DNB Markets SME Conference 2014

DNB Markets SME Conference 2014
Oslo, 8 April 2014
John Binde, CEO
AGENDA:
NRS in brief
Current status
Outlook
Markets and opportunities
2
Business areas:
SALMON FARMING
EXPORT / TRADING
CHAIN MANAGEMENT
4 companies
Finnmark, Troms,
Hordaland, Rogaland
Salmon fresh & frozen
81 licenses
Sales 2013: 67.000 tons
96 % export
50 countries
Revenue: 2 600 MNOK
Procurement
Quality Assurance
Food Safety
Bench Marking
Public Relations
26 licenses
Volume 2013: 30.000 tons
3
From salmon trader to integrated salmon farmer
Private
placement II
NOK 100m
NRS founded as
a salmon trader
1992
NRS acquired
90.1% of
Reinhartsen
Seafood
1996
Private
placement I
NOK 50m
2006
NRS acquired
100% of Feøy
Fiskeoppdrett/
Åmøy
Fiskeoppdrett &
82.5% of Nor
Seafood
2007
# of majority owned
licenses
NRS acquired
100% of
Altafjord Laks &
76.24% of AS
Tri/ Salmo
Arctica
2008
NRS
acquired100%
of Brilliant
Fiskeoppdrett
2009
16
0
22
Nord Senja Laks
AS established,
NRS owns
66.7%
Acquisition of
100% of AS Tri,
merged with
Altafjord Laks
AS
2010
IPO
1Q 2011
2011
25
6
NRS has historically been based on a membership model
–
–
–
NRS handles procurement of feed, food safety, HSEQ and other common functions for small
independent salmon farmers
Salmon farmers sell their harvested volumes through NRS
Currently 26 members holding 78 sea water licenses and 8 fresh water licenses
In 2006 NRS made a strategic decision to vertically integrate into salmon farming
–
–
–
–
A target was set to do an initial public offering within 3-5 years
Philosophy to invest in clusters of 3-10 licenses, whilst retaining local commitment and leadership
NOK 150m raised through two private placements to finance acquisitions (2006 & 2008)
Acquired salmon farmers with long historic track-record
4
Open shareholder structure
Focusing on creating shareholder value
Ownership struture as pr April 1st 2014
Shareholder
GÅSØ NÆRINGSUTVIKLING AS
GLASTAD INVEST AS
EGIL KRISTOFFERSEN OG SØNNER AS
HAVBRUKSINVEST AS
DNB NOR MARKETS
SPAREBANK 1 MARKETS
MÅSØVAL EIENDOM AS
NYHAMN AS
HELLESUND FISKEOPPDRETT AS
VERDIPAPIRFONDET DNB
LOVUNDLAKS AS
WILSGÅRD FISKEOPPDRETT AS
MP PENSJON PK
MERTOUN CAPITAL AS
HENDEN FISKEINDUSTRI AS
BARBINVEST AS
MÅSØVAL FISHFARM AS
STATE STREET BANK AN
STATE STREET BANK AN
FREWI AS
Total 20 largest shareholders
Total other shareholders
Total no of shares
No of shares
6 309 752
5 487 861
4 451 450
3 526 312
3 339 164
3 116 860
2 967 707
2 133 371
1 541 450
1 180 000
1 000 000
468 689
450 700
340 000
339 502
252 850
240 219
231 475
217 163
203 433
Share
14,48 %
12,59 %
10,22 %
8,09 %
7,66 %
7,15 %
6,81 %
4,90 %
3,54 %
2,71 %
2,30 %
1,08 %
1,03 %
0,78 %
0,78 %
0,58 %
0,55 %
0,53 %
0,50 %
0,47 %
37 797 958
86,75 %
5 774 233
13,25 %
43 572 191
100,00 %
F-430
T-302
N ord- Senja (3 )
T-359
T-302
N or Seafood (2 )
T-359
Wils gård FO (3 )
T-359
F-430
N RS Finnmark (1 4)
Kris toffersen (6 )
N-234
Sjurelv (2 )
Kleiva (4 )
Sørollnesfisk (3 )
L ovundlaks (4 )
N-1041
N-1041
E mils en Fisk (6 )
NT-167
NT-167
Refs nes L aks (4 )
ST-106
ST-106
ST-106
M ås øval FF (2 )
ST-106
M ås øval FO (7 )
N RS-Group (2 5 )
O wned and c ontrolled by N RS
A s sociated c ompanies (9 )
N RS owners hip < 5 0 %
H-109
L ingalaks (7 )
H-220
Fylkesnes (3 )
H-220
N RS- Feøy (6 )
H-220
E idesvik (3 )
H-220
Kors havn (1 )
M embers (4 9)
P artnering c ontracts
H-109
T O TAL N RS: 8 3 licenses
H-220
H ellesund (2 )
H-220
T-470
T-436
Region North – NRS Finnmark
Finnmark is an area nominated by the
authorities for growth following new license
awards and increase of MAB.
