Kjell Bjordal - Head Ewos Group/COO Feed Cermaq - Status and development in salmonid feed production 2012
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Kjell Bjordal - Head Ewos Group/COO Feed Cermaq - Status and development in salmonid feed production 2012

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Kjell Bjordal på Havbrukskonferansen 22. november 2011 på Radisson Blu Scandinavia i Oslo.

Kjell Bjordal på Havbrukskonferansen 22. november 2011 på Radisson Blu Scandinavia i Oslo.

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Kjell Bjordal - Head Ewos Group/COO Feed Cermaq - Status and development in salmonid feed production 2012 Kjell Bjordal - Head Ewos Group/COO Feed Cermaq - Status and development in salmonid feed production 2012 Presentation Transcript

  • Status and development insalmonid feed production 2012Havbrukskonferansen 22. November 2011Kjell BjordalHead EWOS Group/COO Feed Cermaq
  • Agenda• Intro to Cermaq and EWOS• Status & Outlook in feed- and raw material markets• The value of growth – Use of functional feed in a low Photograph: Tom Haga salmon price market Photograph: Ragge Strand
  • This is Cermaq A global leader in the aquaculture industry Two business units; EWOS and Mainstream EWOS: The world’s 2nd largest producer of salmonid feed – market share of app. 35 %  Sales 2010: 876.000 tons  Sales 2011E: > 1 mill tons Mainstream: A leading salmon farming company  Sales 2010: 97.000 tons (gwe)  Sales 2011E: 105.000 tons (gwe) Total EBIT 2010 NOK mill 1.439 Approx 3.500 employees Operations in Norway, Chile, Canada , Scotland and Vietnam 3
  • • Operations in Norway, Canada, Chile, Scotland, Vietnam – 7 factories globally; 875 employees – 21 feed production lines• Increased attention on functional feeds – Ensure healthy fish and improved growth• Extensive R&D through Ewos Innovation – Fish nutrition, Raw materials, Fish performance and health – 3 locations, 80 People, NOK 80 mill per year in R&D 1000 900 thousand tonnes 800 700 600 500 400 300 200 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4 EWOS NorAqua /FK
  • Status & Outlook infeed- and raw material markets 5
  • Development in feed markets 2006 2007 2008 2009 2010 2011E 2012E Norway 933 800 1 083 000 16 % 1 136 700 5 % 1 302 500 15 % 1 307 500 0 % 1 463 000 12 % 1 531 600 5% Chile 1 006 300 1 082 400 8 % 1 018 200 -6 % 594 000 -42 % 698 400 18 % 926 400 33 % 934 100 1% UK 194 800 211 300 8 % 201 300 -5 % 207 400 3 % 207 500 0 % 221 400 7 % 218 700 -1 % North America 194 200 201 400 4 % 193 800 -4 % 191 500 -1 % 204 900 7 % 191 700 -6 % 193 500 1% Faraoe Islands 28 900 45 600 58 % 59 700 31 % 62 200 4 % 61 700 -1 % 81 300 32 % 84 700 4% Total 2 358 000 2 623 700 11 % 2 609 700 -1 % 2 357 600 -10 % 2 480 000 5 % 2 883 800 16 % 2 962 600 3%Source Kontali Nov 2011• Global feed sales in 2012 influenced by – Salmon price development – MTB limitations impact on harvest volume in 2H 2012 – Changes in biological conditions• Chilean feed suppliers indicate higher growth in Chile than Kontali 6
  • Fishmeal production development 3 2,5 2Million tons 1,5 2010 1 2011E 0,5 2012E 0 Source IFFO 2011 7
  • Fishoil production development 0,8 0,7 0,6 0,5Million tons 0,4 0,3 2010 0,2 2011E 2012E 0,1 0 Source IFFO 2011 8
  • General vegetable market trends• We expect stable and sufficient supply of soy, both for GM and non- GM qualities• Speculators seem to withdraw cash from traded commodities• Use of biofuel will influence total world demand, will subsidies for non fossil fuel be withdrawn in current financial markets?• Fish feed is a price taker for vegetable raw materials• Advanced formulation capabilities for feed, make feed manufacturers less and less susceptible for price fluctuations on individual raw materials 9
