Fish Pool Christmas Webinar Supply Outlook Todays Agenda
Part 1 – Background Where are we today and where are coming from? Part II – Supply Outlook Low supply growth in 2021 expected, but… Part III – Salmon Prices A slow transition back towards EUR6.0/kg Part IV – Long-term supply The party is not ending anytime soon Part V – Concluding Remarks
Carnegie Investment Bank AB 18 November 2020 2 Fish Pool Christmas Webinar: Supply Outlook Covid-19 negatively impacting salmon prices in 2020
. 2020 has not been nice to the fish farming industry Weekly salmon price: Norway (EUR/kg) – Salmon prices (in EUR) trending below 2018-19 levels 9.5 since the Covid-19 pandemic started in February 8.5
7.5
6.5
5.5 EUR/kg
4.5
3.5
2.5 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Min/Max '12-'18 Avg. '12-'18 2018 2019 2020
Source: Carnegie Research, Nasdaq
Carnegie Investment Bank AB 18 November 2020 3 Fish Pool Christmas Webinar: Supply Outlook Covid-19 negatively impacting salmon prices in 2020
. 2020 has not been nice to the fish farming industry Weekly salmon price: Norway (EUR/kg) – Salmon prices (in EUR) trending below 2018-19 levels 9.5 since the Covid-19 pandemic started in February 8.5
– But, in a world where many people are left without a job 7.5 and several industries fail to make ends meet, we are 6.5 weathering the challenges quite well…
5.5 EUR/kg
4.5
3.5
2.5 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Min/Max '12-'18 Avg. '12-'18 2018 2019 2020 Break-even (Norway) Source: Carnegie Research, Nasdaq
Carnegie Investment Bank AB 18 November 2020 4 Fish Pool Christmas Webinar: Supply Outlook Covid-19 negatively impacting salmon prices in 2020
. 2020 has not been nice to the fish farming industry Norway: Weekly harvest volumes – Salmon prices (in EUR) trending below 2018-19 levels 35,000 since the Covid-19 pandemic started in February – But, in a world where many people are left without a job 30,000 and several industries fail to make ends meet, we
weathered the challenges quite well… 25,000
– …as harvest volumes are stable versus 2019 levels Tonnes 20,000
15,000 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 2018 2019 2020
Source: Carnegie Research, Kontali
Carnegie Investment Bank AB 18 November 2020 5 Fish Pool Christmas Webinar: Supply Outlook Covid-19 negatively impacting salmon prices in 2020
. 2020 has not been nice to the fish farming industry FX: EUR versus NOK and USD – Salmon prices (in EUR) trending below 2018-19 levels 130 since the Covid-19 pandemic started in February 125 120 – But, in a world where many people are left without a job 115 and several industries fail to make ends meet, we 110 weathered the challenges quite well… 105 – …as harvest volumes are stable versus 2019 levels 100 95 – And on top: FX has boosted earnings (again) for the 90 Norwegian fish farming industry…
EURUSD EURNOK
Source: Carnegie Research, Factset
Carnegie Investment Bank AB 18 November 2020 6 Fish Pool Christmas Webinar: Supply Outlook Covid-19 negatively impacting salmon prices in 2020
. 2020 has not been nice to the fish farming industry Weekly salmon price: Norway (NOK/kg) – Salmon prices (in EUR) trending below 2018-19 levels 90 since the Covid-19 pandemic started in February 80
– But, in a world where many people are left without a job 70 and several industries fail to make ends meet, we weathered the challenges quite well… 60 50 – …as harvest volumes are stable versus 2019 levels NOK/kg 40 – And on top: FX has boosted earnings (again) for the Norwegian fish farming industry… 30 – …resulting in fairly stable price development versus 20 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 2019 Min/Max '12-'18 Avg. '12-'18 2019 2020
Source: Carnegie Research, Nasdaq
Summarized, 2020 is yet another fantastic year for the fish farming industry (in Norway) given the circumstances caused by the Covid-19 shutdowns across all key markets
Carnegie Investment Bank AB 18 November 2020 7 Fish Pool Christmas Webinar: Supply Outlook What to read out of the significant demand loss in 2020
. Demand for fresh whole salmon estimated down Norwegian export value (EURm, per week)
