Chilean volume reduction Impact on global markets. North Atlantic Seafood Forum Steven Rafferty CFO Cermaq ASA 5 March 2009

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1 Chilean volume reduction Impact on global markets North Atlantic Seafood Forum Steven Rafferty CFO Cermaq ASA 5 March 2009

2 Context Chilean Atlantic salmon supply will drop by 50% + in 2009 Further drop in 2010 will occur Approximately 380 thousand tonnes produced in 2008 We expect less than 200 thousand in 2009 Range of 100 in thousand What will the impact be on the global markets of the dramatic drop in supply? 2

3 Farmed / Wild Development Farmed Wild Catch 2500 RFE Tonnes Thousands Farmed salmon has continued to grow at fast rates 9% + CAGR since % + in last 5 years

2009 will bring first ever decrease in global supply of farmed salmon Global market has grown in a range 2% to 22% per annum since 1992 - No individual year has had a reduction 2009 will likely see a

4 2009 will bring first ever decrease in global supply of farmed salmon Global market has grown in a range 2% to 22% per annum since No individual year has had a reduction 2009 will likely see a supply reduction of 5% will probably see a further reduction The next years will be a major test of whether salmon is truly global Will Norway and the other producing countries be able to fill the gap left by the Chilean supply decrease in 2009 and following years? 4

5 Demand will drop, but supply shortfall will soften the impact Demand is sure to drop in all markets due to the global recession. The question is how much? - Switch to cheaper proteins like pork and ground beef - Salmon is more robust than other proteins, but it is not indestructible Foodservice sector is impacted more than retail - 30% sales in EU to this sector, 50% in USA USA market will have limited visibility on demand trends - Shortage of volume will offset any demand impact EU market will be the first to crack if volumes increase and demand falls a little Flows to other markets, even limited will do wonders for EU price 5

6 Production by Country Norway Chile UK Canada Faroes Ireland USA Others Norway has gradually increased share of world supply from 42% in 2002 to 50% in 2008 Share in 2009 will be close to 60% 600 RFE Tonnes Thousands

7 Share of global supply 100% 90% 80% 70% 60% 50% 40% Others USA Ireland Faroes Canada UK Chile Norway 30% 20% 10% 0%

8 Volume by main markets Europe USA Japan Rest of World EU took more than 220 thousand tonnes of salmon in 2008 vs Rest of World has advanced most rapidly of all markets. 200 thousand tonnes increase, doubling volume in 6 year period RFE Tonnes Thousands

9 Market share of global supply 55% 50% 45% 40% Europe USA Japan Rest of World 35% 30% 25% 20% 15% 10% 5% 0%

10 EU Supply by producing country 600 RFE Tonnes Thousands Norway UK Faroes Ireland Chile Others

Price Development Europe FHL price per Kg Gutted NOK/kg 50 45 40 35 30

11 Price Development Europe FHL price per Kg Gutted NOK/kg Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 11

12 USA Supply by producing country 250 Chile Canada USA Norway UK Faroes 200 Others RFe Tonnes Thousands

Price Development USA 3-4 lb Fresh Fillets Delivered Miami 4.5 4.0 USD/lb 3.5 3.0 2.5 2.0 1.

13 Price Development USA 3-4 lb Fresh Fillets Delivered Miami USD/lb jan. 99 jan. 00 jan. 01 jan. 02 jan. 03 jan. 04 jan. 05 jan. 06 jan. 07 jan. 08 jan

14 Other Markets by producing country Norway Canada Chile UK 100 Faroe Island Others RFE Tonnes Thousands

Main Markets 2008 Supply by producing country Chile 176

3 1% Others 1 0% Total 295 100% Norway 530 70% UK 116

Total 757 100% Norway 62 83% Rest 13 17% Total 75 100%

46 100% Rest of World Norway 113 37% Chile 118 38%

15 Main Markets 2008 Supply by producing country Chile % Canada 86 29% USA 5 2% Norway 10 3% UK 16 5% Faroes 3 1% Others 1 0% Total % Norway % UK % Faroes 28 4% Ireland 12 2% Chile 69 9% Others 1 0% Total % Norway 62 83% Rest 13 17% Total % Norway 24 53% Chile 15 32% Canada 3 6% Others 4 9% Total % Rest of World Norway % Chile % Canada 29 9% UK 4 1% Faroe Islan 3 1% Others 43 14% Total % 15

