Bakkafrost P/f · OSL:BAKKA
Bakkafrost P/f — Bakkafrost — Q2 2023 Earnings Presentation
45 slides from Bakkafrost P/f's earnings presentation, Aug 22, 2023
Slide 1: Q2 2023 Bakkafrost Group
Q2 2023 BAKKAFROST GROUP Glyvrar 22 August 2023
Slide 2: Summary of Q2 2023
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Nes Eysturoy, Faroe Islands
Slide 3: Highlights Q2-23 (Q2-22)
HEALTHY LIVING HIGHLIGHTS Q2-23 (Q2-22) Revenues and Revenue of DKK 1,670 million (DKK 1,684 million) Operational EBIT Operational EBIT* of DKK 353 million (DKK 587 million) Harvest in the Faroe Islands: 8,658 tgw (13,101 tgw) Harvest in Scotland: 7,343 tgw (6,646 tgw) Operation Feed sales
Slide 4: Markets & Sales
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Kolbeinagjógv, Faroe Island
Slide 5: Global Markets: Higher Prices Y/Y and Q/Q
GLOBAL MARKETS HEALTHY LIVING 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 in Q2 2023 130,00 Q1 Q2 Q3 Q4 (NOK/KG) 110,00 90,00 y/y: 107.46 1.0% 108.50 (Q2 2022) 1.03 (Q2 2023) 70,00 q/q: 104.83 3.5% 108.50 (Q1 2023) 3.67 (Q2 20
Slide 6: Salmon Markets, Sold Quantity
HEALTHY LIVING SALMON MARKETS, SOLD QUANTITY Salmon Salmonmarkets, markets,sold sold quantity (head on gutted weight) EU/UK/US consumption below supply quantity (head on growth Estimated volumes Q1 comparison Estimated volumes FY comparison Indication of modest price sensitivity Markets Q2 2023 Q2
Slide 7: 1% Increase in Global Harvested and Sold Quantity
HEALTHY LIVING 1% INCREASE IN GLOBAL HARVESTED AND SOLD QUANTITY Stable supply to the market Supply Development Q2 2023 Q2 2022 Change % SUPPLY DEVELOPMENT Q2 2023 Q2 2022 Change % Norway 283 274 3.1 % UK 42 41 4.7 % Europe - Norway/UK growth neutralised by other Faroes 16 18 -13.7 % countries Icela
Slide 8: Financials
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Kolbeinagjógv, Faroe Island
Slide 9: Group Profit and Loss
GROUP PROFIT AND LOSS HEALTHY LIVING LOWER REVENUE AND OPERATIONAL EBIT Q2 2022 Q2 2023 (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Operating revenue 1,670 3,720 1,684 3,323 Revenue (mDKK) 1,684 -1% 1,670 Operational EBITDA* 508 1,221 724 1,278 Operational EBIT* 353 919 587 1,004 Operational EBIT (mDKK)
Slide 10: Margins
MARGINS HEALTHY LIVING SCOTLAND IMPROVED – FAROE ISLAND SOFTER THAN THE HISTORICALLY STRONG Q2 2022 Q2 2022 Q2 2023 (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 OPERATIONAL EBIT/Kg (NOK) Operational EBITDA margin 30.4% 32.8% 43.0% 38.5% Farming Faroe Islands Operational EBIT margin 21.2% 24.7% 34.8% 30.2
Slide 11: Operational EBIT and Adjusted Earnings per Share
HEALTHY LIVING OPERATIONAL EBIT* AND ADJUSTED EARNINGS PER SHARE** 587 565 415 407 418 376 353 339 325 303 268 248 224 Operational EBIT* 182 (mDKK) 120 103 89 71 2019 2020 2021 2022 2023 1,325 622 821 1,705 918 7,19 6,77 5,89 4,98 4,83 4,80 4,82 4,07 4,00 3,79 3,19 3,43 Adjusted EPS** 2,95 (DKK) 2,0
Slide 12: Balance Sheet
HEALTHY LIVING BALANCE SHEET End Headlines (mDKK) (DKK million) Q2 23 2022 End 2022 Q2 2023 Intangible assets 4,512 4,509 Property, plant and equipment 5,951 5,647 PPE: 5,647 304 5,951 Right of use assets 481 439 Financial assets 239 234 Biological assets: 2,938* 162 2,777* Deferred tax assets 354 3
