Salmon price, demand and market trends

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1 Salmon price, demand and market trends Kolbjørn Giskeødegård, Director 21 November 2018

2 Salmon supply growth dramaticly down after : CAGR 2% : CAGR 8% Volume global Source: Kontali and Nordea est 2

Kilo WFE Kilo WFE Average harvesting weights Norway, Chile, Faroes 6 5.8 4.9 5.6 4.8 5.4 4.7 5.2 4.6 5 4.8 4.5 4.6 4.4 4.4 4.3 4.

3 Kilo WFE Kilo WFE Average harvesting weights Norway, Chile, Faroes E H 2H Chile Norway Faroes Source: Kontali and Nordea est 3

4 Change in w eight kilos Norway: Harvesting weights, number harvested, biomass 2H 2018: Volumes: + 18,900 tonnes (4%) Weight 212 grams (-4.5%) Number of fish mill (9%) Biomass: -3.5% y/y (Nordea est.) Source: Kontali and Nordea est 4

5 Markets, prices, demand Source: Nordea 5

6 Index (2006=100) Global markets other up twice as much as EU/USA 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , EU USA Other Markets EU USA Other Markets Sources: Kontali and Nordea Markets 6

7 Market shares 2006 and 2020E E EU 51 % EU 40 % Other Markets 18 % Russia 4 % Japan 4 % USA 23 % Other Markets 36 % Russia 3 % Japan 3 % USA 18 % Sources: Kontali and Nordea Markets 7

8 Salm on price (NOK/kg) Prices in NOK doubles in ten years E 30 ish 40 ish 60 ish Kilde: FishPool og Nordea est 8

9 When is salmon too expensive and when do low price trigger demand hike? «RED» ZONE (risk for price drop): 2009: NOK : NOK : NOK : NOK : NOK 70 Source: Nordea Markets 9

10 Split in the value chain who takes the biggest chunk? Whole cake = price to consumer (observed) Norwegian part = Export price Difference = «Value add» 10

11 w w7 w13 w19 w25 w31 w37 w43 w49 w3 w9 w15 w21 w27 w33 w39 w45 w51 w5 w11 w17 w23 w29 w35 w41 w47 w w7 w13 w19 w25 w31 w37 w43 EUR per kilo HOG w eight Prices to end consumer split by part of the value chain 14,00 12,00 10,00 8,00 6,00 4,00 2,00 - Export price Value add 11

12 w w7 w13 w19 w25 w31 w37 w43 w49 w3 w9 w15 w21 w27 w33 w39 w45 w51 w5 w11 w17 w23 w29 w35 w41 w47 w w7 w13 w19 w25 w31 w37 w43 w w7 w13 w19 w25 w31 w37 w43 w49 w3 w9 w15 w21 w27 w33 w39 w45 w51 w5 w11 w17 w23 w29 w35 w41 w47 w w7 w13 w19 w25 w31 w37 w43 EUR per kilo Value add - EUR per kilo Win-win situation - Value add +30%, spot price +38% Export price Value Axis added Title EUR/kg Linear (Value added EUR/kg) Source: Kontali and Nordea est 12

13 w w7 w13 w19 w25 w31 w37 w43 w49 w3 w9 w15 w21 w27 w33 w39 w45 w51 w5 w11 w17 w23 w29 w35 w41 w47 w w7 w13 w19 w25 w31 w37 w43 4 years ago 50/50 distribution of total value, now back to the same 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Spot Value add Source: Kontali and Nordea est 13

14 The future 14

15 Walking in the mountains long trend is obvious, but what is the visibility on short and medium term? 15

16 NOK per kilo NOK per kilo Short term down (November 2018 as in 2017) fwd oct 2018 "Actual" 2017 Source: Fishpool 16

17 Short /medium term: Flattish although 2019 contract trending slightly down FY 2019 Source: Fishpool 17

18 Long term: Up - the market potential is unlimited, supply the issue Share of global middle class per region 2010 Growth global middle class, mill persons North America 18 % Europe 36 % Asia Pacific 28 % Africa/M.E 8 % Central & South America 10 % 1,800 1,600 1,400 1,200 1, Europe 14 % North America 7 % Change Change Asia Pacific Africa/M.E Central & South America Europe North America Central & South America 6 % Africa/M.E 7 % Asia Pacific 66 % Source: World Bank 18

19 Price change How much supply growth can the market absorb at stable prices? 60% % y = x R² = % 30% 20% % % % -5% 0% 5% % 15% 20% -10% -20% -30% Supply change % Source: Nordea estimates 19

The 2019 price If the market is like average 2014-18 NOK 64, EBIT NOK 27 If the market is in «2015 or 2017 mode», NOK 60, EBIT NOK 23 If use the 2011 scheme, a 4% supply growth => 9% price decline

20 The 2019 price If the market is like average NOK 64, EBIT NOK 27 If the market is in «2015 or 2017 mode», NOK 60, EBIT NOK 23 If use the 2011 scheme, a 4% supply growth => 9% price decline NOK 55, EBIT NOK 18 If we use 2016, extreme shift, supply +4%, price + 37% NOK 83, EBIT NOK 56 Regardless of scenario, fish farmers EBIT margin will be 3.5 to 11 times average historical earnings in the period 1985 to 2010 And the current price level offers very good business opportunities also for the customers processing and selling the farmed Atlantic Salmon Which is the perfect introduction to wish us all a 20

21 Thanks! Kolbjørn Giskeødegård, Director Nordea Bank Abp, filial i Norge, Essendrops gate 7, PO box 1166 Sentrum, 0107 Oslo, Norway, MVA (Norwegian Register of Business Enterprises) Nordea Bank Abp, Helsinki, Finland, (Finnish Patent and Registration Office) Nordea Markets is the name of the Markets departments of Nordea Bank Abp. The information provided herein is intended for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. The views have been provided solely based on the information made available to Nordea Markets and for the purposes of presenting the services made available by Nordea Markets. This notice does not substitute the judgement of the recipient. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. Relevant professional advice should always be obtained before making any investment or credit decision. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.. Web: For disclosures and disclaimers, please click this link

Weekly Salmon Outlook Week

Weekly Salmon Outlook Week Week 10-20 Page 1 of 8 Harvest of Atlantic salmon in Norway continued to grow in week 9. The harvest volume (23 000 tonnes wfe) was up 1000 tonnes from the previous week and 3% higher than in the corresponding