some 10-20% since the Covid-19 pandemic started in 30% February 20% – Switch from fresh wholefish into foodservice to 10% prepacked products and filets into retail as restaurants 0% got closed or forced to operate at reduced capacity… EURm -10% -20% -30%
-40%
Jul-19 Jul-20
Jan-19 Jan-20
Jun-19 Jun-20
Sep-19 Sep-20
Feb-19 Feb-20
Apr-19 Apr-20
Aug-19 Oct-19 Aug-20 Oct-20
Mar-19 Mar-20
May-19 May-20
Dec-19
Nov-20 Nov-19 Export value (EUR), Y/Y (4w moving-average)
Source: Carnegie Research, Directorate of Fisheries
Carnegie Investment Bank AB 18 November 2020 8 Fish Pool Christmas Webinar: Supply Outlook What to read out of the significant demand loss in 2020
. Demand for fresh whole salmon estimated down Nasdaq salmon prices: 6-9kg premium/discount to 3-5kg
some 10-20% since the Covid-19 pandemic started in 3.0 February 2.5 – Switch from fresh wholefish into foodservice to 2.0 prepacked products and filets into retail as restaurants 1.5 got closed or forced to operate at reduced capacity… 1.0 EUR/kg 0.5 – …which is explaining why the large fish premium was 0.0 non-existing in Q2(20) and from October-20 -0.5 -1.0
Source: Carnegie Research, Nasdaq
Carnegie Investment Bank AB 18 November 2020 9 Fish Pool Christmas Webinar: Supply Outlook What to read out of the significant demand loss in 2020
. Demand for fresh whole salmon estimated down Salmon: Demand by region (measured in EUR) -1.7% some 10-20% since the Covid-19 pandemic started in 16
February 14 12.7% – Switch from fresh wholefish into foodservice to 12 prepacked products and filets into retail as restaurants 10
got closed or forced to operate at reduced capacity… 8 EURbn – …which is explaining why the large fish premium was 6
non-existing in Q2(20) and from October-20 4 . In total, demand for salmon (in EUR) estimated to be 2 0 down 7.1% versus 2019… 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
– …and down 1.7% annually since “peak demand” in 2016 EU USA Japan Russia Brazil Rest of the World
Source: Carnegie Research, Kontali, Nasdaq
Carnegie Investment Bank AB 18 November 2020 10 Fish Pool Christmas Webinar: Supply Outlook Demand was soft already ahead of the Covid-19 outbreak
Value increase, EURbn, % 9% supply ~6% volume 50% growth and 23% supply growth growth Russia closed 40% ~4% supply growth and 30% Covid-19 20%
10%
0%
-10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Value increase, EURbn, %
Source: Carnegie Research, Kontali, Nasdaq
Historical demand drops (and increases) are quite easy to explain – 2017-19 is different and 2020 mark another tick in the wrong direction
Carnegie Investment Bank AB 18 November 2020 11 Fish Pool Christmas Webinar: Supply Outlook No return to normal before Covid-19 restrictions are eased
. The foodservice market accounts for 40-50% of global consumption – Europe: 30-40% – USA: 40-50% – Asia: 60-80% . Impossible to picture an ease of foodservice and travel restrictions before a Covid-19 vaccine is officially approved, manufactured in large scale and distributed across the wider population – Best case: Business as usual from second half of 2021?
Key question: As the Covid-19 vaccines are unlikely to yield 100% protection in all recipients and may vary in their ability to produce immune responses and memory to Covid-19 Is the implication of a “new normal” meaningful different for the demand of salmon?
Carnegie Investment Bank AB 18 November 2020 12 Todays Agenda
Part 1 – Background Where are we today and where are coming from? Part II – Supply Outlook Low supply growth in 2021 expected, but… Part III – Salmon Prices A slow transition back towards EUR6.0/kg Part IV – Long-term supply The party is not ending anytime soon Part V – Concluding Remarks
Carnegie Investment Bank AB 18 November 2020 13 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Carnegie Investment Bank AB 18 November 2020 14 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 1) Continued Covid-19 restrictions in H1(21) to impact supply/demand dynamics and logistics? 2) How much trust can we attribute to Kontali’s -13% (-96,000t) supply change estimate from Chile? 3) Any upside/downside to Kontali’s +5% (64,000t) supply change estimate from Norway? 4) Frozen inventory in Europe and Chile?
