NORWAY ROYA L S A L M ON PRESENTATION Q Oslo, 7 November 2017 Charles Høstlund, CEO Ola Loe, CFO 1

Size: px

Start display at page:

Download "NORWAY ROYA L S A L M ON PRESENTATION Q Oslo, 7 November 2017 Charles Høstlund, CEO Ola Loe, CFO 1"

Bethany Wilkins
5 years ago
Views:

1 PRESENTATION Q Oslo, 7 November 2017 Charles Høstlund, CEO Ola Loe, CFO 1

2 AGENDA: Highlights for the period Segment information Group financials Markets Outlook 2

3 Highlights in Q Operational EBIT of MNOK 192 Still high production costs in Region North All time high harvested and sold volume in a quarter Good fish health and sea lice situation 43 % higher biomass than at the end of Q3 last year 3

4 Highlights in Q NORWAY ROYAL SALMON - KEY FIGURES Q3 Q3 (NOK '000) Operating revenues Operational EBITDA Operational EBIT Income from associates EBIT EBT EPS (NOK) before fair value adjustments 5,33 4,92 ROCE 1) 43,8 % 50,6 % Net cash flow from operating activities Investments in tangible fixed assets Net interest-bearing debt Equity ratio 47,4 % 50,0 % Volume harvested (HOG) Operational EBIT per kg 2) 19,29 30,35 Volume sold - Sales )ROCE: Return on average capital employed based on 4-quarters rolling EBIT aligned for fair value adjustments / average (NIBD + Equity - Financial assets) 2) Operational EBIT for segments before non-recurring items incl margin from sales Operational EBIT MNOK 192 in Q3 17 Operational EBIT per kg NOK Average salmon price (NASDAQ) down NOK 3.37 per kg from Q3 last year Harvested volume up 39 % and sold volume up 26 % from Q3 last year EBT pre fair value adjustments of MNOK 276 Positive operational cash flow of MNOK 107 ROCE of 43.8 % 4

5 SEGMENT INFORMATION 5

6 Region North KEY FIGURES Q3 Q3 (NOK '000) Operating revenues ,09 28,77 EBIT pr kg 27,28 29,68 Operational EBIT * ,85 Volume harvested (tonnes) Operational EBIT (ex contracts) 15,70 34,15 Gain (+)/Loss (-) on open fixed price contracts 3,16-3,06 Operational EBIT per kg 18,85 31,09 * EBIT pre fair value adjustments and non-recurring items incl. allocated margin from sales Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Operational EBIT per kg NOK Down NOK from Q3 16 and down NOK from Q2 17 Sales price FCA packing station down NOK 8.87 per kg from Q3 16 and down NOK from Q2 17 Suboptimal timing of harvest volume during the quarter High harvest weight to premium prices 6

Farming Region North NORWAY ROYA L S A L M ON Production Cost 36,94 38,80 37,57 7 086 Harvested Volume 8 238 32,21 5 500 29,47 2 612 3 633 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17

7 Farming Region North NORWAY ROYA L S A L M ON Production Cost 36,94 38,80 37, Harvested Volume , , Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Production cost of NOK per kg Production cost down by NOK 1.23 from Q2 17 Harvesting of the 2015-generation The smolt purchased in 2015 to replace culled smolt due to ISA have performed weaker than normal Expect improvement in production cost for the 2016-generation (Q4 17) Volume up 16 % compared to Q3 16 Operation Increased biomass in the quarter The growth in Q3 has been lower than expected due to low sea water temperatures Good fish health and sea lice situation 7

Region South KEY FIGURES Q3 Q3 (NOK '000) 2017 2016 NORWAY ROYA L S A L M ON EBIT pr kg 32,91 31,30 Operating revenues 288 129 66 135 Operational EBIT * 46 345 8 451 18,73 24,39 20,91 Volume

