Grieg Seafood ASA Q1 2014 Morten Vike CEO Atle Harald Sandtorv CFO 15 May 2014 1
Agenda Highlights Business Units (Regions) Financials Outlook 2
HIGHLIGHTS Q1 2014 3
Highlights Q1 2014 First quarter results driven by strong salmon prices. EBIT before fair value adjustment of biomass was NOK 140m against NOK 51m in 2013. Seawater production up on last year due to higher water temperatures and improved fish health status. Substantially lower costs in Scotland and some improvement in Finnmark. Extraordinary charge related to the previously reported write-down of smolt in Canada and storm damage in the south of Norway, affects results negatively with NOK 26m. Grieg Seafood Finnmark nominated to be awarded four new green licences (April 2014). Tekst
Financial highlights Q1 2014 Q1 2014 Q1 2013 Total operating income (TNOK) 623 647 517 085 EBITDA operational (TNOK) 172 554 85 200 EBIT operational (TNOK) 140 142 51 080 EBIT operational / kg (NOK) 10,70 3,72 Harvest volume (tons gwe) 13 095 13 715 4.5% volume decrease. 27.2% average increase in realised prices. 16.35 NOK per kg op. EBIT in Norway (excl. extraordinary charge). 5
BUSINESS UNITS (REGIONS) 6
Business units performance Q1 2014 Operational EBIT before biomass adjustment/kg gwt 9,52 8,05 15,94 4,93-5,44 2,57 10,08-2,93 Rogaland Finnmark BC Scotland Q1 14 Q1 13 Q1 14 Q1 13 Q1 14 Q1 13 Q1 14 Q1 13 Harvest (gwt) 2 138 4 238 5 775 5 055 1 053 1 939 4 129 2 483 Sales MNOK 110 164 256 178 59 77 199 97 7
GSF Rogaland Significantly higher prices behind increased profitability. Severe storm damage on one site (as reported in Q4 report) with an extraordinary negative effect of NOK 17m (NOK 7.95 per kg). Higher costs y-o-y: Increased feed costs, treatment costs and contingency costs. Harvested site, previously diagnosed with PD in Q1. Seawater production below expectation, despite higher seawater temperatures: Weather conditions. Emergency harvest due to storm damage. Costs will come down in following quarters. Q1 2014 Q1 2013 Harvest (gwt) 2 138 4 238 Sales revenues 110 480 164 164 EBIT adj 20 347 34 115 EBIT adj/kg 9,52 8,05 of which Markets NOK/kg 0,37 0,67 Operational EBIT before biomass adjustment 8
GSF Finnmark Significant price increase. Good operational performance. Slight cost reduction y-o-y despite underlying cost increases (feed etc.). EBIT per kg negatively affected by trout: Trout: NOK 13.8 per kg Salmon: NOK 16.9 per kg Final harvest of trout in Q1 2014. Nominated for 4 new green licenses in Finnmark (total of 10). Seawater production somewhat better than plan (less positive temperature gain in Finnmark than in rest of Norway). Effect of smolt investment materialising in improved production results. Regional director Håkon Volden resigning by end of Q2 2014. Q1 2014 Q1 2013 Harvest (gwt) 5 775 5 055 Sales revenues 255 960 178 120 EBIT adj 92 080 24 918 EBIT adj/kg 15,94 4,93 of which Markets NOK/kg 0,14 0,42 Operational EBIT before biomass adjustment 9
New green licenses in Norway Total of 45 new green licenses to be awarded in 2014 (4-5% capacity increase). Grieg Seafood nominatedfor 4 new green licenses in Finnmark (40% of total capacity increase in Finnmark). Represents 17% capacity increase for Grieg Seafood Finnmark. Finnmark licenses to be awarded at a fixed price of NOK 10m per license. Nomination based best concepts in terms of 2 sustainability criteria (escapes and reduction of sea lice). Grieg Seafood Finnmark s application based on a comprehensive integrated (technical and operational) concept to meet both sustainability criteria, a.o.: Large smolts (200-300g) ECO nets Lice skirts Genetics Mooring sensors Lumpsuckers Specialized employee training module Licenses to be finally awarded following round of appeals from non-nominated applicants. 10
GSF BC (Canada) Significant increase in prices, but less than market average: Harvest timing Low superior quality share Smolt write-down (as reported in Q4 report) of NOK 9.1m (NOK 8.6 per kg). Highly unsatisfactory cost level due to very low production level (lost smolt stocking due to furunculosis in 2012). Good seawater production ahead of plan. Smolt stocking to reach level of 15,000 MT (2015) completed by May 2014. New generation in hatchery ahead of plan and historical performance. High share of pacific salmon in 2014 (33%). Final stocking of pacific salmon in January 2014. Q1 2014 Q1 2013 Harvest (gwt) 1 053 1 939 Sales revenues 58 562 77 266 EBIT adj -5 724 4 976 EBIT adj/kg -5,44 2,57 Operational EBIT before biomass adjustment 11