Carnegie Investment Bank AB 18 November 2020 15 Fish Pool Christmas Webinar: Supply Outlook Continued restrictions in H1(21) to impact fundamentals
2021 supply growth into EU of 76,750t (vs. 11,950t in 2020) Expected volume change by region
Harvest volume change by country/region ('000t WFE) Supply of Atlantic Salmon into EU
2900 130,000 77 2800 120,000 8 14 2700 110,000 2,691 94 2,696 2600 100,000 2500 90,000 2400 80,000 2300 70,000 2200 60,000 2100 2000 2020e Europe Americas Australia Others 2021e 2021e 2020e 2019e 2018e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 1) Continued Covid-19 restrictions in H1(21) to impact supply/demand dynamics and logistics? • Kontali estimate 12% volume growth into Europe in Q1(20) and 4% in Q2(20) as continued restrictions imply that majority of European harvest will be pushed into the “local” retail market • Additional volumes potentially from: • Volumes being held back in Q4(20) to hope for better prices into 2021? • Chilean frozen volumes offered into EU?
Carnegie Investment Bank AB 18 November 2020 16 Fish Pool Christmas Webinar: Supply Outlook Continued restrictions in H1(21) to impact fundamentals
Low to negative supply growth in H2(21) is positive… …but Q3 has been soft over the last two years
Supply of Atlantic Salmon into EU Weekly salmon price: Norway (EUR/kg)
130,000 9.5
120,000 8.5 110,000 7.5 100,000 6.5 90,000 5.5 80,000 EUR/kg 70,000 4.5
60,000 3.5
2.5 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2021e 2020e 2019e 2018e Min/Max '12-'18 Avg. '12-'18 2018 2019 2020
Source: Carnegie Research, Kontali Source: Carnegie Research, Nasdaq
Key questions: 1) Continued Covid-19 restrictions in H1(21) to impact supply/demand dynamics and logistics? • Kontali estimate 12% volume growth into Europe in Q1(20) and 4% in Q2(20) as continued restrictions imply that majority of European harvest will be pushed into the “local” retail market • Additional volumes potentially from: • Volumes being held back in Q4(20) to hope for better prices into 2021? • Chilean frozen volumes offered into EU? • Double digit biomass growth in Norway towards YE2020? • And remember when comparing 2020 prices to 2021: Frequent issues with winter ulcer reduced volumes superior volumes available in the spot market “Hidden” supply if less issues in 2021?
Carnegie Investment Bank AB 18 November 2020 17 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 2) How much trust can we attribute to Kontali’s -13% (-96,000t) supply change estimate from Chile?
Carnegie Investment Bank AB 18 November 2020 18 Fish Pool Christmas Webinar: Supply Outlook Kontali’s track-record in forecasting Chilean volumes is soft
Actual Chilean harvest volumes vs Kontali estimates ('000t, Y-1)
800 Harmful algae 750 bloom in Chile 700
650
600
550
500
450
400 Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual 2016 2017 2018 2019 2020 2021
Source: Carnegie Research, Kontali
Key questions: 2) How much trust can we attribute to Kontali’s -13% (-96,000t) supply change estimate from Chile? • Over the last 3-4 years, Kontali’s next year estimate for Chile per Q3-Q4 has understated Chilean harvest volumes by 56,100t (6.9pp) • Chilean KPIs has continued to surprise on the upside • Visibility/reporting of smolt release figures poorer versus Norway?
Carnegie Investment Bank AB 18 November 2020 19 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 3) Any upside/downside to Kontali’s +5% (64,000t) supply change estimate from Norway?