8 Region South KEY FIGURES Q3 Q3 (NOK '000) NORWAY ROYA L S A L M ON EBIT pr kg 32,91 31,30 Operating revenues Operational EBIT * ,73 24,39 20,91 Volume harvested (tonnes) Operational EBIT (ex contracts) 17,76 21,79 Gain (+)/Loss (-) on open fixed price contracts 3,16-3,06 Operational EBIT per kg 20,91 18,73 * EBIT pre fair value adjustments and non-recurring items incl. allocated margin from sales Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Operational EBIT per kg NOK Up NOK 2.18 from Q3 16 and down NOK from Q2 17 Sales price FCA packing station down NOK 0.54 per kg from Q3 16 and down NOK from Q2 17 8

9 Farming Region South Production Cost NORWAY ROYA L S A L M ON Harvested Volume ,01 37,26 33,94 36,10 38, Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Production cost of NOK per kg Production cost up NOK 1.92 from Q2 17 Increased production cost from Q due to starting to harvest on a new site Volume up tonnes compared to Q3 16 Operation The growth in Q3 has been better than expected Good fish health and sea lice situation 9

Associated companies NORWAY ROYA L S A L M ON Hatcheries Norwegian Fish farming companies Iceland Fish farming company Harvesting Companies Skardalen Settefisk AS Ranfjord Fiskeprodukter AS Wilsgård

Iceland Q3 2017 Q3 2016 Other associated companies Farming companies ex.

10 Associated companies NORWAY ROYA L S A L M ON Hatcheries Norwegian Fish farming companies Iceland Fish farming company Harvesting Companies Skardalen Settefisk AS Ranfjord Fiskeprodukter AS Wilsgård Fiskeoppdrett AS (5) Måsøval Fishfarm AS (2) Hellesund Fiskeoppdrett AS (3) Arctic Fish ehf. Hardanger fiskeforedling AS Espevær laks AS (NOK '000) Farming companies ex. Iceland Q Q Other associated companies Farming companies ex. Iceland Operating revenues Operational EBIT Fair value adjustments EBIT Result after tax Volume harvested (tonnes) Operational EBIT per kg 33,39 7,04 NRS' share of result after tax NRS' share of volume harvested (tonnes) Other associated companies NRS share of result after tax of MNOK 20.2 Fair value adjustment after tax positive by MNOK 10.8 EBIT per kg of NOK for Norwegian associated farming companies Positively impacted by gain from sale of biomass (live fish) Shares in NRS owned by associated companies as end of Q3 17 NRS share of fair value MNOK Not recognised in the group accounts EBIT pr kg 42,93 Harvest volume 35,08 33, , , Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q

11 GROUP FINANCIALS 11

NOK MNOK MNOK NORWAY ROYA L S A L M ON Key income statement items 1 107 Operating revenues 1 233 1 360 Revenues up by MNOK 253 (23 %) from Q3 16 Average salmon price (NASDAQ) down NOK 3.

12 NOK MNOK MNOK NORWAY ROYA L S A L M ON Key income statement items Operating revenues Revenues up by MNOK 253 (23 %) from Q3 16 Average salmon price (NASDAQ) down NOK 3.37 per kg from Q3 16 Sold volume up 26 % Q3 16 Q2 17 Q3 17 Operational EBITDA EBIT Depreciation 15,1 20,7 19,7 218,1 192,4 135,6 EBITDA of MNOK (MNOK in Q3 16) Farming: Sales price down NOK 7.99/kg Production cost up NOK 6.25/kg Harvested volume up tonnes - Q3 16 Q2 17 Q3 17 EPS pre fair value Sales: Margins sold volume down by NOK 0.62/kg Gain on fixed price contracts increased by NOK 2.79/kg 4,92 5,33 Depreciation increased by MNOK 5.6 from Q3 16 2,37 Q3 16 Q2 17 Q3 17 EPS pre FV up 0.41 per share from Q

Key balance sheet items 546 874 904 686 611 603 638 790 Biomass pre FV Receivables pre FV NWC pre FV 1605 1805 Q3 16 Q2 17 Q3 17 MNOK

Biomass up by 7 600 tonnes (43 %) from Q3 16 Receivables pre FV up MNOK 83 from Q2 17 Working capital pre FV up MNOK 90 from Q2 17

Equity up by MNOK 173 from Q2 17 Equity ratio 47.4 % Capital employed pre FV up by MNOK 159 from Q2 17 ROCE 43.8 % ROE (after tax) 39.

