A global leader in sustainable aquaculture Handelsbanken Small and Mid Cap seminar

Transcription

1 A global leader in sustainable aquaculture Handelsbanken Small and Mid Cap seminar Stockholm 17 June 2014 Head of investor relations Dag Sletmo

2 Agenda What we do What sets us apart - As a company - As an industry Growth outlook 2

3 2013 a roller coaster year for Cermaq EWOS sold; Cermaq is now a pure salmon farmer 3

4 Cermaq #3 salmon farmer globally Pelagic fishing Terrestrial farming Fish meal and fish oil production Raw material processing Feed production Smolt production RESEARCH & DEVELOPMENT Salmon farming Primary processing Secondary Processing (VAP) Tons Top 10 farmers by harvesting volume Marine Harvest Group Lerøy Seafood Group Cermaq Salmar Empresas Aquachile Pesquera Los Fiordos (Agrosuper) Grieg Seafood Cooke Aquaculture Nordlaks Holding Bakkafrost 4 Source: Kontali

5 Cermaq a company snapshot #3 Global in salmon farming by volume 142 thousand tonnes salmon and trout sold in thousand tonnes estimated for 2014 Norway Canada Total shareholder return: 1 year: 30% 5 years: 270% Since Oct 05: 308% Chile Revenue 2013 NOK 5.2bn EBIT* NOK 495m Employees: Listed on OSE since 2005 Norwegian Gov t owns 59% EBIT in this document is pre fair value and non-recurring items 5

6 Agenda What we do What sets us apart - As a company - As an industry Growth outlook 6

7 Geographically diversified Global harvest of farmed salmonids* 2014e Cermaq sales volume 2014e Total of 2,552 KT GWE Total of 157 KT GWE Others 298 (12%) Canada 20 (13%) Canada UK 298 (12%) 107 (4%) 1,162 (46%) Norway (36%) (36%) Norway 687 (27%) Chile 80 (51%) Chile Sources: Kontali, Cermaq *Atlantics, Coho, and trout. Kontali estimates, CEQ conversion to GWE 7

8 Global trade flow Global trade 2013 farmed salmon, large trout and coho Source: Kontali 8

9 Q412 Q113 Q213 Q313 Q413 Q114 FY14e FY15e USD/kg (gwe) Target 2015; Ex-cage Cost Atlantics Chile 6,0 5,0 Ex-cage cost Atlantics, USD/kg 4,8 4,8 4,5 4,6 Ex-cage cost target of USD 3.8/kg for Atlantics in 2015 reflecting improved fish health 4,0 3,0 2,0 3,3 3,9 3,8 Higher share of superior grade to provide USD 0.2/kg stronger achieved price in ,0 0,0 Key drivers for reaching targets Maintain a low caligus level Reduce chemical caligus treatment Reduce effect of SRS minimize stress Improve feed conversion 9

10 The cornerstones of our strategy Diversification by geography and species CERMAQ Diversification Optimal feed and nutrition Smolt quality Preventive fish health 10

11 Sustainability integrated in our operation SOCIETY Healthy and safe working environment for our employees Respect labour rights, e.g. the right to be organised in Trade Unions and collective bargaining Respect the right of indigenous people, e.g. First Nations in Canada Zero tolerance for corruption Open and transparent dialogue with stakeholders ENVIRONMENT Produce healthy seafood with minimal ecological footprint Optimal biological performance through preventive fish health and animal welfare Efficient use of resources, e.g. marine ingredients in feed ECONOMIC Maintain a strong balance sheet to secure sustainable operations in a volatile industry Create value to our shareholders and attract capital to secure further growth and profitability Create economic value to the communities in which we operate 11

12 Top 20 shareholders shareholder holding in pct account type citizenship MINISTRY OF TRADE, INDUSTRY AND FISHERIES 59,17 NOR FOLKETRYGDFONDET 6,38 NOR PARETO AKSJE NORGE 1,66 NOR STATE STREET BANK AN A/C SEC FIN PRIN ECM 1,44 NOM USA UBS AG, LONDON BRANC A/C EQUITIES/CORPORA 1,22 GBR VERDIPAPIRFONDET DNB 1,11 NOR MONTAGUE PLACE CUSTO C/O EQUITY-SECURITY 1,10 NOM GBR STATE STREET BANK AN A/C CLIENT OMNIBUS F 0,93 NOM USA FONDSFINANS SPAR 0,90 NOR VERDIPAPIRFONDET DNB 0,75 NOR PARETO AKTIV 0,68 NOR MP PENSJON PK 0,67 NOR CLEARSTREAM BANKING 0,61 NOM LUX DZ PRIVATBANK S.A. INVESTMENT FUNDS 0,60 NOM LUX J.P. Morgan Chase Ba A/C US RESIDENT NON 0,59 NOM USA STATOIL PENSJON C/O JP MORGAN CHASE 0,57 NOR SKANDINAVISKE ENSKIL A/C SEC FIN (MANAGED 0,55 NOM SWE RATHBONE GLOBAL OPPO HSBC Bank Plc 0,49 GBR The Bank of New York BNY MELLON 0,48 NOM USA STATE STREET BANK & A/C CLIENT FUND NUMB 0,40 NOM USA Total 80,3 Source: VPS 12

13 Agenda What we do What sets us apart - As a company - As an industry Growth outlook 13

14 There is a growing demand for protein A larger global population will need more food and a growing middle class will demand more protein Source: FAO 14

15 ..and aquaculture must help provide this growth Wild catch of fish has been flat for 25 years, aquaculture must provide the growth to satisfy growing demand Seafood is only 2% of global calorie consumption - But 16% of protein consumption - Farmed salmon 1.5% of seafood consumption but according to FAO, the industry is a technological beacon within aqua culture World food consumption, calories Sources: FAO 15

