Q2 2018 B AKKAFROST GROUP Oslo 21 August 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 / Q2 2018 PRESENTATION
SUMMARY OF Q2 2018 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS OUTLOOK INVESTMENT PLAN 2018 - 2022 APPENDIX
HIGHLIGHTS Harvested 12,902 tgw in Q2 2018 (18,402 tgw in Q2 2017) Feed sales of 15,673 tonnes in Q2 2018* (17,032 tonnes in Q2 2017*) Operation Raw material purchase of 118,387 tonnes in Q2 2018 (163,100 tonnes in Q2 2017) Revenues of DKK 954 million in Q2 2018 (DKK 1,206 million in Q2 2017) Revenues and Operational EBIT Operational EBIT** of DKK 408 million in Q2 2018 (DKK 459 million in Q2 2017) Cash flow from operations of DKK 279 million in Q2 2018 (DKK 498 million in Q2 2017) Cash Flow Farming and FOF segments had positive results, while VAP segment had a loss Segments Dividend Dividend of DKK 10.50 per share (NOK 13.52) paid out in April 2018 *) Including internal sales of 14,656 tonnes in Q2 2018 (16,012 tonnes in Q2 2017) **) EBIT before fair value adjustments of biomass, onerous contracts provisions, income from associates and revenue tax Page 4 BAKKAFROST / Q2 2018 PRESENTATION
SUMMARY OF THE QUARTER The result for the Farming segment Q2 Q2 H1 H1 decreased due to lower volumes. The VAP (DKK million) 2018 2017 2018 2017 result was negative again, but the FOF Operating revenues 954 1,206 1,805 2,060 segment had a good result. Operational EBITDA 456 505 770 882 Farming/VAP margin increased from 29.77 Operational EBIT 408 459 676 795 NOK/kg in Q2 2017 to 37.41 NOK/kg in Q2 Profit for the period 339 398 611 477 2018 Operational EBITDA margin 47.8% 41.8% 42.7% 42.8% VAP segment had a margin of -11.00 NOK/kg in Q2 2018, compared to -13.01 Operational EBIT margin 42.7% 38.1% 37.4% 38.6% NOK/kg in Q2 2017 Operational EBIT/Kg (Farming) (NOK) 39.09 33.50 31.85 33.71 Farming margin was 39.09 NOK/kg in Q2 Operational EBIT/Kg (Farming and VAP) (NOK) 37.41 29.77 30.39 29.51 2018, compared to 33.50 NOK/kg in Q2 2017 Operational EBIT/Kg (VAP) (NOK) -11.00 -13.01 -8.99 -14.88 FOF delivered a strong EBITDA margin of EBITDA margin (Fishmeal, -Oil and Feed) 20.2% 15.1% 24.3% 15.6% 20.2% in Q2 2018, compared to 15.1% in Q2 2017 Group Operational EBIT was DKK 408 million in Q2 2018, compared to DKK 459 million in Q2 2017 Page 5 BAKKAFROST / Q2 2018 PRESENTATION
SUMMARY OF Q2 2018 MARKETS AND SALES SEGMENT INFORMATION GROUP FINANCIALS OUTLOOK INVESTMENT PLAN 2018 - 2022 APPENDIX
MARKETS & SALES Same trend in Q2 2018 as in previous quarter. Sales Total sales of salmon Q2 Q2 H1 H1 to Eastern Europe and Asia increased, and sales to by markets 2018 2017 2018 2017 EU decreased. Sales to USA was nearly flat in Q2 EU 27% 46% 29% 46% 2018, compared to Q2 2017. VAP on contract was on USA 15% 16% 16% 17% a low level at 16% Asia 25% 16% 23% 15% Eastern Europe 33% 22% 32% 22% EU market decreased from 46% in Q2 2017 to 27% in Q2 2018 Fresh salmon only Q2 Q2 H1 H1 USA was nearly flat at 15%, compared to 16% by markets 2018 2017 2018 2017 Asia increased from 16% to 25% EU 20% 28% 21% 28% USA 15% 21% 16% 23% Eastern Europe increased from 22% to 33% Asia 28% 22% 26% 20% Harvest volumes used in VAP was 15% in Q2 2018, Eastern Europe 37% 29% 37% 29% compared to 29% in Q2 2017 Contract share, VAP products [% of qty] 100% 80% 71% 72% 60% 85% 84% 40% 20% 29% 28% 15% 16% 0% Q2 2018 Q2 2017 H1 2018 H1 2017 VAP on contract HOG, spot Page 7 BAKKAFROST / Q2 2018 PRESENTATION
ACQUISITION OF US SALMON IMPORTER – NORTH LANDING Bakkafrost signed an agreement in Q2 2018 to acquire the business and assets in North Landing. The acquisition has been closed in Q3 2018 North Landing – Sales office, handling and processing facilities in Clifton, New Jersey Market access Serve Bakkafrost’s customers in the US market Page 8 BAKKAFROST / Q2 2018 PRESENTATION