13 Key balance sheet items Biomass pre FV Receivables pre FV NWC pre FV Q3 16 Q2 17 Q3 17 MNOK Q3 16 Q2 17 Q MNOK Biomass pre FV up by MNOK 30 from Q2 17 Biomass up by tonnes (13 %) from Q2 17 Biomass up by tonnes (43 %) from Q3 16 Receivables pre FV up MNOK 83 from Q2 17 Working capital pre FV up MNOK 90 from Q2 17 Accounts payable up by MNOK 75 Other short term liabilities down by MNOK 24 Inventories of feed and harvested fish up by MNOK 28 Equity up by MNOK 173 from Q2 17 Equity ratio 47.4 % Capital employed pre FV up by MNOK 159 from Q2 17 ROCE 43.8 % ROE (after tax) 39.0 % 65,4 % 50,6 % 49,6 % 65,9 % 52,4 % 47,0 % ROCE ROE 48,5 % 43,8 % 40,0 % 39,0 % Equity Cap. Empl. Pre FV Q3 16 Q4 16 Q1 17 Q2 17 Q

14 Cash flow, Cap Ex and Net interest bearing debt Op. Cash flow (MNOK) 203 Operational cash flow positive by MNOK EBITDA MNOK 213 Working capital pre FV up MNOK Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Cap. Ex. - fixed assets (MNOK) Capex of MNOK 72 in Q3 17 Estimated capex of MNOK 205 for Maintenance capex about MNOK 80 per year 15 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 NIBD (MNOK) NIBD down by MNOK 55 from Q2 17 Unused credit facility of MNOK 400 at end of Q3 17 Bank deposit of MNOK Q3 16 Q4 16 Q1 17 Q2 17 Q

15 MARKETS 15

16 Average Nasdaq - 0,75 NORWAY ROYA L S A L M ON Market outlook 70,00 60,00 Salmon prices in Q3 the last 20 year's Salmon prices in NOK and EUR at the 2 nd highest level the last 20 years for a third quarter 50,00 40,00 30,00 20,00 Prices down 6 % both in NOK and EUR in Q3 17 vs Q3 16 Harvested volume from Norway up 4 % from Q3 16 and up 8 % globally as Chile increased harvest volumes by 21 % 10,00 0,00 16

17 Harvest volumes Harvest volumes up 8 % in Q3 17 compared with Q3 16 The Norwegian salmon industry has increased the biomass vs last year during Q3 Chile are soon close to levels before the algae bloom Harvest volums Q3/17 Q3/16 chg. Norway % Chile % UK % Canada % Faroe Island % Other % % wfe tonnes Source: Kontali Analyse Consumption Consumption of salmon in the world markets increased by 6 % in Q3 17 compared with Q3 16 Both USA, Eastern Europe and Asia showed significant growth, while volumes to EU only increased 1 % Volumes from Norway to Asia increased by 6 % Markets Q3/17 Q3/16 chg. EU % USA % Eastern Europe % Asia % Other % % wfe tonnes Source:kontali Analyse 17

18 Moderate growth in 2018 Globally we expect a 12 % increase in harvest volumes in Q4, but then growth will slow down to approx. 6 % in Q1/18 and 7 % for 2018 For Q4 17 the industry will be able to serve the markets with the same volumes as in Q4 15. From Q1 18 the quarterly volumes will be at all-time high, but with a lower yr/yr supply growth in % Harvest volums Q4/17E Q4/16 chg. Q1/18E Q1/17 chg. 2018E 2017E chg. Norway % % % Chile % % % UK % % % Canada % % % Faroe Island % % % Other % % % % % % wfe tonnes Source: Kontali Analyse 18

19 OUTLOOK 19

estimated in Q2 17 report Estimate approximately full MAB utilization in Q4 2017 Estimate harvest volume for 2018 of 43 000 tonnes (+32 % yr/yr) Volume hedged 2017: Q1