World Supply in 2009 RFE Tonnes Thousands 2008 2009 change Norway 741 827 12% Chile 394 196-50% UK 137 140 2% Canada 119 125 5% Faroes 35 43 23% Ireland 12 16 33% USA 17 15-12% Others 29 35 21% Total

16 World Supply in 2009 RFE Tonnes Thousands change Norway % Chile % UK % Canada % Faroes % Ireland % USA % Others % Total 1,484 1,397-6% Likely 6% drop in supply in 2009 Following a sustained demand for salmon of 5% + in last decade Even if demand suffers in 2009, supply reduction should ensure good pricing But only if Norway can replace the Chilean drop in supply. It will not be straightforward. 16

Chilean Markets Chilean historic dependence on the USA market is a thing of the past Processing and freezing capacities of the industry have opened all markets Chile is the only true global supplier

17 Chilean Markets Chilean historic dependence on the USA market is a thing of the past Processing and freezing capacities of the industry have opened all markets Chile is the only true global supplier Brazil is the one market served by Chile that is apparently out of reach of other countries (50,000t in 2008) Others Asia, South & Central America, Canada Chilean Exports by Market RFE Tonnes Thous. EU 69 18% USA % Japan 15 4% Other % Domestic 14 4% Total % 17

18 Chile exports in 2009? Possible scenario RFE Tonnes Thous EU 69 18% 25 13% USA % % Japan 15 4% 10 5% Other % 54 28% Domestic 14 4% 7 4% Total % % Gaps in supply in 2009 compared to EU 44k tonnes - USA 76k - Japan 5k - Other (Asia, Brazil mostly) 57k Norway will produce 80k tonnes more in 2009 than It has plenty of opportunities to allocate this Canada, Scotland and The Faroes should all benefit as well 18

will be short of product due to Chilean supply drop Norway are reducing dependence on EU but it is a slow evolution 2009 and 2010 presents

19 Can Norway be more flexible in supplying non-core markets? Norway has to actively look outside the EU to mitigate against price pressure caused by the biomass increase USA and Asia are markets that will be short of product due to Chilean supply drop Norway are reducing dependence on EU but it is a slow evolution 2009 and 2010 presents unique opportunities for Norway to penetrate non traditional markets Norway Exports by Market RFE Tonnes Thous. EU % USA 10 1% Japan 24 3% Other % Domestic 27 4% Total % Others Mainly Asia and Russia 19

20 USA exports for Norway do have some obstacles Import duty on Norwegian gutted fish of over 20% still remaining from early 1990s - Frozen fish and fresh fillets/portions are exempt from duty Sales channels and relationships are not established Not all Norwegian producers have flexible processing capacity to make the required products Plenty of logistical routes to USA out of Norway, but they need extra planning versus trucking to EU However, Norwegian salmon is perceived as premium product in USA so there is an excellent opportunity to take market share in 2009 / 10 - Today s exchange rate for USD helps profitability 20

21 Canada could be the big winners in the next years On doorstep of USA Already ships over 70% of production to U.S. market Exchange rate of USD / CAD favourable at present Potential for extra competition in USA market from wild salmon in 2009 Canadian market breakdown 21

diversification from Norway UK market breakdown Scotland Exports by Market -

22 Scotland could also benefit No USA duty on gutted fish so free to export Already well positioned in USA market Will benefit from any market diversification from Norway UK market breakdown Scotland Exports by Market RFE Tonnes Thous. UK 67 49% Rest of EU 48 35% USA 16 12% Others 5 4% Total % 22

23 Conclusions Unless demand is impacted more than expected, salmon supply will be short for next years A potential worry could be that shortage of supply to USA can do some damage to consumption and future demand However, if Norway and others can allocate product outside the EU to fill the holes left by Chile, then we should have a good period for pricing coming up USA pricing will be good, EU is more uncertain, but signs are positive Norwegian industry increase in supply in coming months may put short term pressure on prices in EU before stability returns 23

RS Platou Markets. Seafood conference. 10th June 2010

RS Platou Markets. Seafood conference. 10th June 2010 RS Platou Markets Seafood conference 10th June 2010 Agenda Introduction to Cermaq Highlights Q1 2010 and outlook full year Chile Recovery 2 Overview of Cermaq One of the global leaders in the aquaculture