Q1 2018 B AKKAFROST GROUP Oslo 7 May 2018
DISCLAIMER No representation or warranty (expressed or implied) is This presentation includes statements regarding future 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 fairness, accuracy or completeness of the information the results indicated or implied in these statements. contained herein. Accordingly, none of the Company, or any of its principal shareholders or subsidiary under- takings or any of such person’s officers or employees or advisors accept any liability whatsoever arising directly or indirectly from the use of this document. Page 2 BAKKAFROST / Q1 2018 PRESENTATION
SUMMARY OF Q1 2018 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS OUTLOOK APPENDIX
HIGHLIGHTS Harvested 12,237 tgw in Q1 2018 (13,158 tgw in Q1 2017) Feed sales of 13,923 tonnes in Q1 2018* (19,827 tonnes in Q1 2017*) Operation Raw material purchase of 130,104 tonnes in Q1 2018 (106,567 tonnes in Q1 2017) Revenues of DKK 851 million in Q1 2018 (DKK 854 million in Q1 2017) Revenues and Operational EBIT Operational EBIT** of DKK 268 million in Q1 2018 (DKK 335 million in Q1 2017) Cash flow from operations of DKK 368 million in Q1 2018 (DKK 365 million in Q1 2017) Cash Flow Farming and FOF segments had positive results, while VAP segment had a loss Segments *) Including internal sales of 13,152 tonnes in Q1 2018 (18,953 tonnes in Q1 2017) **) EBIT before fair value adjustments of biomass, onerous contracts provisions, income from associates and revenue tax Page 4 BAKKAFROST / Q1 2018 PRESENTATION
SUMMARY OF THE QUARTER The result for the Farming segment Q1 Q1 decreased due to lower salmon prices and (DKK million) 2018 2017 2017 2016 higher costs. The VAP result was negative Operating revenues 851 854 3,770 3,203 again, but the FOF segment had a very Operational EBITDA 314 377 1,561 1,298 strong result. Operational EBIT 268 335 1,378 1,165 Farming/VAP margin decreased from 29.40 Profit for the period 272 79 511 1,339 NOK/kg in Q1 2017 to 22.92 NOK/kg in Q1 2018 Operational EBITDA margin 36.9% 44.2% 41.4% 40.5% VAP segment had a margin of -7.10 NOK/kg Operational EBIT margin 31.5% 39.3% 36.5% 36.4% in Q1 2018, compared to -17.62 NOK/kg in Q1 2017 Operational EBIT/Kg (Farming) (NOK) 24.15 34.27 30.02 34.50 Operational EBIT/Kg (Farming and VAP) (NOK) 22.92 29.40 28.29 29.23 Farming margin was 24.15 NOK/kg in Q1 2018, compared to 34.27 NOK/kg in Q1 2017 Operational EBIT/Kg (VAP) (NOK) -7.10 -17.62 -4.96 -13.82 EBITDA margin (Fishmeal, -oil and feed) 28.8% 16.3% 20.4% 21.4% FOF delivered a very strong margin of 28.8% in Q1 2018, compared to 16.3% in Q1 2017 Group Operational EBIT was DKK 268 million in Q1 2018, compared to DKK 335 million in Q1 2017 Page 5 BAKKAFROST / Q1 2018 PRESENTATION
SUMMARY OF Q1 2018 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS OUTLOOK APPENDIX
MARKETS & SALES Sales to Eastern Europe and Asia increased, and Total sales of salmon Q1 Q1 sales to EU and USA decreased in Q1 2018, compared by markets 2018 2017 2017 2016 with Q1 2017. VAP on contract was on a low level at EU 31% 46% 45% 43% 17% USA 16% 19% 18% 23% Asia 21% 13% 16% 17% EU market decreased from 46% in Q1 2017 to 31% in Eastern Europe 32% 22% 21% 17% Q1 2018 USA decreased from 19% to 16% Fresh salmon only Q1 Q1 by markets 2018 2017 2017 2016 Asia increased from 13% to 21% EU 22% 29% 23% 19% Eastern Europe increased from 22% to 32% USA 17% 25% 24% 33% VAP contract share was 17% in Q1 2018, compared Asia 23% 17% 23% 25% to 28% in Q1 2017 Eastern Europe 38% 29% 30% 23% Contract share, VAP products [% of qty] 100% 80% 63% 65% 72% 60% 83% 40% 20% 37% 35% 28% 17% 0% Q1 2018 Q1 2017 2017 2016 VAP on contract HOG, spot Page 7 BAKKAFROST / Q1 2018 PRESENTATION
GLOBAL MARKETS Large price increase during Q1 2018 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Q1 Q2 Q3 Q4 Exceptional high price change during Q1 2018 80.00 Price change (low/high) of NOK 25.95 ~50% 70.00 - from NOK 51.90 to NOK 77.85 60.00 y/y by 5.93 NOK/kg ~8.8% 50.00 - from NOK 67.07 to NOK 61.14 40.00 q/q by 10.98 NOK/kg ~21.9% - from NOK 50.16 to NOK 61.14 30.00 20.00 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Increased global supply in Q1 2018 2015 2016 2017 2018 10% increased global supply in Q1 2018, Change in global market supply and market price compared with Q1 2017, corresponding to 45,190 tonnes 50% Change in global market supply of farmed Atlantic salmon from the 30% previous year 10% Change in European spot 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 prices - fresh -10% Atlantic salmon 2013 2014 2015 2016 2017 2018 (FishPool index) from the previous -30% year -50% Source: Kontali Page 8 BAKKAFROST / Q1 2018 PRESENTATION
DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 10% supply growth in Q1 2018 SUPPLY DEVELOPMENT Q1 Q1 Change (head on gutted - HOG) 2018 2017 % European harvest increased by 4% American harvest increased by 23% Norway 263.3 249.3 5.6 % UK 31.1 35.8 -13.1 % Ireland 3.5 2.4 44.4 % 6% growth from Norway Faroes 16.5 15.6 5.8 % Total Europe 314.4 303.1 3.7 % Reduced harvest during the quarter Chile 151.9 118.1 28.7 % Weaker productivity compared to Q4 2017 Canada 27.5 26.4 4.1 % USA 3.3 3.8 -11.9 % Low temperatures caused higher mortality Total Americas 182.7 148.2 23.3 % Scotland low due to few individuals for harvest and Other 20.4 18.2 12.4 % low temperatures Total (Harvested quantity) 517.5 469.5 10.2 % 29% growth from Chile Inventory movements -0.8 1.9 -142.9 % Total (Sold Quantity) 516.7 471.4 9.6 % Q1 2017 impacted by few individuals for harvest 2016 algae bloom caused high mortality Higher than expected harvest in Q1 2018 Opportunistic due to high prices Precautionary due to algae bloom Notes: All figures are in hog-equivalents and thousand tonnes. Source: Kontali Page 9 BAKKAFROST / Q1 2018 PRESENTATION
SALMON MARKETS, SOLD QUANTITY (HOG) Good growth in most markets in Q1 Salmon markets, sold quantity (head on gutted - HOG) 2018 Estimated volumes Q1 comparison Estimated volumes FY comparison Markets Q1 2018E Q1 2017 Volume % FY 2017 FY 2016 Volume % EU performed well EU 218,000 204,200 13,800 6.8% 919,700 942,600 -22,900 -2.4% USA 109,190 100,200 8,990 9.0% 396,300 380,000 16,300 4.3% 7% growth vs. 4% growth in European harvest Russia 19,500 14,100 5,400 38.3% 68,500 69,900 -1,400 -2.0% High quantities from Norway early in the quarter Japan 13,600 13,900 -300 -2.2% 57,600 58,700 -1,100 -1.9% Greater China 28,400 21,100 7,300 34.6% 104,600 95,000 9,600 10.1% Only main market with growth in latter part of the ASEAN 20,500 20,300 200 1.0% 82,500 65,000 17,500 26.9% quarter Latin America 40,300 34,700 5,600 16.1% 135,500 137,400 -1,900 -1.4% Ukraine 3,400 3,000 400 13.3% 13,600 9,100 4,500 49.5% Low growth in the US given supply Other markets 63,800 60,000 3,800 6.3% 256,000 242,600 13,400 5.5% Total all markets 516,690 471,500 45,190 9.6% 2,034,300 2,000,300 34,000 1.7% However strong consistent growth trend Improved image of Chilean salmon due to Comments: reduced use of antibiotics Greater China = China / Hong Kong / Taiwan (incl. estimated re‐export from Vietnam) ASEAN = Association of Southeast Asian Nations (estimated re‐export from Vietnam subtracted) Russia – strong growth Latin America (including both Mexico and Caribbean + domestic consumption in Chile) All figures above are in tonnes hog, and are rounded to the nearest 100 tonnes. Mainly driven by Chile Greater China Spectacular growth Supply from all main origins Positive development in other markets Source: Kontali Page 10 BAKKAFROST / Q1 2018 PRESENTATION
SHORT TERM SUPPLY OUTLOOK Modest supply growth expected for the coming quarters SUPPLY - TOTAL 700 12% Growth rate impacted by inventory movements 600 10% Growth in harvest likely to be instrumental for pricing 500 8% 400 Frozen products are materially sold through alternative channels 6% 300 4% Uncertainty in Chilean estimates 200 2% 100 Indications of higher growth in 2019 0 0% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Harvest Supply to the markets Change Harvest Change Supply to the markets SUPPLY - EUROPE SUPPLY - AMERICAS 450 6.0% 195 30% 190 400 25% 5.0% 185 350 180 20% 300 4.0% 175 250 15% 170 3.0% 200 165 10% 150 2.0% 160 5% 100 155 1.0% 150 50 0% 145 0 0.0% 140 -5% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 EUROPE Change same quarter last year AMERICAS Change same quarter last year Source: Kontali Page 11 BAKKAFROST / Q1 2018 PRESENTATION
SUMMARY OF Q1 2018 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS OUTLOOK APPENDIX
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