Grieg Seafood ASA Q2 2018 results 22.08.2018 Agenda Highlights - PowerPoint PPT Presentation

Grieg Seafood ASA Q2 2018 results 22.08.2018

Agenda • Highlights • This is Grieg Seafood • Segment review • Financials • Outlook & Summary

Highlights • Highest harvest volume for a quarter (22 568 tonnes) • High prices on strong demand • EBIT/kg NOK 18.89, total EBIT NOK 426 million • Good production in Finnmark, BC and on Shetland • Production in Rogaland negatively impacted by PD • Algal bloom causing loss of 1 000 tonnes in BC • Estimated harvest volume for they year is 75 000 tonnes, up 20% from 2017 • Dividend of NOK 2.00 per share paid out 3

Key financials EBIT before fair value (NOK million) Harvest volume (tonnes GWT) EBIT/kg (NOK) 22 568 426.3 392.3 21.2 18 667 18 503 18.9 16 875 14.2 13.6 229.3 11 433 162.1 150.6 8.1 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 4

This is Grieg Seafood Finnmark Rogaland Shetland British Columbia Harvest volume & capacity 2017 Revenue by market 2017 EBIT by farming region Canada (1 000 tonnes GWT) Eastern Europe 3% 4% 38.0 8% 29.5 Asia 13% 25.0 18% 20.0 17.5 17.0 43% 16.0 12.0 EU 51% USA 9% 39% Rogaland Finnmark BC Shetland Storbritannia Guiding 2018 Total capacity Rogaland Finnmark BC Shetland 16% 5

This is Grieg Seafood cont. • One of the world’s leading salmon farmers • Salmon production for more than 25 years • Production capacity of 100 000 tonnes GWT per year • 780 employees Rooted in nature- Farming the ocean for a better future 6

Ambitions and short term priorities Strategy Priorities Ambitions • Annual growth of minimum • Increasing smolt capacity 10% 2018-2020 • 100 000 tonnes in 2020 Secure new locations • Exploit potential in current • Develop current locations capacity • Increasing smolt size • Precision farming • Reducing production time in • Increased efficiency by growth Cost at or below industry sea • Optimal feeding • Preventive sea lice measures average • Biosecurity • Algae monitoring • Internal improvement program • R&D 7

Segment review

Business unit performance EBIT/kg *) Q2 2018 40 29.6 30 23.9 22.3 19.6 20 16.7 14.9 11.5 10 8.3 0 Rogaland Finnmark BC Shetland Q2 17 Q2 18 *) EBIT before fair value adjustment of biological assets 9

Business unit performance EBIT/kg *) YTD Q2 2018 40 29.0 30 23.4 19.2 20 16.7 14.7 11.6 9.3 10 2.8 0 Rogaland Finnmark BC Shetland YTD Q2 2017 YTD Q2 2018 *) EBIT before fair value adjustment of biological assets 10

GSF Rogaland EBIT/kg (NOK) • Low harvest volume with high share of PD fish • High FCR contributes to high cost for the period 30.7 29.6 28.0 26.5 • Negative impact on price achievement due to low quality and 19.2 weight of harvested fish 11.9 11.5 • 7.4 Remaining volume of PD fish harvested in the 6.8 beginning of Q3 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 • Downgrading expected to be reduced going forward • Low volume in Q3 will continue to affect cost Harvest volume (1 000 tonnes GWT) negatively • Growth impacted by low sea temperatures and sea 7.8 6.5 6.4 lice 5.8 4.4 4.3 • 2018 harvest guiding reduced by 4 000 tonnes 2.3 2.3 1.7 • Big smolt strategy moving forward as planned Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 11

GSF Finnmark • Increased harvest volume QoQ and YoY EBIT/kg (NOK) • Reduced cost per kg 26.2 22.3 19.6 18.0 • Quality of harvested fish somewhat affected by 14.5 13.2 11.9 winter-ulcer disease 9.4 9.6 • Underlying biology remained stable Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 • Overall price achievement good Harvest volume (1 000 tonnes GWT) • Harvest volume expected to remain high in Q3 and is expected to stabilize cost per kg 9.3 8.6 8.4 • 6.4 2 new ASC certified sites 4.5 4.1 4.2 • 2.0 Growth strategy moving forward as planned 1.6 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 12

GSF British Columbia (BC) EBIT/kg (NOK) • Strong production in the quarter 23.9 22.7 14.9 14.2 14.1 • 11.7 Harvest volume doubled YoY 7.2 7.0 4.0 • Good quality of harvested fish Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 • Harmful algal bloom caused cost to increase • 1 000 tonnes affected Harvest volume (1 000 tonnes GWT) • Reducing the guided harvest volume for 2018 7.3 • Cost expected to stabilize going forward 4.9 3.8 3.4 2.5 2.6 2.4 1.9 • Smolt production going according to plan 1.2 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 13