GSF Hjaltland (Scotland) Significantly improved result, mainly driven by cost reductions and better biological performance. Some positive contribution of higher prices, but price realisation lagging market/norway: Contracts Weak spot market price realisation Integration of Scottish sales operations in Ocean Quality well underway and is expected to improve results going forward. Continued good operational and biological performance. Seawater production as planned. Escape of 26,000 harvest size fish (cost of NOK 1.6m). Cause identified and corrective actions implemented. New smolt plan being finalized. Expected to start production in summer 2014. Q1 2014 Q1 2013 Harvest (gwt) 4 129 2 483 Sales revenues 198 682 97 401 EBIT adj 41 618-7 270 EBIT adj/kg 10,08-2,93 Operational EBIT before biomass adjustment 12
Ocean Quality AS (sales Norway associated company 60%) Only Norwegian sales per Q1. Improved price realisation vs. previous four quarters. Scotland operationally incorporated per Q1. Expected to be consolidated per Q2. All figures in NOK 1,000 Q1 2014 Q1 2013 Sales revenue (MNOK) 739,2 565,7 EBIT (MNOK) 6,2 8,7 Margin 0,8 % 1,5 % 13
Financials 14
Profit and Loss All figures in NOK 1,000 Q1 2014 Q1 2013 Total operating income 623 647 517 085 EBITDA 172 554 85 200 Depreciation and amortisation -32 411-34 120 EBIT before biomass adj 140 142 51 080 Fair value adj biological assets -46 714 76 777 EBIT after biomass adj. 93 428 127 857 Share of profit from ass. companies 1 669 1 190 Net financial -23 040-27 645 Profit before tax 72 057 101 402 Estimated taxation -15 466-25 547 Net profit in the period 56 591 75 854 15
Net financial All figures in NOK 1,000 Q1 2014 Q1 2013 Changes in fair value from hedging instruments 1 496-61 Net financial interest -21 936-26 014 Net currency gain (losses) -1 874-371 Dividends 0 0 Net other financial expenses /-income -726-1 199 Net financial item -23 040-27 645 16
Investments Capex Maintenance level 17
Cash Flow Q1 2014 Q1 2013 Cash - opening balance 163 913 239 885 EBITDA 172 554 85 200 Inventory, trade payables and trade receivables -20 123-10 081 Other adjustments -22 439 31 686 Cash flow from operations 129 992 106 805 Capital expenditure (fixed assets) -40 711-19 110 Investments in associated companies 0 0 Change in other non-current receiveables -2 737 Cash flow from investments -40 713-18 373 Changes in interest-bearing debt 40 507-82 841 Paid dividends 0 0 Net interest and financial items -21 186-24 655 Cash flow from financing 19 321-107 496 Currency effect on cash - opening balance 972 488 Changes in cash (incl currency effect on cash) 109 572-18 576 Cash - closing balance 273 485 221 309 18
Net Interest Bearing Debt NIBD NIBD/EBITDA 1 600 1 400 1 200 1 000 6 4 2 2012 2013 2014 NIBD NIBD/EBITDA (waiver 2012-2013) 19
NIBD MNOK Q1 2014 Q1 2013 Term Loan 530 631 Revolving Credit 500 450 Bond 400 400 Leasing 218 193 Other interest bearing debt 5 11 Cash - closing balance -273-221 NIBD 1 380 1 463 20
Balance sheet 1 ASSETS 31.03.14 31.03.13 Goodw ill 107 155 105 046 Licenses 987 496 976 530 Other intangible assets 5 185 4 068 Property, plant and equipment 1 201 620 1 123 455 Investments in associtated and joint venture companies 44 701 53 663 Other non-current assets 1 634 4 067 Total non-current assets 2 347 792 2 266 829 Inventories 59 455 55 870 Biological assets 1 372 663 1 129 399 Fair value biological assets 350 253 196 532 Accounts receivable 107 517 127 533 Other current receivables 73 412 58 433 Derivates and other financial instruments 414 989 Cash and cash equivalents 273 485 221 309 Total current assets 2 237 199 1 790 064 Total assets 4 584 991 4 056 894 21
Balance sheet 2 EQUITY AND LIABILITIES 31.03.14 31.03.13 Share capital 446 648 446 648 Treasury Shares -5 000-5 000 Retained earnings and other equity 1 582 481 1 150 319 Total equity 2 024 129 1 591 967 Deferred tax liabilities 566 133 455 632 Pension- and other obligations 788 9 790 Subordinated loans 21 679 21 787 Borrow ings and leasing 1 001 944 1 076 696 Total non-current liabilities 1 590 544 1 563 904 Short-term loan facilities 646 016 603 511 Accounts payable 217 253 164 372 Derivates and other financial instruments 8 697 14 871 Other current liabilities 96 306 118 268 Total current liabilities 970 318 901 022 Total liabilities 2 560 862 2 464 926 Total equity and liabilities 4 584 991 4 056 894 22
