological assets: 2,448* 490 2,938* Long-term receivables 0 8 *(whereof mDKK
Slide 14: Cash Flow
CASH FLOW Q4 2021 Q4 2022 (DKK million) Q4 22 Q4 21 YTD 22 YTD 21 Cash flow, operations (mDKK) Cash flow from operations 382 189 1,202 1,125 Cash flow from investments -570 -289 -1,255 -1,112 189 193 382 Cash flow from financing 339 237 263 30 Net change in cash 151 136 210 42 Cash flow, investments
Slide 15: Net Interest-Bearing Debt (NIBD)
NET INTEREST-BEARING DEBT (NIBD) NIBD INCREASED DURING Q4 2022 NIBD was increased by: Development in NIBD in DKK millions Net investments (mDKK 570) Taxes paid (mDKK 171) NIBD was decreased by: Change in working capital (mDKK -174) Cash flow, operating activities (mDKK -330) NIBD and availab
Slide 16: Q4 2022 ESG Update
Q4 2022 ESG UPDATE Strenghtening freshwater treatment capacity in the Faroes Bakkafrost’s new 10,000m3 hybrid-powered well-boat Bakkafossur was delivered. Hereby the freshwater treatment capacity in the Faroe Islands is significantly improved. Engaging with suppliers to reduce carbon footprint At Ba
Slide 17: Segment Information
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Bakkafossur and Bakkafrost’s FSV’s and wellboats in the Faroe Island
Slide 18: Farming – Harvest Volume
FARMING – HARVEST VOLUME AVERAGE HARVEST WEIGHT INCREASED IN SCOTLAND Q4 2021 Q4 2022 Harvest Volumes tonnes [HOG] Q4 22 Q4 21 YTD 22 YTD 21 Harvested volumes (tonnes HOG) North: 28% FO - North Region 5,322 9,268 28,864 26,082 FO: 20,694 -7% 19,276 West: 72% FO - West Region 13,954 8,904 28,033 32,2
Slide 19: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE STRONG PERFORMANCE IN THE FAROES Q4 2021 Q4 2022 Farming FO (DKK million) Q4 22 Q4 21 YTD 22 YTD 21 Operational EBIT (mDKK) Operating revenue 1,139 1,111 4,633 3,477 Operational EBIT 380 282 1,913 904 FO: 282 34% 380 Operational EBIT margin 33% 25% 41% 26% SCT: -214
Slide 20: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE IMPROVEMENTS IN BOTH REGIONS Q4 2021 Q4 2022 Margin - EBIT per kg total harvested quantity [NOK/kg] Q4 FO Q4 SCT YTD FO YTD SCT Operational EBIT per kg (NOK) 50,00 38,91 FO: 18.29 9.27 27.56 30,00 27,56 18,29 18,37 10,00 SCT: -55.95 16.00 -39.96 -10,00 -11,49 -16,88
Slide 21: Mortality in Scotland
MORTALITY IN SCOTLAND BAKKAFROST VS INDUSTRY PEERS Industry Mortality in Q4 2022 Bakkafrost’s share of total reported in Scotland is reducing Industry Peer 1 Industry Peer 2 2M 1M 1M 0.5M 0 0 2M 1M 1M 0.5M 0 0 Reported mortality reasons Bakkafrost Scotland Source: Scottish Government’s Fish Health I
Slide 22: Bakkafrost Scotland Exceptional Mortality
BAKKAFROST SCOTLAND EXEPTIONAL MORTALITY POSITIVE EFFECT FROM INCREASED FRESHWATER TREATMENT CAPACITY • New capabilities for efficient and gentle dual-treatment for gill health and sea lice • Now permanently two Farming Service Vessels in service all year around to clear gills and sea-lice Weekly ex
Slide 23: Bakkafrost Scotland Biological Development
