NORWAY ROYAL SALMON Trondheim, 04 June 2014 Klaus Hatlebrekke, COO
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
2
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
4 F-430 NRS Finnmark (14) F-430
T-302 N ord-Senja (3 )
T-359 Nor Seafood (2) T-302
T-359 Wilsgård FO (3) T-359 Sjurelv (2 )
N-234 Kristoffersen (6) Kleiva (4 ) T-470
Sørollnesfisk (3 ) T-436
N-1041 Lovundlaks (4 ) N-1041
NT-167 E mils en Fisk (6 ) NT-167 ST-106 Refs nes Laks (4 )
ST-106 Måsøval FF (2) ST-106 ST-106 Måsøval FO (7 ) NRS-Group (25) O wned and c ontrolled by NRS
A ssociated c ompanies (9 ) N RS owners hip < 50 %
H-109 Lingalaks (7) M embers (4 9) H-220 Fylkesnes (3) Partnering c ontracts H-109 T O TAL N RS: 8 3 licenses H-220 NRS-Feøy (6 ) H-220
H-220 Eidesvik (3)
H-220 Korshavn (1) Hellesund (2) H-220 Development of volumes from NRS Huge unutilized farming capacity in 2009, which will be almost utilized in 2014
80 000 External Volumes 80 000 NRS-Farming 70 000 68 000 70 000 62 200 60 000 57 500 60 000
49 500 50 500 50 000 47 200 50 000 45 500 39 000 39 500 37 000 40 000 35 500 36 500 40 000 32 000 30 000 39 000 30 000 39 500 40 700 29 000 35 100 25 200 20 000 20 000 32 300 21 000 18 500 10 000 10 000 10 500 6 500 3 200 6 000 0 4 400 0 2006 2007 2008 2009 2010 2011 2012 2013 2014
6 AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
7 Highlights in Q1 2014:
The best margins in NRS’ history – EBIT/kg Farming North of 18.71 – EBIT/kg Farming South of 15.40 – ROCE rolling past 4 quarters of 29.3 %
Continued strong salmon market driven by increased demand and low supply growth – Historically high salmon prices throughout the quarter – Promising outlook with historically high forward prices
Favourable refinancing with increased flexibility – Total bank facility of MNOK 900
NRS is nominated for 10 new green licenses – 9 licenses in Troms and Finnmark at MNOK 10 ea (Group B) – 1 license in Rogaland (intended for Troms) at MNOK 56 (Group A) – Potential capacity growth of 40 %
8 Highlights in Q1 2014
KEY FIGURES Q1 Q1 Average salmon price (NASDAQ) up 32 % from (NOK '000) 2014 2013 Q1 last year with significant positive impact on Operating revenues 695 371 527 593 operational EBIT Operational EBITDA 96 306 52 633
Operational EBIT 1) 87 057 44 781 Harvested volume unchanged and sold volume up by 3 % from Q1 last year Income from associates 2 522 2 810 EBIT 28 325 92 425 EBT 12 307 84 034 Operational EBIT MNOK 87.1 in Q1 14 – ROCE 29.3 % EPS (NOK) 2 ) 1,05 0,58 ROCE 3) 29,3 % 5,5 % – Operational EBIT per kg Farming NOK 18.45 – Loss on fixed price contracts of MNOK 10.2 Op. cash flow 102 016 -7 219 Capital expenditure 8 355 17 017 Negative fair value adjustment of MNOK 61.3 Net interest-bearing debt 367 359 603 883 Equity ratio 47,8 % 38,1 % Positive cash flow from operations with Volume harvested (HOG) 5 435 5 405 MNOK 102 Operational EBIT per kg Farming 18,45 9,48 Op. EBIT per kg Sales inc. contracts -1,40 -0,23 Equity ratio increased in Q1 14 to 47.8 % from Total operational EBIT per kg 17,04 9,26 Volume sold 13 978 13 574 42.4 % due reduced total capital.