GSF Shetland EBIT/kg (NOK) • Harvest volume down by some 700 tonnes YoY 22.0 • Low harvest volume contributes to high cost per kg 16.7 15.9 9.5 8.8 8.3 • 6.0 Good price achievements due to good quality of harvested fish • Stable production in sea Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 • -5.9 Costs on Shetland assessed as high, mainly due to lice- and -11.2 algae issues, however; • sea lice situation under control following positive results from fresh water treatment • Harvest volume expected to increase next quarter Harvest volume (1 000 tonnes GWT) • Cost per kg expected to come down 4.5 4.4 3.9 • Industry cooperation to improve biology 3.2 3.1 2.9 2.5 • Longer fallowing periods 1.3 1.2 • Algae monitoring • Initiatives to reduce lice count Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 14

Financial review

Profit & loss Q2 2018 Q2 2017 YTD 2018 YTD 2017 All figures in NOK 1 000 • Increased revenues and earnings driven Revenues 2 318 660 2 030 504 3 835 654 3 451 575 by increased harvest volume EBITDA before fair value 482 610 441 429 702 909 619 828 Depreciations -56 297 -49 176 -114 526 -96 083 • Higher depreciations following growth EBIT *) 426 313 392 253 588 383 523 745 investments Fair value adjustments -189 621 -76 930 -11 273 -273 140 • Net financials negative due to currency EBIT after fair value 236 692 315 323 577 109 250 606 effects Net financial items -20 424 958 -47 253 -3 580 Profit before tax 216 269 316 280 529 856 247 025 Estimated taxation -50 548 -69 636 -136 403 -60 477 Net profit in the period 165 721 246 645 393 453 186 549 *) EBIT before fair value adjustment of biological assets 16

EBIT and cost development 24 • Spot prices up NOK 0.98 per kg compared to Q2 2017 22 -3.2 -0.6 20 • Lower average realized price than Q2 1.5 2017 18 • 16 Higher proportion of harvest volume towards EBIT/kg (NOK) the end of the quarter when prices were low 14 • Lower realized price for PD fish in Rogaland 21.2 12 18.9 • Farming cost decreased by NOK 1.54 per 10 kg compared to Q2 2017 8 • Higher harvest volume in Finnmark and BC 6 • 4 Farming cost per kg stabilizing moving Operational EBIT/kg Price Farming cost El/ASA Operational EBIT/kg into Q3 Q2 2017 Q2 2018 17

Cash Flow 800 37.6 600 • -297.1 Continued strong earnings drive positive operating cash flow 485.3 400 • Paid dividend of NOK 246 million -228.7 -21.1 • NOK 2.0 per share 200 • NOK 221 million to shareholders 225.2 198.5 • NOK 25 million to non-controlling interests - Cash EBITDA Inventory, AR, Investment Financing Other Cash 31.03.2018 AP 30.06.2018 18

Financial position Financial position as at 30.06.2018 8 000 Non-current liabilities NOK 2.417 bn 6 000 Non-current assets Non-current Non-current NOK 3.371 bn • assets Total balance of NOK 7 534 million as at 30 liabilities NOK x.xbn NOK x.xbn June 2018 Current liabilities NOK 1.663 bn 4 000 • Equity made up NOK 3 453 million, Current liabilities NOK x.xbn corresponding to an equity ratio of 46% Current assets Current assets (ex. Cash) (ex. Cash) 2 000 Equity NOK x.xbn NOK 3.964 bn Equity NOK 3.453 bn NOK x.xbn Cash - NOK x.xbn Cash NOK 0.199 bn 0 Assets Equity and Liabilities 19

Funding Q2 2018 Q2 2017 FY 2017 All figures in NOK 1 000 Term loan 1 170 690 1 030 000 985 000 • NIBD down NOK 152 million during the Revolving credit 190 000 300 000 300 000 quarter Leasing 354 001 282 997 260 251 Other interest-bearing debt 11 024 -7 792 -10 727 • Cash- closing balance -198 536 -454 705 -271 715 Revolving credit and overdraft facility of NIBD excl. factoring 1 527 179 1 150 500 1 262 810 NOK 1 100 million • NOK 891 million available credit end Q2 2018 2.0 2 000 2,0 • Refinancing increasing long term funding 1.5 1 500 1,5 by NOK 500 million, effective from Q1 1.0 1 000 1,0 • Annual instalments of NOK 50 million and EUR 5 million for term loans of NOK 600 million and 1.5 500 0,5 EUR 60 million, respectively, until 28 February 0.0 - 0,0 2023 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Net interest-bearing debt (NOK million) NIBD/EBITDA 20

Investments 700 600 • Annual maintenance investment of NOK 250 million 500 • Expansion of smolt plant 400 Rogaland/Finnmark NOK 150 million 300 • Growth on licenses Finnmark 200 NOK 57 million 100 • Improving biology and growth NOK 190 million 0 2012 2013 2014 2015 2016 2017 2018 Annual investments Maintenance level 21

Outlook & Summary