BAKKAFROST SCOTLAND BIOLOGICAL DEVELOPMENT Average harvest weight 2020-2023 Week 1-6: 2022 vs 2023 No. of harvested Harvest volume Avg. harvest weight Sales value fish (1,000) (tonnes) (g) (mNOK) 700 3.500 6.000 350 600 3.000 5.000 300 500 2.500 250 4.000 400 2.000 200 3.000 300 1.500 150 2.000 200
Slide 24: Large Smolt Strategy: Allowing for One Summer Cycles
LARGE HIGH QUALITY SMOLT = GAME CHANGER Large Smolt Strategy Allowing for - Reduced biological risk ”ONE SUMMER” - Increased production efficiency - Enables growth cycles FRESHWATER MARINE Summer/Autumn Risk BAKKAFROST / PRESENTATION Page 24
Slide 25: Hatcheries in Scotland – The Past
HATCHERIES IN SCOTLAND – THE PAST BAKKAFROST / PRESENTATION Page 25
Slide 26: Hatcheries in Scotland: Applecross Progressing
HATCHERIES IN SCOTLAND APPLECROSS PROGRESSING Applecross progressing • Transfering 125 gr.smolt from AP 2 to AP 4 ult. Q 1 • Delivering first large smolt 200-300 gr. ult. Q2-2023 BAKKAFROST / PRESENTATION Page 26
Slide 27: Our Roadmap to Larger Smolt in Scotland
OUR ROADMAP TO LARGER SMOLT IN SCOTLAND RAPIDLY REDUCING THE GAP BETWEEN FAROE ISLANDS AND SCOTLAND Ónavík new Hatchery 3 new Glyvradal expansion Norðtoftir expansion Viðareiði expansion 500 500 Large hatchery 2 new 2y GAP 400 400 350 350 Strond 332 Applecross 5 & 6 expansion 250 205 205 5y GAP 180
Slide 28: Value Added Products (VAP)
VALUE ADDED PRODUCTS (VAP) HIGHER VOLUMES AND HIGHER COST OF RAW MATERIAL Q4 2021 Q4 2022 (DKK million) Q4 22 Q4 21 YTD 22 YTD 21 Volumes (tonnes) Operating revenue 483 359 1,704 1,185 6,603 10% 7,231 Operational EBIT 86 28 -51 120 Operational EBIT margin 18% 8% -3% 10% Revenue (mDKK) Farming FO tra
Slide 29: Fishmeal, Oil and Feed (FOF)
FISHMEAL, OIL AND FEED (FOF) HIGHER EBITDA AND HIGHER SALES OF FISHMEAL AND FISH OIL Q4 2021 Q4 2022 (DKK million) Q4 22 Q4 21 YTD 22 YTD 21 Operating revenue 791 433 2,433 1,659 EBITDA (mDKK) EBITDA 110 89 436 306 89 24% 110 EBITDA margin 14% 21% 18% 18% Feed sold (tonnes)* 32,600 32,527 127,840 12
Slide 30: Market Conditions Feed
MARKET CONDITIONS FEED UNCHANGED INTERNAL FEED SALES AND INCREASE EXTERNAL FEED SALES Q4 2021 Q4 2022 Volumes of raw material purchase and feed sale [tonnes] 180.000 50.000 Total feed sales increased (tonnes) 160.000 45.000 140.000 40.000 Raw material (tonnes) 32,527 0% 32,600 35.000 Feed sale (tonn
Slide 31: Outlook
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Nevið, Lambavík, Faroe Islands
Slide 32: Expected Harvest Growth of 2.3% in 2023
EXPECTED HARVEST GROWTH OF 2.3% IN 2023 Expectation of limited global supply growth SUPPLY - TOTAL 1.600 8% Flat development 1H 2023 1.400 6% 1.200 4% Mid single digit growth expected 2H 2023 1.000 2% 800 0% European harvest set to increase in 2H 2023 600 -2% 400 -4% At expense of 1H 2023 200
Slide 33: Outlook
OUTLOOK Market Contracts Global harvest: For 2023, Bakkafrost has signed contracts for around 23% of the total expected harvest volumes Decreased 2% in Q4 2022 vs Q4 2021 2.3% global supply growth expected in 2023 Fishmeal, Oil and Feed Feed sales are expected to be around 130,000 tonnes in
Slide 34: Appendix
SUMMARY OF Q4 2022 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Hvannasund, Faroe Island