Carnegie Investment Bank AB 18 November 2020 20 Fish Pool Christmas Webinar: Supply Outlook 7.7% more individuals at sea of the youngest generation
Per end-September
Norwegian salmon biomass by generation
14.0% 13.2% 12.0% 10.0% 8% 8.0% 5.7% 5% 6.0% 4.4% 4.0% 3.0%
Delta Y/Y Delta 1.5% 2.0% 0.0% -2.0% -1.5% -1.3% -4.0% 19G vs. 18G 20G vs. 19G Total Biomass # of Fish Avg. Kg Volum (WFE)
Source: Carnegie Research, Kontali
Carnegie Investment Bank AB 18 November 2020 21 Fish Pool Christmas Webinar: Supply Outlook Strong feed sales in September and October
Development in feed sales - best proxy on biomass growth
300 000 +16% 250 000
200 000
150 000
100 000
50 000
- January February March April May June July August September October November December
2016 2017 2018 2019 2020
Source: Sjømat Norge, Carnegie Research
Key questions: 3) Any upside/downside to Kontali’s +5% (64,000t) supply change estimate from Norway? • 5.7% more individuals at sea per end-September, of which 7.7% more individuals of the 20G • Feed sales significantly up in September and October
Carnegie Investment Bank AB 18 November 2020 22 Fish Pool Christmas Webinar: Supply Outlook Strong feed sales + slow harvest pace + increased avg. weights
Norwegian harvest volumes stable versus 2019 Avg. harvest weight significantly up over the last month
Norway: Weekly harvest volumes Norway: Avg. harvest weight (4w MA)
35,000 5.20
5.00 30,000 4.80
25,000 4.60
Kg Tonnes 4.40 20,000 4.20
15,000 4.00 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 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 2018 2019 2020 2018 2019 2020
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 3) Any upside/downside to Kontali’s +5% (64,000t) supply change estimate from Norway? • 5.7% more individuals at sea per end-September, of which 7.7% more individuals of the 20G • Feed sales significantly up in September and October • Weekly harvest volumes stable Y/Y at ~30,000t • Average harvest weights significantly up Y/Y over the last 4-6 weeks
Do not be surprised if the Norwegian biomass is up 10% (or more) when we move into Jan-2021
Carnegie Investment Bank AB 18 November 2020 23 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 4) Frozen inventory in Europe and Chile? • Per end-September, Mowi (Kontali) estimated that 55-65,000t was stored at frozen inventory in Chile… • …but,
Carnegie Investment Bank AB 18 November 2020 24 Fish Pool Christmas Webinar: Supply Outlook Chilean biomass +1.8% per end-September
Chilean salmon biomass by generation
15.0% 11.5%
10.0% 7.4% 4.8% 5.0% 1.8%
0.0% Delta Y/Y Delta -5.0% -6.0% -5.4% -5.2% -10.0% -8.4%
-15.0% -13.4% 19G vs. 18G 20G vs. 19G Total # of Fish Avg. Kg Volum (WFE) Source: Carnegie Research, Aquabench
Carnegie Investment Bank AB 18 November 2020 25 Fish Pool Christmas Webinar: Supply Outlook Biomass >4kg +33.2% Y/Y and >5kg +65.5% per end-September
Chile: Biomass composition (WFE)
300
250 264
200 198 150 156 161 100 122 '000WFE Tonnes 98 50 54 59 53 30 44 48 0 0-3.5/kg 3.5-4.0/kg 4.0-4.5/kg 4.5-5.0/kg >5.0/kg Total >4.0/kg Sep-20 Sep-19 Source: Carnegie Research, Aquabench
Carnegie Investment Bank AB 18 November 2020 26 Fish Pool Christmas Webinar: Supply Outlook Drop in 2021 Chilean volumes will curb global supply growth
Kontali expect zero global supply growth in 2021 Expected volume change by country
Global supply growth: Farmed Atlantic salmon Harvest volume change by country/region ('000t WFE)