20 Harvesting estimates 2017 and 2018 SOUTH NORTH 43,0 7,2 32,5 7,3 35,8 7,2 5,2 1,7 1,6 5,5 3,6 10,5 9,6 2,2 1,8 8,2 7,8 25,2 Q1-17 Q2-17 Q3-17 Q4-17E FY-17E FY-18E Q3 17: tonnes (+39 % yr/yr) tonnes more than estimated in Q2 17 report Estimate harvest volume for 2017 of tonnes (+21 % yr/yr) tonnes less than estimated in Q2 17 report Estimate approximately full MAB utilization in Q Estimate harvest volume for 2018 of tonnes (+32 % yr/yr) Volume hedged 2017: Q1 Q2 Q3 Q Tonnes Average contract price Q4 2017: About NOK (Nasdaq-equivalent) 11.5 million smolts are planned released in

Organic growth potential for Norway Royal Salmon NRS-Farming 43 000 45 000 32 500 18 500 21 000 25 200 22 400

21 Organic growth potential for Norway Royal Salmon NRS-Farming E 2018E Capacity 21

22 Outlook Focus on reduction of production costs New and bigger sites with an efficient operational structure Increase smolt quality and size High focus on fish health Use of cleaner fish Optimizing feed consumption Educate and increase the production knowledge of the staff Growth Full utilisation of all licenses including 9 green licenses New and bigger sites in Region North Sustainable production and achieve the criteria of the authorities for further growth Applied for 15 development licenses together with Aker ASA NRS traffic light growth on 83 % of the licenses Directorate of Fisheries has granted NRS Finnmark a demonstration facility licenses Price Moderate supply growth and good demand provide the basis for a positive market outlook 22

23 Thank you for your attention Norway Royal Salmon ASA NO

24 APPENDIX 24

25 Sales operation NORWAY ROYA L S A L M ON Market knowledge, motivated employees, low historical losses and low capital cost makes this to an important business for NRS Access to volumes from own operations, associated companies, NRS members and independent salmon farmers. Global sales to 52 countries External Volumes NRS-Farming Track record for achieving attractive prices 25

26 Farming operations focused in attractive regions REGION NORTH NRS Finnmark (19) NRS Troms (6) Nor Seafood (4) NRS with 35 licenses Head office Norway Royal Salmon ASA REGION SOUTH NRS Feøy (6) Sales office Norway Royal Salmon ASA 26

Region North NRS Finnmark Finnmark is an area prioritized by the authorities for growth in the past 3 allocations 19 licenses owned 100 % through NRS Finnmark Attractively located sites, history of

27 Region North NRS Finnmark Finnmark is an area prioritized by the authorities for growth in the past 3 allocations 19 licenses owned 100 % through NRS Finnmark Attractively located sites, history of good profitability Good biological conditions Low biological risk Relatively high water temperature in winter Relatively low water temperature in summer Long term harvesting agreement Smolt production through Nordnorsk Smolt, Ranfjorden Fiskeprodukter and other partners NRS own 50 % of Nordnorsk Smolt AS, capacity of 3.2 million big size smolt NRS own % of Ranfjorden Fiskeprodukter, capacity of 5.5 million smolt Long term agreement with other smolt suppliers Construction of new hatchery in Karlsøy NRS has purchased land in Karlsøy where construction of a new hatchery is planned to start in end of 2018 when all necessary approvals are in place. NRS Settefisk AS has applied for permission to produce 10 million smolts 27

Region North Troms cluster Troms is an area prioritized by the authorities for growth in the past 3 allocations 10 licenses majority owned in Troms NRS owns 82.