14 licenses owned 100 % through NRS
Finnmark AS
Attractively located sites, history of good
profitability
Good biological conditions
–
–
Low biological risk
No algae in the area resulting in lower maintenance costs
of nets
Long term harvesting agreement with major
industry player
–
Close to and approved for the Russian market.
Smolt production through Ranfjorden
Fiskeprodukter
–
–
–
NRS own 37.75 % of the company
Capacity of 5.5 million smolt
Long term agreement with other smolt suppliers
8
Region North – Senja cluster
TROMSØ
Troms is an area nominated by the authorities for
growth following new license awards and
increase of MAB.
At least 10 new licenses will be awarded in 2014.
5 licenses majority owned in the Senja cluster
–
–
–
–
NRS owns 82.5% of Nor Seafood AS (2 licenses)
NRS owns 66.7% of Nord Senja Laks AS (3 licenses)
Operated in co-operation with Wilsgård Fiskeoppdrett in a 9
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
Harvesting at Wilsgård and Nord Senja
Smolt production through Skardalen Settefisk
–
–
Kåfjord based smolt producer with capacity of 2.5 million
smolt
Owned together with associated company Wilsgård
Fiskeoppdrett (70%, NRS subsidiaries 30%)
9
Region South – NRS Feøy
Operates in the Haugesund
area, both in Rogaland and
Hordaland counties
HAUGESUND
Region South holds a total of
6 licenses
– Owned 100% through NRS Feøy AS
STAVANGER
One single MAB Zone from
2013
–
Enables smoother and better utilization of
MAB
Harvesting at Espevær Laks
– Approved for the Russian market
10
Development of volumes from NRS
80 000
80 000
External Volumes
NRS-Farming
70 000
68 000
70 000
62 200
57 500
60 000
50 000
40 000
45 500
47 200
49 500
60 000
50 500
39 000
50 000
37 000
39 500
40 000
36 500
35 500
32 000
30 000
39 500
20 000
30 000
39 000
40 700
29 000
25 200
35 100
32 300
18 500
10 000
0
20 000
21 000
10 000
10 500
3 200
4 400
2006
2007
6 000
6 500
0
2008
2009
2010
2011
2012
2013
2014
11
12
Status as per Q4-2013
13
Highlights in Q4 2013:
The best quarterly and yearly result in NRS’ history
–
MNOK 91 in Q4-13 and MNOK 256 for the year
Continued strong salmon market driven by increased demand
and low supply growth
–
–
Historically high salmon prices throughout the quarter
Promising outlook with historically high forward prices
Reduced harvesting volume
–
–
Planned harvesting in December was reduced due to unforeseen events in Region
North and low growth in Region South
Estimated harvesting volume for 2014 is reduced to 29 000 tonnes due to low
growth in Region South, and premature harvesting in Troms due to sea lice
Favourable refinancing with increased flexibility
Dividend proposal of NOK 2.20 per share
–
41 % of earnings per share
14
Highlights in Q4 2013
KEY FIGURES
(NOK '000)
Q4
2013
Q4
2012
Operating revenues
Operational EBITDA
851 450
100 323
543 003 2 603 712 1 744 266
16 568
289 729
50 866
1)
91 366
8 484
256 002
20 416
95 594
13 566
120 783
6 774
2 973
-1 945
350 727
28 834
396 292
69 845
10 464
40 749
2,43
-0,30
5,43
-0,12
ROACE 3)
25,3 %
2,1 %
25,3 %
2,1 %
Op. cash flow
Capital expenditure
38 037
18 421
-6 558
8 295
211 835
65 399
-2 828
34 747
453 883
42,4 %
566 075
36,2 %
453 883
42,4 %
566 075
36,2 %
8 383
12,02
-0,08
11,94
19 858
7 337
1,45
0,35
1,80
18 115
25 191
11,71
-0,59
11,12
62 141
21 162
1,25
1,00
2,25