Slide 13: Cash Flow
HEALTHY LIVING CASH FLOW Q2 2022 Q2 2023 (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Cash flow, operations (mDKK) 542 -166 376 Cash flow from operations 376 949 542 693 Cash flow from investments -304 -507 -272 -447 Cash flow from financing -99 -618 -206 -247 Net change in cash -26 -176 63 -1 Cash flow,
Slide 14: Net Interest-Bearing Debt (NIBD)
NET INTEREST-BEARING DEBT (NIBD) HEALTHY LIVING NIBD DECREASED DURING Q2 2023 NIBD was increased by: Development in NIBD in DKK millions • Net investments (mDKK 304) • Dividend (mDKK 591) • Change in working capital (mDKK 147) NIBD was decreased by: • Cash flow, operating activities (mDKK 488) Finan
Slide 15: Segment Information
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX View from the Office at Glyvrar , Faroe Island
Slide 16: Farming – Harvest Volume
FARMING – HARVEST VOLUME HEALTHY LIVING LOWER VOLUMES AND AVERAGE HARVEST IN THE FAROE ISLAND BUT HIGHER IN SCOTLAND Q2 2022 Q2 2023 Harvest Volumes tonnes [HOG] Q2 23 YTD 23 Q2 22 YTD 22 Harvested volumes (tonnes HOG) FO - North Region 1,270 5,396 4,801 14,847 FO: 13,101 -34% 8,658 FO - West Region
Slide 17: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE HEALTHY LIVING IMPROVED OPERATIONAL EBIT IN SCOTLAND Q2 2022 Q2 2023 Farming FO (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Operating revenue 892 1,989 1,140 2,338 Operational EBIT (mDKK) Operational EBIT 242 557 617 1,088 FO: 617 -375 242 Operational EBIT margin 27% 28
Slide 18: Farming – Operational Performance
FARMING – OPERATIONAL PERFORMANCE HEALTHY LIVING GOOD MARGINS IN BOTH REGIONS Q2 2022 Q2 2023 Margin - EBIT per kg total harvested quantity [NOK/kg] Operational EBIT per kg (NOK) Q2 FO Q2 SCT YTD FO YTD SCT FO: 63.38 -19.62 43.76 70,00 63,38 SCT: 8.29 6.93 15.22 50,00 47,53 43,76 41,76 30,00 21,63 1
Slide 19: Farming – Faroe Islands
FARMING – FAROE ISLANDS HEALTHY LIVING BUILDING NET BIOMASS IN H1 FOR THE FIRST TIME PAST 12Y The normal annual biomass profile: Faroe Islands – development of total biomass at sea (tonnes) H1: Decreasing biomass H1 H2 50.000.000 H2: Building biomass 45.000.000 For the first time past 12yrs, biomass
Slide 20: Value Added Products (VAP)
VALUE ADDED PRODUCTS (VAP) HEALTHY LIVING LOWER VOLUMES AND HIGHER COST OF RAW MATERIAL Q2 2022 Q2 2023 (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Operating revenue 395 772 417 835 Volumes (tonnes) Operational EBIT -26 -20 -108 -137 5,944 -16% 4,999 Operational EBIT margin -7% -3% -26% -16% Farming FO
Slide 21: Fishmeal, Oil and Feed (FOF)
FISHMEAL, OIL AND FEED (FOF) HEALTHY LIVING RECORD-HIGH SOURCING LEADING TO HIGHER SALES OF FISHMEAL AND FISH OIL Q2 2022 Q2 2023 (DKK million) Q2 23 YTD 23 Q2 22 YTD 22 Operating revenue 744 1,475 523 965 EBITDA (mDKK) EBITDA 128 257 119 205 119 8% 128 EBITDA margin 17% 17% 23% 21% Feed sold (tonne
Slide 22: Market Conditions Feed: Raw Material