28 Region North Troms cluster Troms is an area prioritized by the authorities for growth in the past 3 allocations 10 licenses majority owned in Troms NRS owns 82.5 % of Nor Seafood AS (4 licenses) NRS owns 100 % of NRS Troms (6 licenses) Operated in co-operation with Wilsgård Fiskeoppdrett in a 15 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 Good growth and no oxygen problems Shorter production time than Finnmark Harvesting at Wilsgård Smolt production through Skardalen Settefisk Smolt producer with capacity of 2.5 million smolt Owned together with associated company Wilsgård Fiskeoppdrett (70 %, NRS subsidiaries 30 %) 28

29 Region South Operates in the Haugesund area, both in Rogaland and Hordaland county Region South holds a total of 6 licenses Owned 100 % through NRS Feøy AS One single MAB Zone Enables smoother and better utilization of MAB Harvesting at Espevær Laks 29

30 Group income statement Q3 Q3 YTD YTD FY (NOK '000) Operating revenues Cost of goods sold Salaries Depreciation Other operating costs Operational EBIT Fair value adjustments Income from associates EBIT Gain/loss on financial assets Other net financial items EBT Tax Net profit/loss Profit attributable to: Parent company shareholders Minority interests Earnings per share (NOK) 4,38 5,14 8,41 12,64 22,72 Earnings per share - diluted 4,38 5,14 8,41 12,64 22,72 EXTENDED INCOME STATEMENT Q3 Q3 YTD YTD FY (NOK '000) Net profit/loss Items to be reclassified to profit or loss: Translation differences and OCI posts from associated companies Cash Flow hedges (net) Items not to be reclassified to profit or loss: Actuarial gains on defined benefit plans (net) Total comprehensive income Total comprehensive income attributable to: Parent company shareholders Non-controlling interests

31 Group balance sheet NORWAY ROYA L S A L M ON (NOK '000) Intangible assets Property, plant and equipment Non-current financial assets Non-current assets Inventory and biological assets Receivables Bank deposits, cash Current assets TOTAL ASSETS Share capital Other equity Non-controlling interests Equity Pensions Deferred tax Provisions Long-term interest-bearing debt Short-term interest-bearing debt Trade payables Tax payable Other current liabilities Current liabilities TOTAL EQUITY AND LIABILITIES

32 Group cash flow statement Q3 Q3 YTD YTD FY (NOK '000) Operational EBIT Adjusted for: Tax paid Depreciation Gains (-)/ losses (+) on disposal of non-current assets Share based payment Pension costs w ith no cash effect Change in inventory / biomass Change in debtors and creditors Change in other current assets and other liabilities Net cash flow from operating activities Cash flow from investing activities Proceeds from sale of property, plant and equipment Payments for purchase of PPE Payments for acquisition of associated company Proceeds from realisation of non-current financial assets (TRS) Proceeds from investments in non-current financial assets Payments for acquisition of minority interest in subsidiary Change in loans to associates and others Net cash flow from investing activities Cash flow from financing activities Receipts from new long-term debt Long-term debt repayments Net change in overdraft Payment for acqusition of treasury shares Proceeds from sale of treasury shares Interest paid Dividend payment Net cash flow from financing activities Net increase (+)/ decrease (-) in cash & cash equivalents Cash and cash equivalents - opening balance Cash and cash equivalents - closing balance

33 Statement of Equity NORWAY ROYA L S A L M ON (NOK '000) Equity allocated to parent company shareholders Share capital Treasury shares Retained earnings Total Non-controlling interests Total equity Equity at Total comprehensive income Transactions with shareholders Dividend Share based payment Purchase of treasury shares Sale of treasury shares Equity changes associated companies Total transactions w ith shareholders Equity at (NOK '000) Equity allocated to parent company shareholders Share capital Treasury shares Retained earnings Total Non-controlling interests Total equity Equity at Comprehensive income Transactions with shareholders Dividend Share based payment Purchase minority interest Purchase/sale of treasury shares Other changes Total transactions w ith shareholders Equity at (NOK '000) Equity allocated to parent company shareholders Share capital Treasury shares Retained earnings Total Non-controlling interests Total equity Equity at Total comprehensive income Transactions with shareholders Dividend Share based payment Purchase/sale of treasury shares Purchase minority interest Equity changes associated companies Total transactions w ith shareholders Equity at

