dnb markets sme conference 2014 - norway royal salmon · 2015. 4. 12. · dnb markets sme...
TRANSCRIPT
DNB Markets SME Conference 2014 Oslo, 8 April 2014
John Binde, CEO
AGENDA:
NRS in brief
Current status
Outlook
Markets and opportunities
2
Business areas:
SALMON FARMING
4 companies Finnmark, Troms,
Hordaland, Rogaland
26 licenses Volume 2013: 30.000 tons
EXPORT / TRADING
Salmon fresh & frozen 81 licenses
Sales 2013: 67.000 tons 96 % export 50 countries
Revenue: 2 600 MNOK
CHAIN MANAGEMENT
Procurement Quality Assurance
Food Safety Bench Marking Public Relations
3
0 6
1622 25
From salmon trader to integrated salmon farmer
4
# of majority owned licenses
1992 2011 2006 2007 2010 1996 2008 2009
NRS founded as a salmon trader
NRS acquired 90.1% of
Reinhartsen Seafood
Private placement I
NOK 50m
NRS acquired 100% of Feøy
Fiskeoppdrett/ Åmøy
Fiskeoppdrett & 82.5% of Nor
Seafood
NRS acquired 100% of
Altafjord Laks & 76.24% of AS
Tri/ Salmo Arctica
NRS acquired100%
of Brilliant Fiskeoppdrett
Nord Senja Laks AS established,
NRS owns 66.7%
Acquisition of 100% of AS Tri,
merged with Altafjord Laks
AS
IPO 1Q 2011
NRS has historically been based on a membership model – NRS handles procurement of feed, food safety, HSEQ and other common functions for small
independent salmon farmers
– Salmon farmers sell their harvested volumes through NRS
– Currently 26 members holding 78 sea water licenses and 8 fresh water licenses
In 2006 NRS made a strategic decision to vertically integrate into salmon farming – A target was set to do an initial public offering within 3-5 years
– Philosophy to invest in clusters of 3-10 licenses, whilst retaining local commitment and leadership
– NOK 150m raised through two private placements to finance acquisitions (2006 & 2008)
– Acquired salmon farmers with long historic track-record
Private placement II NOK 100m
Open shareholder structure Focusing on creating shareholder value
Ownership struture as pr April 1st 2014
Shareholder No of shares Share
GÅSØ NÆRINGSUTVIKLING AS 6 309 752 14,48 %
GLASTAD INVEST AS 5 487 861 12,59 %
EGIL KRISTOFFERSEN OG SØNNER AS 4 451 450 10,22 %
HAVBRUKSINVEST AS 3 526 312 8,09 %
DNB NOR MARKETS 3 339 164 7,66 %
SPAREBANK 1 MARKETS 3 116 860 7,15 %
MÅSØVAL EIENDOM AS 2 967 707 6,81 %
NYHAMN AS 2 133 371 4,90 %
HELLESUND FISKEOPPDRETT AS 1 541 450 3,54 %
VERDIPAPIRFONDET DNB 1 180 000 2,71 %
LOVUNDLAKS AS 1 000 000 2,30 %
WILSGÅRD FISKEOPPDRETT AS 468 689 1,08 %
MP PENSJON PK 450 700 1,03 %
MERTOUN CAPITAL AS 340 000 0,78 %
HENDEN FISKEINDUSTRI AS 339 502 0,78 %
BARBINVEST AS 252 850 0,58 %
MÅSØVAL FISHFARM AS 240 219 0,55 %
STATE STREET BANK AN 231 475 0,53 %
STATE STREET BANK AN 217 163 0,50 %
FREWI AS 203 433 0,47 %
Total 20 largest shareholders 37 797 958 86,75 %
Total other shareholders 5 774 233 13,25 %
Total no of shares 43 572 191 100,00 %
NRS Finnmark (14)
Nord-Senja (3)
Wilsgård FO (3)
Nor Seafood (2)
Kris toffersen (6)
Sørollnesfisk (3)
Kleiva (4)
Lovundlaks (4)
Emilsen Fisk (6)
Refsnes Laks (4)
Måsøval FF (2)
Måsøval FO (7)
Lingalaks (7)
NRS-Feøy (6)
E idesvik (3)
Fylkesnes (3)
Korshavn (1) Hellesund (2)
NRS-Group (25)
O wned and controlled by NRS
A ssociated companies (9)
NRS ownership < 50 %
Members (49)
Partnering contracts
TO TAL NRS: 83 licenses
Sjurelv (2)
F-430
T-302
T-359
T-359
N-234
N-1041
NT-167
ST-106
ST-106
ST-106
H-109
H-220
H-220
H-220
H-220 H-220
T-436
T-470
F-430
T-359
NT-167
ST-106
H-220
H-109
T-302
N-1041
Region North – NRS Finnmark Finnmark is an area nominated by the authorities for growth following new license awards and increase of MAB.