57 673
Operational EBIT
EBIT
Income from associates
EBT
EPS (NOK) 2)
Net interest-bearing debt
Equity ratio
Volume harvested (HOG)
Operational EBIT per kg Farming
Op. EBIT per kg Sales inc. contracts
Total operational EBIT per kg
Volume sold
FY
2013
FY
2012
Average salmon price (NASDAQ) up 52 %
from Q4 last year with significant positive
impact on profits
Harvested volume up by 14 % and sold
volume up by 10 % from Q4 last year
Operational EBIT MNOK 91.4 in Q4 13
–
–
–
Cost of escaped fish by MNOK 2.2
Loss on fixed price contracts of MNOK 5.8
Increased provision for doubtful
receivables with MNOK 5.8
Positive cash flow from operations with
MNOK 38.7
Equity ratio increased in Q4 13 to 42.4 %
from 39.5 % due a strong total result
1) EBIT pre fair value adjustments and non-recurring items
2) Earnings per share pre fair value adjustments
3) ROACE: Return on average capital employed based on 4-quarters rolling operational EBIT /
average (NIBD + Equity - Financial assets)
15
Region North
KEY FIGURES
(NOK '000)
Q4
2013
Q4
2012
Operating revenues
626 738 325 354
Operational EBIT pr kg farming
13,65
Operational EBIT *
78 796
9 039
Volume harvested (tonnes)
6 204
4 397
Operational EBIT per kg Farming
Op. EBIT per kg Sales inc. contracts
Total operational EBIT per kg
12,78
-0,08
12,70
1,70
0,35
2,06
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
12,31
12,78
Q3 13
Q4 13
10,09
1,71
Q4 12
Q1 13
Q2 13
Operational EBIT per kg farming NOK 12.78
– Margin from Sales down by NOK 0.43 per kg compared with Q4 12 due to loss on
contracts by NOK 0.69 per kg
– Sales price FCA packing station up by NOK 12.86 per kg from Q4 12
– Planned harvest in December was reduced due to unforeseen events, such as
storms and a diesel leak at harvesting plant. As prices were at the highest in
December, this reduced average price achieved in the quarter.
16
Farming – Region North
Production Cost - NORTH
26,00
25,35
24,83
24,00
23,37
Harvested Volume - NORTH
25,16
6 204
5 560
6 000
23,33
4 397
4 473
Q4-12
Q1-13
4 254
4 000
22,00
2 000
20,00
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q2-13
Q3-13
Q4-13
Production cost of NOK 25.16 per kg
Volume increase of 41 % compared to Q4 12
Operation
– Good growth in Q4 despite low sea temperatures
– Higher than normal costs as a result of extended
sea lice treatments, especially in Troms
– The harvesting in Troms of the 2012 generation has
been accelerated, due to sea lice challenges
– This years smolt release has better growth and
lower mortality than normal
Temperatures Region North
12,0
10,0
8,0
6,0
4,0
2,0
0,0
Jan
Mar
May
Spread 09-12
Jul
Sep
Average 09-12
Nov
2013
17
Region South
KEY FIGURES
(NOK '000)
Q4
2013
Operating revenues
219 928 217 455
Operational EBIT *
Q4
2012
21 316
4 184
Volume harvested (tonnes)
2 179
2 940
Operational EBIT per kg Farming
Op. EBIT per kg Sales inc. contracts
Total operational EBIT per kg*
9,86
-0,08
9,78
1,07
0,35
1,42
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
Operational EBIT pr kg farming
10,03
6,59
9,86
6,60
1,07
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Operational EBIT per kg farming NOK 9.86
– Margin from Sales down by NOK 0.43 per kg compared with Q4 12 due to loss on
contracts by NOK 0.69 per kg
– Sales price FCA packing station up by NOK 13.06 per kg from Q4 12.