34 Quarterly historical information QUARTERLY HISTORICAL INFORMATION Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 (NOK thousand, NOK per kg) Volumes harvested (ktonnes, HOG) Region North Region South Total Operational EBIT Region North Region South Total Operational EBIT per kg Region North 18,85 29,68 27,28 28,77 31,09 30,28 26,66 14,54 9,69 5,68 10,21 12,84 5,91 Region South 20,91 31,30 32,91 24,39 18,73 11,18 15,26 3,63 0,24 3,23 10,83 11,40 1,76 Total 19,29 30,17 28,60 26,83 30,35 25,33 25,54 12,63 9,24 4,83 10,31 12,80 4,78 Volumes sold (ktonnes) ,,,, NRS GROUP Operational EBITDA Operational EBIT Net interest bearing debt Equity ratio 47,4 % 45,4 % 53,3 % 55,1 % 50,0 % 48,2 % 45,8 % 41,3 % 38,3 % 38,5 % 41,3 % 39,0 % 41,9 % 34

35 Accumulated historical information HISTORICAL INFORMATION YTD FY FY FY FY FY (NOK thousand, NOK per kg) Volumes harvested (ktonnes, HOG) Region North Region South Total Operational EBIT Region North Region South Total Operational EBIT per kg Region North 23,79 29,28 10,63 11,44 11,73 2,52 Region South 27,60 17,74 5,05 4,00 8,47 1,71 Total 24,70 27,06 9,64 9,98 11,12 2,25 Volumes sold (ktonnes) NRS GROUP Operational EBITDA Operational EBIT Net interest bearing debt Equity ratio 47,4 % 55,1 % 41,3 % 39,0 % 42,4 % 36,3 % 35

Financing Long term debt NORWAY ROYA L S A L M ON (NOK '000) 30.09.

36 Financing Long term debt NORWAY ROYA L S A L M ON (NOK '000) Long-term debt to financial institutions Long-term finance lease Total long-term interest bearing debt Short term debt (NOK '000) Short-term debt to financial institutions 0 First year's instalment long-term debt Total short-term interest bearing debt Cash and cash equivalents 1) Net interest bearing debt ) of which TNOK are restricted cash deposits Credit facility (NOK '000) Unused long-term credit facility 0 Unused short-term credit facility Total unused credit facility

37 Dividend Dividend policy The company aims to provide a dividend level that reflects the company s value creation in the form of dividends and increases in the company s share price At least 60 % of the profit shall be distributed as dividends, provided that the company s equity ratio is above 40 % and that the company s own capital requirements have been satisfied 37

38 Shareholders Ow nership structure the 20 largest shareholders as at : Shareholder No. of shares Shareholding GÅSØ NÆRINGSUTVIKLING AS ,56 % GLASTAD CAPITAL AS ,09 % MÅSØVAL EIENDOM AS ,87 % EGIL KRISTOFFERSEN OG SØNNER AS ,87 % HAVBRUKSINVEST AS ,46 % DNB NOR MARKETS, AKSJEHAND/ANALYSE ,03 % HELLESUND FISKEOPPDRETT A/S ,76 % SPAREBANK 1 MARKETS AS ,90 % NYHAMN AS ,45 % LOVUNDLAKS AS ,44 % STATE STREET BANK AND TRUST COMP ,20 % J.P. MORGAN BANK LUXEMBOURG S.A ,89 % HOLTA INVEST AS ,70 % JPMORGAN CHASE BANK, N.A., LONDON ,63 % HENDEN FISKEINDUSTRI AS ,59 % MÅSØVAL FISHFARM AS ,59 % MP PENSJON PK ,58 % STATE STREET BANK AND TRUST COMP ,47 % SVENSKA HANDELSBANKEN AB ,44 % OLA LOE ,43 % Total 20 largest shareholders ,94 % Total other shareholders ,06 % Total no. of shares ,00 % 38

Presentation Q Oslo, 6 November Charles Høstlund, CEO Ola Loe, CFO

Presentation Q Oslo, 6 November Charles Høstlund, CEO Ola Loe, CFO Presentation Q3 2018 Oslo, 6 November 2018 Charles Høstlund, CEO Ola Loe, CFO Agenda 1. Highlights for the period 2. Segment information 3. Group financials 4. Markets 5. Projects for growth 6. Outlook