1) EBIT pre fair value adjustments and non-recurring items 2) Earnings per share pre fair value adjustments 3) ROCE: Return on average capital employed based on 4-quarters rolling operational EBIT / average (NIBD + Equity - Financial assets) 9 Region North
KEY FIGURES Q1 Q1 Operational EBIT pr kg farming (NOK '000) 2014 2013 18,71
Operating revenues 639 705 437 008 13,65 12,31 12,78 Operational EBIT * 86 642 44 097 10,09
Volume harvested (tonnes) 5 007 4 473
Operational EBIT per kg Farming 18,71 10,09 Op. EBIT per kg Sales inc. contracts -1,40 -0,23 Total operational EBIT per kg 17,30 9,86
* EBIT pre fair value adjustments and non-recurring Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 items incl. allocated margin from sales Production Cost - NORTH 26,00 25,35 25,16 25,21 Operational EBIT per kg farming 24,83 NOK 18.71 24,00 – Margin from Sales down by NOK 1.17 23,33 per kg compared with Q1 13 – Sales price FCA packing station up by 22,00 NOK 10.50 per kg from Q1 13
20,00 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14
10 Region South
KEY FIGURES Q1 Q1 (NOK '000) 2014 2013 Operational EBIT pr kg farming 15,40 Operating revenues 54 561 89 612
10,03 Operational EBIT * 5 987 5 923 9,86 6,59 6,60 Volume harvested (tonnes) 428 932
Operational EBIT per kg Farming 15,40 6,59 Op. EBIT per kg Sales inc. contracts -1,40 -0,23 Total operational EBIT per kg* 14,00 6,36 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 * EBIT pre fair value adjustments and non-recurring items incl. allocated margin from sales Production Cost - SOUTH 34,00 33,25
32,00 Operational EBIT per kg farming 29,90 30,02 30,00 NOK 15.40 28,00 27,34 – Margin from Sales down by NOK 1.17 26,70 per kg compared with Q1 13 26,00 – Sales price FCA packing station up by 24,00 NOK 14.72 per kg from Q1 13. 22,00
20,00 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14
11
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
13 Harvesting estimates 2014: 29.000 tonnes (+ 15%)
30,0 29,0 25,2 25,0 SOUTH NORTH 6,2 4,7 20,0
15,0 11,1 9,7 22,8 10,0 20,5 1,2 3,1 5,4 5,0 0,4 2,8 9,9 6,6 5,0 1,5 0,0 1,3 FY-13 Q1-14 Q2-14 Q3-14 Q4-14 FY-14
2 000 Volume hedged 2014 (tonnes)
1 781 1 500 1 698 1 508 Smolt release FY 13 FY 14 1 000 1 222 (Mill no.) ACT EST
500 North 5,9 6,6 - South 1,7 1,7 Q1-14 Q2-14 Q3-14 Q4-14 Total 7,6 8,3 14 General Market Outlook Strong demand for Atlantic salmon in Q1 as prices were approx. 30 % above last year’s level, while Norwegian supply increased 3 % and global supply 4 %. EU growth in line with Norwegian supply growth, due to strong demand from UK, Holland, Spain, Sweden etc. France and Poland imported less salmon and seems affected by the high prices in Q1. Russia and Ukraine is also reducing imports due to prices and increased risk. Improving demand from Asia and the US in Q1. Strong growth from Greater China, which saw a 14 % import growth from Norway. US doubled volumes vs last year.