18
Farming – Region South
30,00
Production Cost
- SOUTH
29,90
28,00
30,02
3 000
27,34
Harvested Volume - SOUTH
4 000
2 940
2 179
26,00
25,75
2 000
26,70
1 269
24,00
932
1 000
320
22,00
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q4-12
Q1-13
Production cost of NOK 30.02 per kg
– Weak performance
– Changed production regime implemented to
reduce biological risks
Volume down by 26 % compared to Q4 12
10,0
– Growth being significantly lower and mortality
higher than expected due to challenges with
AGD and sea lice
– Escape of fish from one of the sites after a
storm
Q3-13
Q4-13
Temperatures Region North
18,0
Operation
Q2-13
16,0
14,0
12,0
8,0
6,0
4,0
2,0
0,0
Jan
Mar
May
Spread 09-12
Jul
Sep
Average 09-12
Nov
2013
19
Associated companies
KEY FIGURES
(NOK '000)
Operating revenues
Q4 2013
Other
Farming
associated
companies companies
138 784
38 542
Operational EBIT *
48 762
1 180
EBIT
49 650
1 180
Result after tax
37 921
628
Volume harvested (tonnes)
3 302
Operational EBIT per kg *
14,77
*EBIT pre fair value adjustments
NRS' share of result after tax
13 457
109
3 fish-farming companies with 9 licenses
2 harvesting companies and
2 hatchery with a yearly capacity of total 8 million smolt
Q4 13 EBIT per kg of NOK 14.77 for associated farming companies
NRS share of result after tax of MNOK 13.6 in Q4 13
20
Y/Y growth past 12 quarters
OSE-listed companies
Volumes Region NORTH
Growth Y/Y: 17%
40 000
35 000
37 787
31 035
29 728
30 000
25 000
16 637
16 859
Q2-11
Q3-11
25 930
24 505
23 564
23 642
Q1-12
Q2-12
Q3-12
22 093
20 000
37 139
27 870
15 000
10 000
5 000
Q1-11
Q4-11
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
73 578
75 650
Q3-13
Q4-13
Volumes Region CENTRAL
Growth Y/Y: 7%
90 000
82 397
80 000
76 275
72 423
65 504
70 000
60 000
50 697
77 036
65 339
54 667
58 699
60 789
Q1-13
Q2-13
50 000
40 000
30 000
20 000
10 000
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Volumes Region SOUTH
Growth Y/Y: 8%
70 000
64 000
61 961
57 538
60 000
56 699
56 627
52 513
50 000
48 220
48 255
Q2-11
Q3-11
51 758
48 017
44 673
40 994
40 000
30 000
20 000
10 000
Q1-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
21
Regional Performance in Norway - 2013
Regional performance - EBIT/kg
OSE-listed Companies
16,00
14,00
13,0
12,00
12,1
10,6
9,9
9,7
10,00
8,00
13,5
10,8
8,7
8,5
10,7
7,9
7,0
6,00
4,00
2,00
-
Q1-13
Q2-13
SOUTH
Q3-13
CENTRAL
Q4-13
NORTH
22
OUTLOOK
23
Harvesting estimates 2014 (tonnes HOG)
32,0
SOUTH
27,0
25,2
22,0
4,7
NORTH
29,0
6,2
17,0
12,0
9,7
20,5
7,0
5,4
0,4
2,0
-3,0
FY-13
11,1
1,2
22,8
3,1
2,8
5,0
1,5
1,3
Q1-14
Q2-14
6,6
Q3-14
9,9
Q4-14
FY-14
2013: 25 200 tonnes (+ 19 % yr/yr)
1 800 tonnes lower than estimated in Q3 report
–
–
Planned harvest in December was prevented by unforeseen events
in Region North, such as storms and diesel leak at harvesting plant
Low growth in Region South due to biological challenges
2014: 29 000 tonnes (+ 15 % yr/yr)
1 000 tonnes lower than estimated in Q3 report
–
–
Low growth and escape of fish in Region South