MARKET CONDITIONS FEED HEALTHY LIVING RECORED-HIGH RAW MATERIAL SOURCING Raw material sourcing Raw material sourcing vs Feed sale [tonnes] 200.000 50.000 Sourcing of marine raw materials 40.000 150.000 in Q2 2023 and H1 were exceptionally Raw material 30.000 Feed sale 100.000 high in volume versus
Slide 23: Outlook
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX Scotland
Slide 24: Expected Harvest Growth of 2% in 2023
HEALTHY LIVING EXPECTED HARVEST GROWTH OF 2% IN 2023 SUPPLY - TOTAL Q2 total supply in line with estimates from Q1 1.800 10% • Europe below and Americas above expectations 1.600 8% 1.400 6% 4% 1.200 Reduced estimates for 2H 2023 and 1H 2024 2% 1.000 • Marginal growth in Q3 2023 800 0% -2% • Mid sing
Slide 25: Outlook
HEALTHY LIVING OUTLOOK Global harvest Contracts • Marginal increase 0.3% in Q2 2023 vs Q2 2022 • For 2023, Bakkafrost has signed contracts for around 23% of • 2% global supply growth expected in 2023 the total expected harvest volumes Fishmeal, Oil and Feed • Feed sales are expected to be around 130
Slide 26: Performance
PERFORMANCE HEALTHY LIVING BEST PRACTICES & WELL-INVESTED VALUE CHAIN DRIVES PERFORMANCE Smolt weight (g) (2021 Full Gen.) Biological Feed Conversion Ratio (2021 Full Gen.) Economic Feed Conversion Ratio (2021 Full Gen.) Bakkafrost Faroes 382 Bakkafrost Faroes 1,06 Bakkafrost Faroes 1,16 Norway 187
Slide 27: Value Chain Insight – Hatcheries for Smolt
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT LARGE HIGH-QUALITY SMOLT ARE THE KEY TO GROWTH AND IMPROVEMENT Average smolt weight New hatchery Current capacity (June 2023) 18 million smolt of 500g Glyvradal expansion Norðtoftir expansion Viðareiði expansion 500 500 X 400 409 g Number of release
Slide 28: Large Smolt Strategy
LARGE SMOLT STRATEGY HEALTHY LIVING DELIVERING LARGE HEALTHY SMOLT SMOLT CAPACITY 11m 14-15m 15m RAS 2 design & build Fairlie Hatchery 2 build AP Fairlie - Planning 8m smolt at 500g Post smolt 2 build AP 32,300m³ capacity Post smolt 1 build AP 100% smolt from RAS No 3rd party smolt Applecross - Cons
Slide 29: 2024-2028 Capex Plan - Investing in Sustainable Growth
2024-2028 CAPEX PLAN - INVESTING IN SUSTAINABLE GROWTH HEALTHY LIVING 165,000 TONNES HARVEST IN 2028, FAROE ISLANDS AND SCOTLAND COMBINED 2024-2028 Capex* of DKK 6.3 bn Volumes Faroe Islands Scotland 1.800 16,00 2023 63,000t 30,000t 1.600 14,00 1.400 12,00 Investments per kg (DKK) 2026 95,000t 45,00
Slide 30: Appendix
SUMMARY OF Q2 2023 MARKETS & SALES FINANCIALS SEGMENT INFORMATION OUTLOOK APPENDIX
Slide 31: Markets & Sales
MARKETS & SALES HEALTHY LIVING SALES TO NORTH AMERICA INCREASED - SALES TO WESTERN EUROPE AND ASIA DECREASED Sales & volume Total sales of salmon by markets Q2 2023 Q2 2022 YTD 2023 YTD 2022 FO SCT Total FO SCT Total FO SCT Total FO SCT Total Q2 2022 Q2 2023 Western Europe 58% 61% 59% 52% 86% 62% 65
Slide 32: Development in Supply and Sold Quantity by Origin
HEALTHY LIVING DEVELOPMENT IN SUPPLY AND SOLD QUANTITY BY ORIGIN Global Supply of Atlantic Salmon (head on gutted - Expected supply growth in 2023 HOG) 2% increase in Global supply* 2018 2019 2020 2021 2022 2023E Norway 1,129 1,198 1,226 1,383 1,359 1,384 UK 137 171 160 179 145 156 2% increase i
Slide 33: Q2 2023 Market Environment