8.0% 7.4% 2900 7.0% 5.9% 6.0% 2800 4.9% 64 37 5.0% 4.2% 4.0% 2700 96 2 696 3.0% 2 691 2.0% 2600 1.0% 0.2% 0.0% 2500 2017 2018 2019 2020e 2021e 2020e Norway Chile Others 2021e
Source: Carnegie Research, Kontali Source: Carnegie Research, Kontali
Key questions: 4) Frozen inventory in Europe and Chile? • Per end-September, Mowi (Kontali) estimated that 55-65,000t was stored at frozen inventory in Chile… • …but, the inventory will continue to rise in the coming months as Chile has 60-90,000t of more harvest-ready fish at sea
Frozen inventory release from Chile over the coming 12 months in the range 60-100,000t is highly likely
Carnegie Investment Bank AB 18 November 2020 27 Fish Pool Christmas Webinar: Supply Outlook We expect 4.1% volume growth in 2021 and 7.3% in 2022
Global production of Atlantic Salmon WFE '000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e Norway 945 1006 1183 1144 1199 1234 1171 1208 1253 1333 1343 1428 1509 1584 UK 142 155 159 158 171 166 157 177 154 184 187 195 212 220 Ireland 18 16 16 11 12 16 16 17 14 16 16 21 20 22 Faroe Islands 42 56 70 73 83 76 78 80 72 87 84 87 107 117 Russia 4 4 7 10 15 14 5 10 4 12 18 21 25 34 Iceland 1 1 3 3 4 4 8 12 14 25 33 41 50 60 Total Europe 1151 1238 1439 1398 1484 1509 1435 1504 1511 1655 1681 1792 1924 2036 Chile 130 221 364 468 583 598 505 564 677 690 730 706 731 737 Canada 118 120 137 115 95 135 146 139 146 138 143 147 167 193 USA 18 18 20 20 24 20 23 22 19 21 20 21 19 21 Total Americas 266 359 520 604 702 753 673 725 843 849 893 873 916 951 Australia 33 36 40 39 42 54 51 61 63 64 78 85 87 87 Others 6 1 1 1 2 2 3 2 7 7 14 25 50 85 Global harvest volumes 1456 1634 2000 2042 2230 2319 2162 2293 2422 2575 2665 2775 2977 3159
Y/Y production growth 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e Norway 10% 6% 18% (3%) 5% 3% (5%) 3% 4% 6% 1% 6% 6% 5% UK (2%) 9% 3% (1%) 8% (3%) (5%) 13% (13%) 20% 2% 4% 9% 4% Ireland 20% (10%) (3%) (32%) 16% 28% 1% 8% (16%) 8% 6% 29% (4%) 8% Faroe Islands (13%) 34% 25% 3% 14% (9%) 3% 4% (11%) 21% (3%) 4% 23% 9% Russia 75% 14% 83% 37% 45% (6%) (63%) 104% (61%) 190% 52% 19% 19% 34% Iceland 50% - 171% 3% 31% (18%) 125% 42% 18% 80% 36% 21% 22% 20% Total Europe 8% 8% 16% (3%) 6% 2% (5%) 5% 0% 10% 2% 7% 7% 6% Chile (46%) 71% 65% 29% 24% 3% (16%) 12% 20% 2% 6% (3%) 3% 1% Canada 2% 1% 14% (16%) (17%) 42% 8% (5%) 5% (6%) 3% 3% 14% 16% USA 10% 2% 7% 4% 18% (16%) 11% (4%) (12%) 9% (3%) 2% (7%) 8% Total Americas (28%) 35% 45% 16% 16% 7% (11%) 8% 16% 1% 5% (2%) 5% 4% Australia 2% 9% 11% (3%) 8% 30% (6%) 20% 2% 2% 21% 10% 2% - Others 5% (83%) (20%) 50% 92% 0% 48% (29%) 171% 6% 100% 80% 101% 70% Global harvest volumes (1.3%) 12.2% 22.5% 2.1% 9.2% 4.0% (6.8%) 6.0% 5.7% 6.3% 3.5% 4.1% 7.3% 6.1% Source: Carnegie Research, Kontali
Carnegie Investment Bank AB 18 November 2020 28 Todays Agenda
Part 1 – Background Where are we today and where are coming from? Part II – Supply Outlook Low supply growth in 2021 expected, but… Part III – Salmon Prices A slow transition back towards EUR6.0/kg Part IV – Long-term supply The party is not ending anytime soon Part V – Concluding Remarks
Carnegie Investment Bank AB 18 November 2020 29 Fish Pool Christmas Webinar: Supply Outlook We see a gradual recovery towards EUR6.0/kg
Salmon prices expected to rise towards 2022 CARe below Fish Pool in Q1(21) and above in Q2-Q4(21)
