Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q4 2011 Earnings Presentation
36 slides from Bakkafrost P/f's earnings presentation, Feb 28, 2012
Slide 1: Presentation Q4 2011
PRESENTATION Q4 2011 CEO Regin Jacobsen / CFO Teitur Samuelsen Oslo February 28th 2012
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: Agenda
AGENDA Summary of Q4 2011 Market Financial Highlights Segment Information Group Financials Outlook BAKKAFROST / Q4 PRESENTATION 2011 Page 3
Slide 4: Bakkafrost – the largest fish farming company in the Faroe Islands
BAKKAFROST – THE LARGEST FISH FARMING COMPANY IN THE FAROE ISLANDS Largest salmon farming company in the Faroe Islands ~75km ~75 % of harvest volumes (Q4 2011) ~57 % of farming licenses (01.07.2011) Harvested a total of 11,538 gwt in Q4 2011 (6,493 tonnes gwt in Q4 2010) Feed sale of 23,61
Slide 5: Status on integration of Havsbrún into Bakkafrost
STATUS ON INTEGRATION OF HAVSBRÚN INTO BAKKAFROST Havsbrún included in P&L from 1st July 2011 Strong quarter for Havsbrún Integration carried out as planned, start to see benefits from the acquisition: Reduced costs of biomass, implementing Bakkafrost standards in all sites Strong results
Slide 6: Summary Q4 2011
SUMMARY Q4 2011 Reduced costs in farming operation Harvested volumes increased by 78% from Q4 2010 to Q4 2011 VAP segment had a record high margin in the quarter 85,000 tonnes of feed sold in 2011 High supply growth and market prices under pressure Prices dropped 3-6 NOK/kg in the period
Slide 7: Market
MARKET Market prices were reduced in the quarter due to high Market share Q4 Q4 increase in market supply in Q4-2011 by value 2011 2010 2011 2010 Sales from Bakkafrost increased from DKK 253 million EU 59% 61% 60% 71% in Q4 2010 to DKK 397 million in Q4 2011 US 17% 31% 23% 15% (57% increase) Far E
Slide 8: Financial Highlights
\Mi/ BAKKAFROST FINANCIAL HIGHLIGHTS
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Q4 Q4 Solid results in a challenging market (DKKm) 2011 2010 2011 2010 Operating revenues 397.2 252.5 1,321.1 820.2 Increased revenue driven by increased Operational EBITDA 68.8 101.5 402.5 289.0 volumes Operational EBIT 45.9 90.4 335.1 246.8 Decrease in EBITDA and EBIT marg
Slide 10: Key Financials, Group
KEY FINANCIALS, GROUP (DKKm) Q4 2011 Q4 2010 Strong cash flow from operations Cash flow from operations 86.7 44.1 Total assets increased by 94% Total assets 2,301.8 1,184.7 NIBD increased to finance the purchase of Havsbrún and has a negative impact on equity NIBD 816.8 70.2 ratio Equity ratio
Slide 11: Segment Information
SEGMENT INFORMATION Klaksvík is the second largest town of the Faroe Islands. The town is located on Borðoy, which is one of the northernmost islands. The first settlement at Klaksvík dates back to Viking times, but it was not before the 20th century that the district merged to form a large, modern
Slide 12: Farming – Harvest Volume
FARMING – HARVEST VOLUME Harvested volume: [tonnes gwt] Q4 2011 Q4 2010 2011 2010 2009 Increased 78% from 6,493 tonnes in Q4 2010 West 4,031 3,514 6,160 7,792 11,970 to 11,538 tonnes in Q4 2011 North 4,168 2,979 21,052 13,834 18,680 Total harvest volume in 2011 of 34,355 tonnes Viking 1,706 3,42
Slide 13: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE (NOK) Q4 2011 The farming segment had in general good Bakkafrost Faroe Farming: Viking operational performance in the quarter: Farming Farming Low mortality Operational EBIT/kg gwt 0.70 -0.58 2.68 Very good growth rate Harvested volumes 1000 [gwt] 8,199 1,633 1,