Key financial indicators Q1 2014 Q1 2013 EBITDA-margin before adj biomass 28 % 16 % EBIT-margin before adj biomass 22 % 10 % NIBD/EBITDA before adj biomass 2,4 122,1 ROCE before adj biomass 18 % 7 % Equity ratio 44 % 39 % 23
OUTLOOK 24
Harvest estimate Guiding 2014 (1,000 tons gw e) Rogaland Finnmark BC Scotland GSF Group Q1 2,1 5,8 1,1 4,1 13,1 Growth % -50 % 14 % -46 % 66 % -5 % Q2 4,6 7,3 1,5 4,2 17,6 Growth % -11 % 8 % 36 % 194 % 22 % Q3-Q4 11,8 12,4 4,4 9,7 38,3 Growth % 106 % 10 % 20 % 5 % 28 % Total 18,5 25,5 7,0 18,0 69,0 Growth % 23 % 10 % 4 % 37 % 19 % Maintained harvest estimates of 69,000 MT. Significant increase in Norway and Scotland. 64% of total harvest from Norway. Continued organic growth expected in 2015. 25
Supply outlook Higher supply growth in 2014 vs. 2013 (winter temperatures), but not above long-term demand growth. Expected increased supply growth in Q2/Q3 (Norway). Market expected to be well balanced also in 2015. Norway (increased supply due to winter temperatures): 2013: -3% 2014: +7% Chile Lower growth rate: 2013: +29% 2014: +9% UK Limited growth: 2013: -1% 2014: 2% Canada No or limited growth: 2013: -16% 2014: 0% 25 20 15 10 5 0-5 Global supply growth farmed salmon: '05-06 '06-07 '07-08 '08-09 '09-10 '10-11 '11-12 12-13 13-14 YoY supply growth NOS (Norway) price development : 26
Outlook summary 2014 harvest volume guidance maintained at 69,000 tons (+19% vs. 2013). Q2 harvest volume expected at 17,500 tons (+22% vs. 2013). Q2 volume growth mainly originating from Scotland (reflection of significantly improved biological situation). Volume growth in Norway and Scotland in 2014. Costs normalising in Rogaland in next quarters. Significant cost reduction in Canada as production will be increasing/normalising. Continued good operational progress in Scotland. 2014 volumes in Canada will remain low, although underlying production increasing in 2H 2014. Maintain expected harvest volume of 15,000 tons in 2015. Continued organic growth expected in coming years: Recovery in Canada. Unutilized capacity in Norway. Nominated for new green licenses in Norway and new sites in Scotland. 27
Thank you! 28
APPENDIX 29
Share info Number of shares 111.7 million (after full conversion of bonds in August 2009). Last issues: Q2 2009 139 MNOK new share issue. Subordinated convertible bond issue: Q1 2009 100 mill. convertible at NOK 4.00 per share within 31.12.2010. 85% converted in Q2 2009. 15% converted in Q3 2009. EPS 0,69 NOK/share Q1 2013. 0,51 NOK/share Q1 2014. Shareholder structure Largest 20 have 92.91% of total no. of shares. 30
Shareholders No. shares % GRIEG HOLDINGS 55 801 409 49,97 % DNB NOR BANK ASA 22 175 739 19,86 % NORDEA BANK NORGE ASA 6 605 998 5,92 % KONTRARI 5 586 896 5,00 % YSTHOLMEN 2 868 197 2,57 % OM HOLDING AS 2 610 000 2,34 % STATE STREET BANK AND TRUST CO. 1 254 438 1,12 % GRIEG SEAFOOD ASA 1 250 000 1,12 % KVASSHØGDI AS 1 000 000 0,90 % SKANDINAVISKA ENSKILDA BANKEN AB 850 742 0,76 % GRIEG SHIPPING II AS 824 565 0,74 % STATE STREET BANK & TRUST COMPANY 450 000 0,40 % STOREBRAND VEKST 443 670 0,40 % VERDIPAPIRFONDET PARETO NORDIC VAL 429 000 0,38 % VERDIPAPIRFONDET DNB SMB 375 000 0,34 % HSBC BANK PLC 373 428 0,33 % SKANDINAVISKA ENSKILDA BANKEN AB 224 027 0,20 % GRIEG LTD A/S 217 390 0,19 % PICTET & CIE(EUROPE) S.A. 206 355 0,18 % MP PENSJON PK 200 000 0,18 % Total 20 largest shareholders 103 746 854 92,91 % Total other 7 915 146 7,09 % Total numbers of shares 111 662 000 100,00 % 31
Profit and Loss All figures in NOK 1,000 Q1 2014 Q1 2013 Total operating income 623 647 517 085 Share of profit from joint venture 1 843 3 244 Change in inventories 12 062-59 904 Raw materials and consumables used -229 716-160 423 Salaries and personnel expenses -74 883-69 417 Other operating expenses -160 399-145 385 EBITDA 172 554 85 200 Depreciation and amortisation -32 125-33 496 Depreciation and amortisation of licenses -286-624 Impairment adjustments on assets 0 0 EBIT before biomass adj 140 142 51 080 Fair value adj biological assets -46 714 76 777 EBIT after biomass adj. 93 428 127 857 Share of profit from ass. companies 1 669 1 190 Net financial -23 040-27 645 Profit before tax and biomass adj 118 771 24 625 Profit before tax 72 057 101 402 Estimated taxation -15 466-25 547 Net profit in the period 56 591 75 854 32