Premature harvesting in Troms due to challenges with sea lice
Outlook - Farming
Recently approved 2 new sites in a new area in Western Finnmark (Hasvik)
with total MAB of 7 200 tonnes
-
Improved opportunities for separation of generations and further growth
Overall MAB for all sites in Finnmark is approx. 37 000 tonnes
Total MAB for licenses in Finnmark is 13 230 tonnes
Investing in new technologies to prevent challenges with sea lice
-
Both biologically and economically sustainable and the concept will be a part of our future
green production system
Fixed price contracts
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
-
Volume hedged 2014 (tonnes)
1 781
1 698
1 508
1 222
Q1-14
Q2-14
Q3-14
Q4-14
25
General Market Outlook
Record high export value of salmon from Norway.
The growth in export value of more than BNOK 10 in one year is also
the highest we have seen in this industry.
Export value of Atlantic Salmon from Norway
45,0
39,9
40,0
35,0
31,3
BNOK
30,0
29,6
23,7
25,0
20,0
17,1
17,4
17,9
13,7
15,0
10,0
29,2
9,9
11,3
5,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
26
General Market Outlook
The growth in export values is mainly driven by fresh sales,
both whole and fillets.
Frozen whole, frozen fillets, smoked, marinated etc has seen a decline
in the share of total exports from Norway.
Volume distribution 2003 (rwe)
Other
Frozen 1 %
whole
11 %
Frozen
fillet
8%
Volume distribution 2013 (rwe)
Frozen
whole
4%
Fresh fillet
7%
Other
0%
Fresh fillet
10 %
Frozen fillet
5%
Fresh
whole
73 %
Fresh
whole
81 %
27
General Market Outlook
Export growth
last 4 quarters from Norway
Strong demand for Atlantic salmon in Q4 as prices were significantly above last year’s
level, while Norwegian supply increased 2% and global supply 4%.
EU growth in line with Norwegian supply growth, due to strong demand from
Poland, Germany and the UK.
Russia affected by the high salmon prices.
Improving demand from Asia in Q4. Japan improved on fresh fillets, while Greater
China experienced 14% import growth from Norway.
28%
14%
6%
1%
-8%
EU-27
2%
0%
France
-11%
Russia
Q1/2013
Poland
Q2/2013
Japan
Q3/2013
Greater China
Others
In total
Q4/2013
28
Supply growth and effect on spot price
Spot price for 2013 was NOK 39.50
YTD price is 31% above last year
2013
2012
45 new «Green» Licenses
Category A:
10 licenses in Finnmark (5 small)
10 licenses in Troms (5 small)
10 MNOK ea.
10 MNOK ea.
Category B:
15 licenses, prequalified, Auction
55 – 66 MNOK ea.
(Salmar: 8, Cermaq: 5, NRS: 1, Bjørøya: 1)
Category C:
10 licenses, “high tech”
10 MNOK ea.
Total of 1 200 MNOK of which 720 MNOK to the State,
and 480 MNOK to hosting communities.
Estimated total national yearly supply growth is + 5 %
Thank you for your attention
Norway Royal Salmon ASA
TRONDHEIM:
Olav Trygvasons gt. 40
Pb. 2608 Sentrum
7414 Trondheim
NO 864 234 232
Tel:
Fax:
+47 7392 4300
+47 7392 4301
KRISTIANSAND:
Gravane 8
Pb. 110
4662 Kristiansand
Tel:
Fax:
+47 3812 2666
+47 3812 2679
31

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