Slide 14: Farming – Margin Development
FARMING – MARGIN DEVELOPMENT Operational EBIT/kg [NOK] The operational EBIT in Q4 2011 was NOK 3.83 per kg for Farming and VAP segment compared with NOK 6.08 per kg in Q3 2011 Reduced selling price accounted for NOK -4.64 per kg Lower downgrade in Q4 than in Q3 accounted for NOK 1.00 per kg
Slide 15: Volume Growth
VOLUME GROWTH Smolt Transfer (million) Smolt transfer 8.6 million in 2011 million pcs Due to delayed smolt transfer in December, planned 14 smolt transfer in 2012 increased to 11.6 million CAGR: 43% 12 CAGR from 2008 to 2012 in transferred smolt is 43% 10 8 6 Biomass 31.12.2011 vs 31.12.2010: 4
Slide 16: Segment VAP
SEGMENT VAP (DKKm) Q4 2011 Q4 2010 Highest margin ever in VAP segment Operating revenues 127 120 Operational EBIT margin 27% in Q4 2011 compared to -1% in Q4 2010 Operational EBIT 34 -1 New VAP factory started up in Jan 2012, will increase Operational EBIT margin 27% -1% capacity 15-25% in 201
Slide 17: Segment Fish Meal, Oil and Feed
SEGMENT FISH MEAL, OIL AND FEED Sales in tonnes increased 40% in 2011 compared Meal, Oil and Feed with 2010 EBITDA margin, which includes the margin from own Q4 production of fish meal/oil, in 2011 on a normalized (DKKm) 2011 2011*** 2010* 2009* level Operating revenues** 232 771 576.6 491.5 R
Slide 18: Group Financials
\i/ BAKKAFROST GROUP FINANCIALS
Slide 19: Group Profit and Loss
GROUP PROFIT AND LOSS Q4 Q4 Overall 2011 best year ever for Bakkafrost (DKKm) 2011 2010 2011 2010 Operating revenues 397.2 252.5 1,321.1 820.2 Revenue up by 145m (57%) from Q4 2010 - Operational EBITDA 68.8 101.5 402.5 289.0 - Main impact from increased harvest and Operational EBIT 45.9 90.4 335
Slide 20: Balance Sheet
BALANCE SHEET (DKKm) Q4 2011 Q3 2011 2010 Increase in biological assets due to increase in Intangible assets 370.0 370.0 136.2 fair value adjustment Property, plant and equipment 828.5 824.1 356.4 Seasonal decrease in inventory of fish meal and Financial assets 35.9 34.6 26.0 fish oil Long term
Slide 21: Planned Investments in 2012
PLANNED INVESTMENTS IN 2012 Investments in PPE (DKKm) Investments in PPE is estimated to be 115 million DKK in 140 2012, which is DKK 15 million lower than in 2011 120 The investments are made in: 100 80 Hatchery division 60 Fish meal/oil and feed 40 Farming division 20 Harvesting division
Slide 22: Cash Flow
CASH FLOW Q4 Q4 Solid cash flow in the quarter: (DKKm) 2011 2010 2011 2010 Cash flow from operations 86.7 44.1 409.9 195.0 Strong cash flow from operations in Q4 2011 Cash flow from investments -27.3 -21.5 -723.7 -71.7 CF from investments reflects payment of investments Cash flow from financing
Slide 23: Overview of New 5 Year Financing
OVERVIEW OF NEW 5 YEAR FINANCING Long term financing of the Group established in Q4: New financing established totalling DKK 1,100 million Instalment loan of DKK 500 million, repayable over 5 years (DKK 25 million/quarter*) Revolving credit facility of DKK 600 million due in 5 years NIBD end
Slide 24: Dividend
DIVIDEND Proposed dividend 2011: Dividend in % of Operating EBIT DKK 1.00 per share (NOK 1,01) 100% ~40% of combined Operating EBIT for 2010 and 2011 90% paid out as dividend in addition to a significant acquisition made in 2011 80% 70% 15% of operating EBIT 2011 60% Lower than in 2010 due to