16 Salmon is smart food Seafood contains important nutrients such as: Essential amino acids Marine omega-3 fatty acids (EPA/DHA) Vitamins D and B12 Iodine Selenide Marine omega-3 content per 100g Source: NIFES Well documented that diets of seafood, high in unsaturated fatty acids, have a positive impact on human health 16

17 Global demand growth is strong Conventional wisdom says demand growth is 6-7% p.a. Annual global demand growth for salmon Price vs volume movements last few years imply a higher growth rate (10%+) - Higher share of emerging markets in the mix - Modified atmosphere packaging expanding distribution to discount food retailers - Sushi trend Source: Frank Asche, University of Stavanger 17

18 Demand drivers Modified atmosphere (fresh pre-packed) helps drive volumes in both mature and emerging markets Emerging markets highest demand growth Annual demand growth % 29 % 16 % 13 % 9 % 8 % EU Eastern Europe USA Asia Latin America Total Retail infrastructure and unbroken cold chain is key Price elasticity, , annual data EU Eastern Europe USA Asia Latin America Source: Pareto Securities -1-1,1-1,2-1,2 Source: Frank Asche, University of Stavanger -1,3 18

19 Agenda What we do What sets us apart - As a company - As an industry Growth outlook 19

20 Increasing barriers to growth Farmed Atlantic salmon harvest Atlantic salmon harvest, ktons (wfe) CAGR? '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14e A few years with essentially no growth due to restrictions in Norway and Chile? Industry and Governments lift biological sustainable capacity through technological innovation and better regulations? But still growth below trend growth in demand? Norway Chile UK Ireland Canada Faroes Other Source: Kontali Higher barriers to growth also implies higher barriers to entry and a tighter market balance 20

21 License to operate Governments are currently reluctant to issue new licenses in major salmon farming regions Reasons vary, but all related to sustainability issues - Escapes of farmed fish - Potential transmission of parasites and pathogens, - First Nations rights - Biological capacity Governmental regulations are a prerequisite for sustainable growth..but it is the salmon farming industry s responsibility to demonstrate adequately sustainable operations.. 21

22 and therefore we have established GSI Established in largest salmon farming companies representing 70% of global production - 3 largest feed producers representing 90%+ of global production are associated members - WWF, FAO and Rabobank are important partners Focus on: - Biosecurity including sea lice - Feed & nutrition including sustainable sources of feed - Standards implementing ASC Cermaq plays an active role in GSI Source: GSI 22

23 Supply restrictions All salmon farming countries are facing supply restrictions - These are based on real or perceived sustainability issues - Sustainable aquaculture has been important in the past, even more so in the future Sanitary problems: SRS and lice threaten salmon farming Sustainability problems: lice and escapes threaten wild salmon Political problems: salmon farming perceived as environmental threat Political & natural problems: lack of good new sites, difficult to get new licenses 23

24 Access to essential raw materials Marine ingredient content in feed, MT Fish oil supply & demand 1,4 1,2 EWOS feed sold Marine ingredients used (fishmeal + fish oil) 1,0 0,8 0,6 0,4 0,2 0, Source: EWOS Important to find other sources of EPA /DHA (marine omega 3) 24

25 Supply changes drive salmon price Change in Norwegian salmon price vs change in global supply, y-o-y Price change y-o-y (vertical axis) 60% 50% 13 40% Q1'14 30% % % 08 0% 03-4% 0% 4% 8% 02 12% 16% 20% 24% -10% % The demand curve appears to have moved to the right, implying a higher underlying growth rate than earlier -30% Global Supply growth y-o-y (horizontal axis) Source: Kontali, Cermaq 25

26 EBIT-margin Norwegian salmon farmers EBIT MARGIN SALMON AND TROUT FARMING IN NORWAY (EBIT, NOK/KG, INFLATION ADJ.) Source: Fiskeridirektoratet, Cermaq 26

27 Supply curve turning into a hockey stick? TRADITIONAL DEMAND AND SUPPLY Price Demand and Supply - traditional The supply curve in salmon farming has historically been relatively flat (cross-cycle), and has covered cost plus normal return on capital Volume Demand 0 Supply 0 DEMAND AND SUPPLY REVISITED Price Demand and supply - new The increased capital requirement in Norway implies more of a hockey-stick supply curve Volume Demand 0 Supply 1 27

28 Salmar Salmar Cermaq Cermaq Salmar Bjørøya Cermaq Salmar Salmar Salmar Salmar Salmar MHG MHG MHG Midt-Norsk H SalmoNor MHG Nordlaks MHG MHG MHG SalmoNor MHG MHG Eidsfjord Ellingsen Eide Fjordbruk Bremnes S Erviks Laks Osland Nova Sea Tomma Norsk Sjømat Aqua Farms Seløy Skyring Green license bids Bids for licenses in category B, Norway NOKm 70 Bids for green licenses category B, Norway Blue bids were successful Source: Fiskeridirektoratet, Cermaq 28

29 Recent expansion initiatives in Chile and Norway Chile: New licenses in region XII 2 new licenses in region XII acquired 4 kt annual production capacity when fully developed Total purchase price USD 2m Longer term ambition to acquire additional licenses in region XII with capacity up to 30 kt per year Current Cermaq annual capacity in Region XII is 10 kt Norway: New green licenses 1 license in category A Finnmark 5 licenses in category B to be located in Nordland The 6 licenses awarded will increase annual capacity by 8 kt License award in category C not yet announced 29

30 Thank you for your attention Photo from Skyring (Punta Arenas), region XII in Chile 30