14 licenses owned 100 % through NRS Finnmark AS
Attractively located sites, history of good profitability
Good biological conditions – Low biological risk
– No algae in the area resulting in lower maintenance costs of nets
Long term harvesting agreement with major industry player
– Close to and approved for the Russian market.
Smolt production through Ranfjorden Fiskeprodukter
– NRS own 37.75 % of the company
– Capacity of 5.5 million smolt
– Long term agreement with other smolt suppliers
8
Region North – Senja cluster
9
Troms is an area nominated by the authorities for growth following new license awards and increase of MAB. At least 10 new licenses will be awarded in 2014.
5 licenses majority owned in the Senja cluster – NRS owns 82.5% of Nor Seafood AS (2 licenses)
– NRS owns 66.7% of Nord Senja Laks AS (3 licenses)
– Operated in co-operation with Wilsgård Fiskeoppdrett in a 9 licenses cluster
– NRS owns 37.5% of Wilsgård
Attractive area with a history of good profitability
Good conditions for salmon farming in the area – Low biological risk
– Optimal sea temperatures during the summer
Harvesting at Wilsgård and Nord Senja
Smolt production through Skardalen Settefisk – Kåfjord based smolt producer with capacity of 2.5 million
smolt
– Owned together with associated company Wilsgård Fiskeoppdrett (70%, NRS subsidiaries 30%)
TROMSØ
Region South – NRS Feøy
10
Operates in the Haugesund area, both in Rogaland and Hordaland counties
Region South holds a total of 6 licenses – Owned 100% through NRS Feøy AS
One single MAB Zone from 2013
– Enables smoother and better utilization of MAB
Harvesting at Espevær Laks – Approved for the Russian market
HAUGESUND
STAVANGER
Development of volumes from NRS
3 200 4 400 6 000 6 500
10 500
18 500 21 000
25 200
29 000
32 300 35 100
39 500 40 700 39 000
32 000
36 500
37 000
39 000
35 500
39 500
45 500 47 200
49 500 50 500
57 500
62 200
68 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
2006 2007 2008 2009 2010 2011 2012 2013 2014
External Volumes
NRS-Farming
11
12
Status as per Q4-2013
13
Highlights in Q4 2013:
The best quarterly and yearly result in NRS’ history – MNOK 91 in Q4-13 and MNOK 256 for the year
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
Reduced harvesting volume – Planned harvesting in December was reduced due to unforeseen events in Region
North and low growth in Region South
– Estimated harvesting volume for 2014 is reduced to 29 000 tonnes due to low growth in Region South, and premature harvesting in Troms due to sea lice
Favourable refinancing with increased flexibility
Dividend proposal of NOK 2.20 per share – 41 % of earnings per share
14
Highlights in Q4 2013 Average salmon price (NASDAQ) up 52 % from Q4 last year with significant positive impact on profits
Harvested volume up by 14 % and sold volume up by 10 % from Q4 last year
Operational EBIT MNOK 91.4 in Q4 13
– Cost of escaped fish by MNOK 2.2
– Loss on fixed price contracts of MNOK 5.8
– Increased provision for doubtful receivables with MNOK 5.8
Positive cash flow from operations with MNOK 38.7
Equity ratio increased in Q4 13 to 42.4 % from 39.5 % due a strong total result
15
KEY FIGURES Q4 Q4 FY FY
(NOK '000) 2013 2012 2013 2012
Operating revenues 851 450 543 003 2 603 712 1 744 266
Operational EBITDA 100 323 16 568 289 729 50 866
Operational EBIT 1) 91 366 8 484 256 002 20 416
EBIT 95 594 6 774 350 727 69 845
Income from associates 13 566 2 973 28 834 10 464
EBT 120 783 -1 945 396 292 40 749
EPS (NOK) 2) 2,43 -0,30 5,43 -0,12
ROACE 3) 25,3 % 2,1 % 25,3 % 2,1 %
Op. cash flow 38 037 -6 558 211 835 -2 828
Capital expenditure 18 421 8 295 65 399 34 747
Net interest-bearing debt 453 883 566 075 453 883 566 075
Equity ratio 42,4 % 36,2 % 42,4 % 36,2 %
Volume harvested (HOG) 8 383 7 337 25 191 21 162
Operational EBIT per kg Farming 12,02 1,45 11,71 1,25
Op. EBIT per kg Sales inc. contracts -0,08 0,35 -0,59 1,00
Total operational EBIT per kg 11,94 1,80 11,12 2,25
Volume sold 19 858 18 115 62 141 57 673
1) EBIT pre fair value adjustments and non-recurring items
2) Earnings per share pre fair value adjustments
3) ROACE: Return on average capital employed based on 4-quarters rolling operational EBIT /
average (NIBD + Equity - Financial assets)
Region North
Operational EBIT per kg farming NOK 12.78 – Margin from Sales down by NOK 0.43 per kg compared with Q4 12 due to loss on
contracts by NOK 0.69 per kg
– Sales price FCA packing station up by NOK 12.86 per kg from Q4 12
– Planned harvest in December was reduced due to unforeseen events, such as storms and a diesel leak at harvesting plant. As prices were at the highest in December, this reduced average price achieved in the quarter.