Nasdaq salmon price (EUR/kg, FCA Oslo) CARe versus Fish Pool (EUR/kg, FCA Oslo)
8.0 7.00 6.8 7.0 6.4 6.2 6.00 5.9 5.7 6.0 5.5 5.6 5.00 5.2 5.3 4.9 5.0 4.4 4.6 4.00 4.0 3.00 3.0 2.00 2.0 1.00 1.0 0.00
0.0
Jul-21 Jul-22
Jan-21 Jan-22
Jun-21 Jun-22
Sep-21 Sep-22
Feb-21 Feb-22
Apr-21 Apr-22
Aug-21 Aug-22
Oct-21 Oct-22
Mar-21 Mar-22
May-21 May-22
Dec-20 Dec-21 Dec-22
Nov-21 Nov-22 2012 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e Nov-20 CARe Fish Pool
Source: Carnegie Research, Fish Pool
We forecast a gradual recovery over 2021. H2(21) supply/demand balance look good given the assumption of completed vaccination program globally and eases of travel and foodservice restrictions
Carnegie Investment Bank AB 18 November 2020 30 Todays Agenda
Part 1 – Background Where are we today and where are coming from? Part II – Supply Outlook Low supply growth in 2021 expected, but… Part III – Salmon Prices A slow transition back towards EUR6.0/kg Part IV – Long-term supply The party is not ending anytime soon Part V – Concluding Remarks
Carnegie Investment Bank AB 18 November 2020 31 Growth towards 2025 expected at 5-6% or ~1m tons of harvest volume
Majority of growth from Norway and Chile – With some additional volumes from new regions and technologies
HARVEST VOLUMES (‘000 WFE)
Growth in Norway driven by “traffic light”, post-smolt, harvest weights and CAGR ~6% conversion of development 150 3 610 licenses 100 29 33 56 184 15 50 415 +1 032 Growth offshore and on land may develop faster or slower than 2575 anticipated
870
+5% +6% +22% 1 750 120 686 1333 87 80 24
2019 2025e 2019 2025e 2019 2025e
1 750 +4% +4% +6% 870 200 1333 686 185 200 144
2019 2025e 2019 2025e 2019 2025e
2019 2025 Norway Chile UK Canada Faroes Iceland Other Off-shore/New areas Landbased
Source: Kontali and Carnegie estimates
Carnegie Investment Bank AB 18 November 2020 32 Todays Agenda
Part 1 – Background Where are we today and where are coming from? Part II – Supply Outlook Low supply growth in 2021 expected, but… Part III – Salmon Prices A slow transition back towards EUR6.0/kg Part IV – Long-term supply The party is not ending anytime soon Part V – Concluding Remarks
Carnegie Investment Bank AB 18 November 2020 33 Fish Pool Christmas Webinar: Supply Outlook 2021 a transitional year towards a better future
. 2021 to be a transitional year with unusual soft prices in H1(21) as continued negative Covid-19 effects will negatively impact demand – Rising prices from Q2(21) and into H2(21) – Volume growth in 2022-25 expected to be around 5-6% Historical supply/price correlation suggest stable prices • But – volume growth between 2019 and 2025 expected to be more than 1m tons of harvest The same absolute growth as in the period between 2011 and 2020 . Market fundamentals continue to be supportive as farmed salmon (and the general seafood category) is a product we should consume more of per capita in the future – Retail to be the key growth category as convenience and health awareness continues to be the major trends in consumption of proteins – The market growth towards 2025 in absolute volumes is significant with more than 1m additional tons expected . Short-term negatives following Covid-19 could be long-term positives Lower salmon prices to trigger increased awareness of the product and hopefully some sticky customers also after the end of the pandemic
Carnegie Investment Bank AB 18 November 2020 34 Thank you!