GLOBAL MARKETS Large price reduction during Q2 2018 Spot prices (NASDAQ) on superior 4-5 [NOK/kg HOG] Q1 Q2 Q3 Q4 Exceptionally large price change during Q2 2018 80.00 Price change (low/high) of NOK 24.88 ~44% 70.00 - from NOK 56.09 to NOK 80.97 60.00 y/y by 1.14 NOK/kg ~2% 50.00 - from NOK 69.03 to NOK 70.17 40.00 q/q by 9.03 NOK/kg ~15% - from NOK 61.14 to NOK 70.17 30.00 20.00 Increased global supply in Q2 2018 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 2015 2016 2017 2018 8% increased global supply in Q2 2018, Change in global market supply and market price compared with Q2 2017, corresponding to 37,800 tonnes Change in global 50% market supply of farmed Atlantic salmon from the 30% previous year 10% Change in European spot prices - fresh 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 -10% Atlantic salmon 2015 2016 2017 2018 (FishPool index) from the previous -30% year -50% Source: Kontali Page 9 BAKKAFROST / Q2 2018 PRESENTATION
DEVELOPMENT IN HARVESTED AND SOLD QUANTITY BY ORIGIN 8% supply growth in Q2 2018 SUPPLY DEVELOPMENT Q2 Q2 Change (HOG) 2018 2017 % European harvest was flat Norway 253.9 235.2 8.0 % Americas harvest increased by 16% UK 32.1 40.8 ‐21.2 % Ireland 2.0 5.1 ‐61.4 % 8% growth from Norway Faroes 16.1 22.3 ‐27.8 % Total Europe 304.1 303.4 0.2 % Increasing harvest during the quarter Chile 140.0 117.6 Scotland low due to few individuals for harvest 19.1 % Canada 34.7 30.6 13.5 % Chilean growth much higher than expected USA 3.9 5.8 ‐32.8 % Total Americas 178.7 154.0 16.0 % Good productivity/increased harvest weights Higher than expected number of individuals Other 18.4 18.7 ‐1.4 % Total (Harvested quantity) 501.2 476.1 5.3 % Low comparator as Q2 2017 harvest was impacted by biological issues Inventory movements 2.3 -10.4 ‐122.6 % Total (Sold Quantity) 503.6 465.8 8.1 % Notes: All figures are in hog-equivalents and thousand tonnes. Source: Kontali Page 10 BAKKAFROST / Q2 2018 PRESENTATION
SALMON MARKETS, SOLD QUANTITY (HOG) Strong momentum in most markets Salmon markets, sold quantity (head on gutted - HOG) Estimated volumes Estimated volumes EU performed well Markets Q2 2018 Q2 2017 Volume % H1 2018 H1 2017 Volume % EU 217,900 204,200 13,700 6.7% 432,800 408,400 24,400 6.0% Contract prices below spot early in the quarter USA 111,200 97,700 13,500 13.8% 219,800 197,900 21,900 11.1% Russia 20,300 13,400 6,900 51.5% 42,400 27,500 14,900 54.2% Spot demand fuelled by lower prices latter part of Japan 12,100 14,600 -2,500 -17.1% 24,800 28,400 -3,600 -12.7% the quarter Greater China 32,500 23,600 8,900 37.7% 62,900 44,600 18,300 41.0% ASEAN 14,900 20,800 -5,900 -28.4% 35,800 41,000 -5,200 -12.7% Strong US growth at increased prices Latin America 34,400 31,300 3,100 9.9% 75,200 66,100 9,100 13.8% Ukraine 3,000 2,500 500 20.0% 6,500 5,500 1,000 18.2% Close to all time high quarterly price Other markets 57,300 57,700 -400 -0.7% 124,300 117,900 6,400 5.4% Total all markets 503,600 465,800 37,800 8.1% 1,024,500 937,300 87,200 9.3% Russia – continued strong growth Mainly driven by Chile Greater China/ASEAN Strong combined growth Inaccurate quarterly number – should be read in concert Japan impacted by currency Source: Kontali Page 11 BAKKAFROST / Q2 2018 PRESENTATION
SHORT TERM SUPPLY OUTLOOK Modest supply growth expected coming quarters SUPPLY - TOTAL Growth rate impacted by inventory movements 700 9% 8% Growth in harvest likely to be instrumental for pricing 600 7% 500 Frozen products are materially sold through alternative channels 6% 400 5% Europe – Fairly high growth 4% 300 3% Norway driven by new licences and expected improved biological performance 200 2% 100 Scotland expected to recover from Q4 2018 after three weak quarters 1% 0 0% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Americas Harvest Supply to the markets Chile expected to grow modestly due to regulatory constraints Change Harvest Change Supply to the markets SUPPLY - EUROPE SUPPLY - AMERICAS 450 12.0% 200 30% 400 25% 10.0% 190 350 20% 300 8.0% 180 250 15% 6.0% 170 200 10% 150 4.0% 160 5% 100 2.0% 150 0% 50 0 0.0% 140 -5% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 EUROPE Change same quarter last year AMERICAS Change same quarter last year Source: Kontali Page 12 BAKKAFROST / Q2 2018 PRESENTATION
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