16
KEY FIGURES Q4 Q4
(NOK '000) 2013 2012
Operating revenues 626 738 325 354
Operational EBIT * 78 796 9 039
Volume harvested (tonnes) 6 204 4 397
Operational EBIT per kg Farming 12,78 1,70
Op. EBIT per kg Sales inc. contracts -0,08 0,35
Total operational EBIT per kg 12,70 2,06
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
1,71
10,09
13,65 12,31 12,78
Q4 12 Q1 13 Q2 13 Q3 13 Q4 13
Operational EBIT pr kg farming
Farming – Region North
Production cost of NOK 25.16 per kg
Volume increase of 41 % compared to Q4 12
Operation – Good growth in Q4 despite low sea temperatures
– Higher than normal costs as a result of extended sea lice treatments, especially in Troms
– The harvesting in Troms of the 2012 generation has been accelerated, due to sea lice challenges
– This years smolt release has better growth and lower mortality than normal
17
4 397 4 473
5 560
4 254
6 204
-
2 000
4 000
6 000
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Harvested Volume - NORTH
23,37 23,33
25,35
24,83 25,16
20,00
22,00
24,00
26,00
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Production Cost - NORTH
0,0
2,0
4,0
6,0
8,0
10,0
12,0
Jan Mar May Jul Sep Nov
Temperatures Region North
Spread 09-12 Average 09-12 2013
Region South
Operational EBIT per kg farming NOK 9.86 – Margin from Sales down by NOK 0.43 per kg compared with Q4 12 due to loss on
contracts by NOK 0.69 per kg
– Sales price FCA packing station up by NOK 13.06 per kg from Q4 12.
18
KEY FIGURES Q4 Q4
(NOK '000) 2013 2012
Operating revenues 219 928 217 455
Operational EBIT * 21 316 4 184
Volume harvested (tonnes) 2 179 2 940
Operational EBIT per kg Farming 9,86 1,07
Op. EBIT per kg Sales inc. contracts -0,08 0,35
Total operational EBIT per kg* 9,78 1,42
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
1,07
6,59
10,03
6,60
9,86
Q4 12 Q1 13 Q2 13 Q3 13 Q4 13
Operational EBIT pr kg farming
Farming – Region South
Production cost of NOK 30.02 per kg – Weak performance – Changed production regime implemented to
reduce biological risks
Volume down by 26 % compared to Q4 12
Operation – Growth being significantly lower and mortality
higher than expected due to challenges with AGD and sea lice
– Escape of fish from one of the sites after a storm
19
2 940
932
1 269
320
2 179
-
1 000
2 000
3 000
4 000
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Harvested Volume - SOUTH
25,75
27,34
29,90
26,70
30,02
22,00
24,00
26,00
28,00
30,00
Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Production Cost - SOUTH
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
Jan Mar May Jul Sep Nov
Temperatures Region North
Spread 09-12 Average 09-12 2013
Associated companies
3 fish-farming companies with 9 licenses 2 harvesting companies and 2 hatchery with a yearly capacity of total 8 million smolt
Q4 13 EBIT per kg of NOK 14.77 for associated farming companies
NRS share of result after tax of MNOK 13.6 in Q4 13
20
KEY FIGURES
(NOK '000)
Operating revenues
Operational EBIT *
EBIT
Result after tax
Volume harvested (tonnes)
Operational EBIT per kg *
*EBIT pre fair value adjustments
NRS' share of result after tax
138 784 38 542
48 762 1 180
49 650 1 180
37 921 628
3 302
14,77
13 457 109
Q4 2013
Farming
companies
Other
associated
companies
Y/Y growth past 12 quarters OSE-listed companies
21
22 093
16 637 16 859
31 035
24 505 23 564 23 642
37 787
29 728
25 930 27 870
37 139
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
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 NORTHGrowth Y/Y: 17%
50 697 54 667
72 423
82 397
65 504 65 339
76 275 77 036
58 699 60 789
73 578 75 650
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
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 CENTRALGrowth Y/Y: 7%
40 994
48 220 48 255
57 538
52 513
61 961
56 699
64 000
44 673
51 758 48 017
56 627
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