32%
14%
3% 3% Norway -4% -2%
from from -12%
-20% Export growth the last 4 quarters quarters 4 thelast growth Export
EU-27 France Russia Poland Japan Greater China Others In total
Q2/2013 Q3/2013 Q4/2013 Q1/2014
15 General Market Outlook
We expect 5-8 % global supply to be manageable at attractive prices. – Growth in Q1 driven by Chile – Growth from Q2-Q4 driven by Norway
New licenses will have limited effect for 2014/2015 and full effect from 2016/2017
Global supply of salmon (2003 to 2014E) 2 300 000
2 100 000
1 900 000
1 700 000
1 500 000
1 300 000
1 100 000
900 000
Global supply in tonnes in supply Global 700 000
500 000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E
16 AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
17 Geographical margin development (OSE listed) EBIT margins pr kg has been highest in the Northern region the last period
Norway Royal Salmon has close to 80% of our own farming operation in the Northern Region Y/Y growth past 12 quarters Volumes Region NORTH OSE-listed companies Growth Y/Y: 17% 40 000 37 787 37 139 35 000 31 035 29 728 30 000 27 870 25 930 24 505 23 564 23 642 25 000 22 093
20 000 16 637 16 859 15 000 10 000 5 000 - Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Volumes Region CENTRAL Growth Y/Y: 7% 90 000 82 397 76 275 77 036 75 650 80 000 72 423 73 578 70 000 65 504 65 339 58 699 60 789 60 000 54 667 50 697 50 000 40 000 30 000 20 000 10 000 - Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Volumes Region SOUTH Growth Y/Y: 8% 70 000 64 000 61 961 60 000 57 538 56 699 56 627 52 513 51 758 48 220 48 255 48 017 50 000 44 673 40 994 40 000
30 000
20 000
10 000
- Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
19 GREEN LICENSES
20 Green licenses – Group B 1 license at MNOK 56 to be awarded to NRS Feøy – One new green license to be awarded – One existing license to be converted into green – Both green licenses to be moved to and operated in Troms
NRS Feøy (Region South) – Reduced from 6 to 5 licenses
NRS has achieved better operational results in Region North – Historically 3 - 4 NOK/kg lower production cost in Region North
Green licenses – Group C NRS has applied for 1 license at MNOK 10 for NRS Finnmark – Decision to be made within June
21 Green licenses – Group A
NRS is nominated for the following green licenses: – NRS Finnmark: 5 – Nor Seafood: 2 – Nord Senja Laks: 2
Criteria: Reduction of sea lice and minimizing negative influence on wild salmon
For each new license, one existing license to be converted into green within 2 years.
In addition, Wilsgård Fiskeoppdrett AS (37.5%), has also been nominated for 2 new green licenses in group A.
22 A game changer for NRS
Green licenses Standard Existing Group B Group A after licenses after Total no of licenses conversion conversion licenses NRS-Finnmark 14 5 10 9 19
Nor Seafood 2 2 4 0 4
Nord-Senja Laks 3 2 6 1 7
NRS - Region NORTH 19 9 20 10 30
NRS - Region SOUTH 6 1 5 5
NRS-Farming 25 1 9 20 15 35
Likely future company structure: – NRS Finnmark – NRS Troms – NRS South
23 Operational implementation
Pending final allocation 2,5 years from start-up to full operational effect Estimated gradual need for working capital of MNOK 200 Estimated Capex MNOK 100 gradually Additional bank facilities of MNOK 200 agreed.
Production cost expected to be marginally influenced Smolt production plant to be realized through partnership
NRS will return with more detailed information regarding our operational concept for the green licenses when the allocation process is finalized.
24 And finally
Future growth in the industry is dependent on sustainable solutions.
The new licenses will permanently change NRS and the industry towards more sustainable development.
NRS is motivated and ready for the challenge of being in the forefront of sustainable aquaculture!
25 HOVEDKONTOR:
NORWAY ROYAL SALMON ASA Thank you Olav Tryggvasonsgt. 40 Postboks 2608, Sentrum 7414 TRONDHEIM Telefon: +47 73 92 43 00 E-post: [email protected]
SALGSKONTOR:
NORWAY ROYAL SALMON ASA Gravane 8 Postboks 110 4662 KRISTIANSAND S Telefon: +47 38 12 26 66 E-post: [email protected]
DATTERSELSKAP:
NRS FINNMARK AS Markedsgt. 3 Postboks 1154 9504 ALTA Mobil: +47 928 96 202 E-post: [email protected]
NRS FEØY AS 5548 FEØY Mobil: +47 994 48 090 E-post: [email protected]
NOR SEAFOOD AS 9381 TORSKEN Telefon: +47 77 85 53 08 Telefaks: +47 77 85 53 10 Mobil: +47 905 73 554 E-post: [email protected]
NORD SENJA LAKS AS Norway Royal Salmon ASA 9373 BOTNHAMN Telefon: +47 77 84 85 86 NO 864 234 232 Telefaks: +47 77 84 85 93 Mobil: +47 911 23 613 E-post: [email protected] 26