  • Conclusion: Less volatility in and more stableraw material pricing expected for the nextquartersRaw Material Prices(USD/tonne) • Fish quotas already set in Peru, fish meal 2000 production is expected to stabilize on 2,5 1800 mill tons, significantly higher than 2010 1600 1400 • Chinese demand drive markets, but the 1200 1000 Chinese users seem to have established 800 a substitution competence balancing 600 400 growth in demand 200 • In conclusion; fish meal prices stable or 0 2008 2009 2010 2011 slightly downwards Fishmeal Peru, FOB Soymeal extracted, FOB • Vegetable proteins expected to maintain Fish Oil Scandinavia, CIF Vegetable Oil, FOB stable or slightly downward prices in 2012 unless extreme weather conditions occur • Vegetable oils: Crops have been good – importance of substitutes for rape oil as biodiesel have been significant. UncertainMain uncertainty is currency development trend, but no dramatic price changes expected 10
  • The value of growth Use of functional feed in a low salmon price marketFaster growth / more resistant fish 11
  • Functional feed improve fish performance – EWOS adapt – designed for fish to cope with transition from FW to SW; functional components to increase the ability to handle new pathogens in a new environment and fatty acid profile to benefit a good/even smoltification – EWOS robust – strengthens and optimises immune response of the fish. Contains a functional component which makes salmon less attractive to sea lice by masking the salmon host odors and a powerful immune stimulant and boost to prepare the fish against pathogens – EWOS synergy – new base for medicated feed – EWOS alpha – clinical diet for fish suffering from Pancreas disease – EWOS opal 120 with boost-contains boost and prebiotica to strengthen the fish 12
  • Value of growth• Feed contributes to almost 50 % of salmon production cost• Choice of feed determines not only feed cost, but also growth rate• Advanced feed is here a Functional feed, low cost a reformulated feed Cost distribution for 5.5 kilo live Growth patterns for advanced, weight salmon fed on standard standard and low cost feed feed 13
  • What is the value of growth?Our model use following input parameters • Production parameters (feed dependent) – Growth rate and size distribution – Production time – Mortality – Feed conversion ratio (FCR) • Economical parameters – Smolt cost – Feed cost – Salmon price per size interval – Cost of transport, slaughting & packing – Capital interests – capital cost – Other variable costs – Fixed costs 14
  • At low salmon prices;will EWOS functional grower feeds still be more beneficialthan standard feeds?• Currently many salmon farms see productions costs about 25 NOK/kg• Benefit of increasing production volume by using EWOS functional grower feeds is maintained for prices far below break even costs (25-13nok/kg), as higher sales volumes increases the cash flow to cover fixed costs 15
  • Benefits of using EWOS functional health feeds• Additional cost of using EWOS suggested functional feed program through a life cycle approximates 250 KNOK/production site (MTB)• Such additional cost will be covered by reducing the need of medicated de-licing with only one treatment (approximate costs from 300 – 1,000 KNOK/site, depending on method)• -or by improving survival by only 2% at salmon prices of 22 NOK/kg) 16
  • Customer experiences with EWOS functionalfeeds against sea lice in 2011 4,50 EWOS robust EWOS alpha EWOS robust 4,00Sea lice (individuals) 3,50 3,00 2,50 2,00 Lice numbers 1,50 Attached stages Fastsittende 1,00 Mobile stages Bevegelig 0,50 Mature stages Kjønnsmoden 0,00 15 19 23 27 31 35 39 Week number 17
  • Are we living as we preach? • Continued significant use of EWOS MS Norway* Functional Feed in Mainstream following Salmon price reduction Functional Feed Standard Feed MS Chile** Functional Feed Standard Feed* Aug – Oct 2011 (Atlantic)** YTD Oct 2011 (Atlantic) 18
  • EWOS outlook• Continued growth in Chile from increased salmon production – Market growth 2011 maintained at 45 % – Reduced growth rate for 2012 Bilde• Focus on fish performance and fish health expected to support continued large share of value added feed• High raw material volatility to continue, but limited changes expected in Q4 2011• Investments in all plants in Norway to increase capacity with 75 000 tonnes in time for peak season 2012• Full year EBIT margin of 5-7 % maintained
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