HEALTHY LIVING Q2 2023 MARKET ENVIRONMENT Reduced prices in Q2 PRICE NORWAY 12,0 90,0 10,5 Nasdaq Norway spot price down 15% in EUR, but 1% up in NOK 9,7 80,0 10,0 8,9 8,4 70,0 Low volumes available for spot market in Q2 2023 8,0 6,7 7,2 60,0 6,2 6,1 50,0 EUR DKK 6,0 5,3 SSB price down 5% (proxy
Slide 34: Q2 2023 – Spot and Contract Pricing Aligned
HEALTHY LIVING Q2 2023 – SPOT AND CONTRACT PRICING ALIGNED PRICE NORWAY (NOK) Nasdaq spot price reflecting marginal pricing per week 120 10 8 100 6 80 4 Statistics Norway (SSB) publish average price for all whole fish 2 60 sold per week 0 40 -2 Incorporates bilateral contracts of variable duration
Slide 35: Development per Quarter
HEALTHY LIVING DEVELOPMENT PER QUARTER Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (mDKK) 2021 2021 2021 2022 2022 2022 2022 2023 2023 Revenue 1,618 1,272 1,488 1,639 1,684 1,867 1,940 2,050 1,670 Operational EBIT 407 71 120 418 587 325 376 565 353 Profit/Loss 428 131 -3 405 845 249 -154 467 -123 Harvest FO (tgw) 17
Slide 36: Dividend
HEALTHY LIVING DIVIDEND Dividend per share in % of adj. EPS* Dividend 99% • The AGM, which was held 28 April 2023, decided to pay out dividend for 2022 of DKK 10.00 per share. The payment was paid out on 22 May 2023. 59% 53% 49% 49% 50% 50% 50% 50% 46% • Dividend payment equals 53% of adjusted EPS 4
Slide 37: Bakkafrost – Overview
HEALTHY LIVING BAKKAFROST – OVERVIEW 37
Slide 38: Bakkafrost – Farming Site Overview
HEALTHY LIVING BAKKAFROST – FARMING SITE OVERVIEW 38
Slide 39: Our Pillars and Values
HEALTHY LIVING OUR PILLARS AND VALUES 39
Slide 40: Bakkafrost salmon at a glance
Bakkafrost salmon at a glance NUTRITION OMEGA-3 LEVELS OMEGA-3 70.6 VITAMIN D MEA RATIO. 2.58 1.4 10.1 ug PROTEIN LEVELS VITAMIN E LEVELS wht 21.0¢ 5.0 ug ver 1008 ver ob polseais fot2va SELENIUM YoDINE WEAN cons 0. 18 mg 0.05 mg ROI 0.06 mg ROIO.15 mg
Slide 41: State-of-the-Art and Fully Integrated Value Chain
STATE-OF-THE ART AND FULLY INTEGRATED VALUE CHAIN HEALTHY LIVING STRONG CONTROL IN THE FAROE ISLANDS 93,000t 41
Slide 42: Value Chain Insight – Hatcheries for Smolt
VALUE CHAIN INSIGHT – HATCHERIES FOR SMOLT IMPROVEMENTS OF LARGE-SMOLT QUALITY, FAROES (2021G VS. 2020G) 54% 13% Lower mortality Higher growth (number of fish) 4% Lower Feed Converstion Ratio (bio) 16% Lower Feed Converstion 32% Ratio (Eco) Lower mortality (biomass) 42
Slide 43: Farming Cycles Getting Shorter with Large High-Quality Smolt
VALUE CHAIN INSIGHT FARMING CYCLES GETTING SHORTER WITH LARGE HIGH-QUALITY SMOLT Large Smolt Strategy - Reduced biological risk - Increased production efficiency - Enables Sustainable Growth Faroes: Currently at 13 months in the sea 409g (H1 2023) 43
Slide 44: ~6.3BN Planned Investments 2024-2028
~ 6.3BN PLANNED INVESTMENTS 2024-2028 HEALTHY LIVING REDUCE BIOLOGICAL RISK, IMPROVE EFFICIENCY AND INCREASE ORGANIC GROWTH Faroe Islands: 2024-2028 capex plan vs. 2022-2026 capex plan 1.800.000 • Hatchery capacity of 24m smolt at 500g in 2028 1.600.000 • Cost-efficient broodstock (repurposing old h
Slide 45: Bakkafrost
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