Slide 25: Market & Outlook
\wli/ BAKKAFROST QUALITY SALMON — FROM THE NORTH ATLANTIC MARKET & OUTLOOK
Slide 26: Market
MARKET Spot prices on fresh salmon [NOK/kg HOG] Salmon price dropped 3-6 NOK per kg on back of 50,00 high volumes in the 4th quarter 45,00 40,00 The price on large salmon (>6 kg) reduced more than 35,00 the price on smaller sizes 30,00 Global salmon supply increased in all markets in the 25,00
Slide 27: Global Market
GLOBAL MARKET Global Supply of Atlantic Salmon to All Markets 2002-2011E [tonnes wfe] 12% growth in 2011, after 3 years without global supply growth The global supply growth rate was heavily back end loaded in 2011, with around 20% growth in second half of the year Source: Kontali Analyse BAKKAFRO
Slide 28: EU Market
EU MARKET Supply of Atlantic Salmon to the EU Market 2002-2011E [tonnes wfe] Steady growth in more than 7 years (except 2010) The supply to the EU market increased approximately 8% in 2011 Market growth from 600,000 to 800,000 tonnes from 2004 to 2011 Source: Kontali Analyse BAKKAFROST / Q4 PRES
Slide 29: US Market
US MARKET Supply of Atlantic Salmon to the US Market 2002-2011E [tonnes wfe] An undersupplied market in more than 7 years The supply to the US market increased approximately 10% in 2011 From 2004 to 2011 the US market has not grown in volume Source: Kontali Analyse BAKKAFROST / Q4 PRESENTATION 2
Slide 30: Outlook
OUTLOOK With low costs, Bakkafrost makes profit at current price level The current market price is boosting demand both on existing and new markets Harvested volumes for Bakkafrost estimated to be between 48,000 - 50,000 tonnes gwt in 2012 Transfer of smolts is estimated to be 11.6m in 2012
Slide 31: Appendix
APPENDIX Kunoyarnes Bakkafrosts fishfarm A-12
Slide 32: Badwill
BADWILL (DKKm) 1st July 2011 Payment: Acquisition of Havsbrún and non- Cash 627 controlling interests in Viking Seafood Havsbrún’s shares in Bakkafrost 350 977 Badwill identified Total Payment Value of Havsbrún’s shares in Bakkafrost decreased between Total net identifiable assets 1,103 agreem
Slide 33: Faroe Islands
FAROE ISLANDS 18 islands – 1,400 km2 48,400 inhabitants (1. Nov 2011) Self-governing part of the Kingdom of Denmark Part of the Danish monetary union Key sectors (% of wage earners, 2009) Service/public admin.: ~37% Private service: ~33% Fishing industry: ~17% GDP: DKK 11.784 bn (2
Slide 34: Faroe Islands – Excellent Conditions for Cost Effective Farming
FAROE ISLANDS – EXCELLENT CONDITIONS FOR COST EFFECTIVE FARMING Average Seawater Temperatures 2003-2009 Faroese fjords provide separation between locations ºC Faroe Islands Norway (Trøndelag) GEOGRAPHY 16 Improves biological control and area management 14 12 Stable seawater temperatures throug
Slide 35: Largest Shareholders
LARGEST SHAREHOLDERS 20 largest shareholder Share price development since listing in NOK Salmar ASA NOR 24,80 Danske Bank a/s 3887 Operations SEC. NOM DNK 13,05 NOK BAKKA (OSL) Jacobsen Hans FRO 9,40 Jacobsen Johan Regin FRO 9,19 JP Morgan Chase Bank NOM GBR 3,24 Six Sis AG Account 2 NOM CHE 2,39 P/
Slide 36: Quality Salmon from Bakkafrost
Quality Salmon from Bakkafrost Bakkafrost develops, produces and markets high-quality salmon products that meet the exacting demands of the international marketplace. sansit.fo \W// BAKKAFROST ESTABLISHED "968