Lars Konrad Johnsen [email protected] +47 22 00 93 71 +47 95 90 31 46
Carnegie Investment Bank AB 18 November 2020 35 Disclosures and disclaimers
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This report is distributed in Sweden by Carnegie Investment Bank AB. Carnegie UK is the UK Branch of Carnegie Investment expected total return over the coming six to 12 months based on various fundamental valuation methods. A commonly used method is DCF valuation, Bank AB which is authorised by the Swedish Financial Supervisory Authority and subject to limited regulation by the UK Financial Conduct Authority. where future cash flows are discounted to today. Analysts may also use different valuation multiples, e.g. P/E ratio and EV/EBIT multiples, relative to This report has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Carnegie UK and issued by it in the industry peers to obtain a target price. For companies where it is appropriate, a target price can also be based on the analyst’s assessment of a fair ratio UK. In Finland this report is issued by Carnegie Investment Bank AB, Finland Branch. 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The Denmark branch is authorised by Information – You will find detailed information about the valuation or methodology and the underlying assumptions on Carnegie Edge (www.carnegie- the Swedish Financial Supervisory Authority and subject to limited regulation by the Danish Financial Supervisory Authority (Finanstilsynet). This report edge.com). The complete history of research reports and previous recommendations can also be found on Carnegie Edge. is distributed in the US by Carnegie Inc., a US-registered broker-dealer. This report is provided for informational purposes only and under no Research coverage – Carnegie’s research analysis consists of case-based analyses, which implies that the frequency of the analytical report may vary circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy any securities. Any US person who wishes to effect over time. Unless otherwise expressly stated in the report, the analysis is updated when considered necessary by the research department, for example transactions based on this report should contact Carnegie Inc. Investors in the US should be aware that investing in non-US securities entails certain in the event of significant changes in market conditions or events related to the issuer/the financial instrument. risks. The securities of non-US issuers may not be registered with, nor be subject to, the current information reporting and audit standards of the US Securities and Exchange Commission. Analyst certification – The research analyst or analysts responsible for the content of this report certify that, notwithstanding the existence of any potential conflicts of interests referred to herein, the views expressed in this report accurately reflect the research analyst’s personal views about the Company specific disclosures companies and securities covered. It is further certified that the research analyst has not been, nor is or will be, receiving direct or indirect The following disclosures relate to relationships between Carnegie Investment Bank AB (with its subsidiaries, “Carnegie”) and the subject company. compensation related to the specific ratings or views contained in this report. Potential conflict of interest – Carnegie, or its subsidiaries, may from time to time perform investment banking or other services for, or solicit Within the past 12 months Carnegie (refer to definition in disclaimer text) has received compensation for investment banking services regarding Agilyx AS, investment banking or other business from, any company mentioned in this report. Any such publicly announced business activity, during the past 12 Aker ASA, Aker Carbon Capture AS, Aker Offshore Wind AS, Aker Solutions, BerGenBio, CELLINK, Cloudberry Clean Energy, Edgeware, Embracer Group, months, will be referred to in this report. A set of rules handling conflicts of interest is implemented in the Carnegie Group. Investment Banking and H+H International, Hexagon Composites, Irras, Isofol Medical, Musti Group Oyj, NEL, Qliro, Sampo, Scatec Solar, Self Storage Group, Serneke, SP Group, other business departments in Carnegie are surrounded by arrangements (Chinese walls) to restrict the flows of sensitive information. Persons outside a Chinese wall may gain access to sensitive information only after having observed applicable Chinese wall crossing procedures. The remuneration of WithinSpeqta andthe Stillfrontpast 12 Group.months Carnegie (refer to definition in disclaimer text) has managed or co-managed a public offering of securities of Azelio, Bang & persons involved in preparing this report is not tied to investment banking transactions performed by Carnegie or a legal person within the same group. 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In accordance with the guidelines the Research Please see Carnegie’s website for a full list of shares owned by employees of Carnegie AS in relation to potential conflicts of interest: www.carnegie.no department is separated from the Investment Banking department and there are no reporting lines between the Research department and Investment (Securities, Research, Disclaimer). Carnegie AS may also own shares in connection with trading. This disclosure is made to meet Norwegian best practice. Banking. The guidelines also include rules regarding, but not limited to, the following issues: contacts with covered companies; prohibition against offering favourable recommendations; personal involvement in covered companies; participation in investment banking activities; supervision and review of research reports; analyst reporting lines and analyst remuneration. Since September 30, 2010 Carnegie Investment Bank AB acts as a market maker in the Fastpartner share. Since September 30, 2010 Carnegie Investment Bank Stock rating distribution in the previous 12 months AB acts as a market maker in the Kindred share. Since 1 December, 2014 Carnegie Investment Bank AB acts as a market maker in the Solar share. Since 17 November, 2016 Carnegie Investment Bank AB acts as a market maker in the TF Bank share. Since 16 July, 2018 Carnegie Investment Bank AB acts as a Ratings Carnegie coverage universe Investment banking services* market maker in the Handicare share. % of total % of total Buy 53 75 Hold 38 16 Sell 9 9
* Investment banking services provided by Carnegie in the previous 12 months Disclaimer main text updated 2019-02-04 w10
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