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 SOUTHGrowth Y/Y: 8%
7,0
10,6
8,77,9
9,7
13,0
9,910,7
8,5
13,5
10,8
12,1
-
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
Q1-13 Q2-13 Q3-13 Q4-13
Regional performance - EBIT/kgOSE-listed Companies
SOUTH CENTRAL NORTH
Regional Performance in Norway - 2013
22
OUTLOOK
23
20,5
5,0 1,3
6,6 9,9
22,8
4,7
0,4
1,5
3,1
1,2
6,2 25,2
5,4
2,8
9,7 11,1
29,0
-3,0
2,0
7,0
12,0
17,0
22,0
27,0
32,0
FY-13 Q1-14 Q2-14 Q3-14 Q4-14 FY-14
SOUTH NORTH
Harvesting estimates 2014 (tonnes HOG)
2013: 25 200 tonnes (+ 19 % yr/yr) 1 800 tonnes lower than estimated in Q3 report – Planned harvest in December was prevented by unforeseen events
in Region North, such as storms and diesel leak at harvesting plant
– Low growth in Region South due to biological challenges
2014: 29 000 tonnes (+ 15 % yr/yr) 1 000 tonnes lower than estimated in Q3 report – Low growth and escape of fish in Region South
– Premature harvesting in Troms due to challenges with sea lice
Outlook - Farming Recently approved 2 new sites in a new area in Western Finnmark (Hasvik) with total MAB of 7 200 tonnes
- Improved opportunities for separation of generations and further growth
- Overall MAB for all sites in Finnmark is approx. 37 000 tonnes
- Total MAB for licenses in Finnmark is 13 230 tonnes
Investing in new technologies to prevent challenges with sea lice - Both biologically and economically sustainable and the concept will be a part of our future
green production system
Fixed price contracts
25
1 222
1 508
1 781 1 698
-
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Q1-14 Q2-14 Q3-14 Q4-14
Volume hedged 2014 (tonnes)
General Market Outlook Record high export value of salmon from Norway.
The growth in export value of more than BNOK 10 in one year is also the highest we have seen in this industry.
26
9,9 11,3
13,7
17,1 17,4 17,9
23,7
31,3 29,2 29,6
39,9
-
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
BN
OK
Export value of Atlantic Salmon from Norway
General Market Outlook
The growth in export values is mainly driven by fresh sales, both whole and fillets.
Frozen whole, frozen fillets, smoked, marinated etc has seen a decline in the share of total exports from Norway.
27
Fresh fillet 7 %
Fresh whole 73 %
Frozen fillet 8 %
Frozen whole 11 %
Other 1 %
Volume distribution 2003 (rwe)
Fresh fillet 10 %
Fresh whole 81 %
Frozen fillet 5 %
Frozen whole
4 %
Other 0 %
Volume distribution 2013 (rwe)
General Market Outlook
Strong demand for Atlantic salmon in Q4 as prices were significantly above last year’s level, while Norwegian supply increased 2% and global supply 4%.
EU growth in line with Norwegian supply growth, due to strong demand from Poland, Germany and the UK.
Russia affected by the high salmon prices.
Improving demand from Asia in Q4. Japan improved on fresh fillets, while Greater China experienced 14% import growth from Norway.
28
1%
-8% -11%
6% 0%
14%
28%
2%
EU-27 France Russia Poland Japan Greater China Others In total
Exp
ort
gro
wth
la
st 4
qu
arte
rs f
rom
No
rway
Q1/2013 Q2/2013 Q3/2013 Q4/2013
Supply growth and effect on spot price
Spot price for 2013 was NOK 39.50
YTD price is 31% above last year
2013
2012
45 new «Green» Licenses
Category A: 10 licenses in Finnmark (5 small) 10 MNOK ea. 10 licenses in Troms (5 small) 10 MNOK ea.
Category B: 15 licenses, prequalified, Auction 55 – 66 MNOK ea. (Salmar: 8, Cermaq: 5, NRS: 1, Bjørøya: 1)
Category C: 10 licenses, “high tech” 10 MNOK ea.
Total of 1 200 MNOK of which 720 MNOK to the State, and 480 MNOK to hosting communities.
Estimated total national yearly supply growth is + 5 %
TRONDHEIM: KRISTIANSAND:
Olav Trygvasons gt. 40 Tel: +47 7392 4300 Gravane 8 Tel: +47 3812 2666
Pb. 2608 Sentrum Fax: +47 7392 4301 Pb. 110 Fax: +47 3812 2679
7414 Trondheim 4662 Kristiansand
Norway Royal Salmon ASA NO 864 234 232
Thank you for your attention
31