The global salmon industry 2015-2025

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Henrik Heiberg, head of IR and treasury in Marine Harvest details MHGs aquaculture, processing and now also feed production is moving into the future.

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The global salmon industry 2015-2025

  1. 1. Marine Harvest Havbrukskonferansen Oslo 28 November 2013
  2. 2. Implied protein consumption driven by population growth only Assumption: Constant consumption of protein per capita Sources: FAO (2009); FAOstat Food Balance Sheets, United Nations population data; World Population Prospects: the 2012 Revision
  3. 3. Farmed Atlantic salmon relatively small Atlantic salmon Sources: OECD-FAO Agricultural Outlook 2013 Kontali Analyse 3
  4. 4. Large opportunities within aquaculture species Source: Kontali Analyse 4
  5. 5. Examples of protein co’s and area of potential 5
  6. 6. A unique nutritional package Proteins: High quality, easy digestable proteins Omega-3: High content of Omega-3 fatty acids Vitamins: Rich in A, D og B12 vitamins Mineral: High content of iodine & selen, taurin og sterols 6
  7. 7. Farmed salmon - Highly efficient use of resources 7
  8. 8. Value CAGR of 8% - Volume CAGR of 6% 8
  9. 9. Historic price–volume relationship  Both 2012 and 2013 clear outliers compared to historical relationship Source: Kontali Analyse 9
  10. 10. 2014 growth expected between -1% and 5%  Growth in 2015 also expected to be moderate 10
  11. 11. Tough biological conditions in Chile….  Weighted average EBIT/kg for selected listed companies in Chile and Rest of World 11
  12. 12. …leads to strong cost increases…  Weighted average EBIT/kg for selected listed companies in Chile 12
  13. 13. …and declining yields per smolt for the industry   Cannot rule out unprofitable operations next few years Slight decline in industry volumes expected in 2014 Source: Sernapesca 13
  14. 14. MHG – Sea lice treatments per site in operation in Chile 14
  15. 15. Expectations for new Norwegian government  Initial signals implies more liberal licensing regime   Introduction of average Maximum Allowed Biomass constraints Assessment of current licensing system in general  This may lead to increased biological risk and reduced sustainability  Marine Harvest perceives this as a threat due to the industry’s dependency of a well regulated and sustainable framework  Marine Harvest’s recommendation:      Continuation of current system with maximum allowed biomass Predictable annual capacity increase of 3-5% for ten years if deemed sustainable Aquaculture Stewardship Council (ASC) certification should be encouraged Establishment of Aquaculture Directorate to secure uniform approach Proceeds from increased capacity directed to host communities 15
  16. 16. MHG – Leading position across the value chain Marine Harvest business areas Feed New Farming #1 Sales/VAP #1 Position: 220 thousand tonnes vs. global production of ~2.6m 405 thousand tonnes vs. global production of c.1.85m (22%) Global sales network Leading position in VAP Focus areas: Successful construction and implementation by July 2014 Acquisitive growth in Norway and Chile Integration of Morpol Restructuring programme in VAP Organic growth in VAP 16
  17. 17. Fish feed project proceeding according to plan  220 thousand tonnes capacity – 60% of MHG requirement in Norway  ~NOK 800m investment - Completion July 2014 17
  18. 18. Marine Harvest farming regions Norway Region North Volume: 62 000 Faroe Islands Volume: 9 000 Canada Volume: 28 000 Norway Region Mid Volume: 59 000 Scotland Volume: 50 000 Norway Region West Volume: 77 000 Ireland Volume: 8 000 Norway Region South Volume: 56 000 Chile Volume: 56 000 18
  19. 19. MHG – Volume recovery from drop in 2013 19
  20. 20. Marine Harvest sales & marketing structure America, Sales & Marketing: Europe, Sales & Marketing: • • • • • • VAP Processing: 13,400MT finished product, turnover 1,0BN NOK VAP Processing: USA & Chile Sales to retail, food service and industry 485FTE Sales Office in: Miami, LA and Puerto Montt (Chile) • • • • Note: Figures in Europe excluding Morpol VAP Processing: 60,000MT finished product, turnover 4,5BN NOK (VAP) VAP Production: France, Belgium, Holland, Poland, Czech Rep 2500FTE Sales to retail, food service and industry Sales office: France, Belgium, Spain, Italy, Czech Rep, Norway, Scotland and Ireland Asia, Sales & Marketing: • • • • Sales 1,1BN NOK. 25,000MT finished products VAP Processing: Tokyo & Shanghai 115FTE Sales Office in: Japan, China, Korea, Taiwan, Thailand and Singapore 20
  21. 21. Morpol – Competition clearance obtained  Major step in becoming a leading integrated protein player  The leading secondary processing entity in Europe  Complementary market position to Marine Harvest  ~30 thousand tonnes HOG farming assets  ~18 thousand tonnes in Orkneys and Shetland to be divested  ~12 thousand tonnes to be integrated Norway and Scotland   Location in Northern Norway where MHG is not currently present Well positioned for further licences in this region in 2013 licencing round  About 4,000 employees 21
  22. 22. Outlook  Strong market poses attractive 2014 net cash flow opportunity  Forward prices of NOK 38 per kg in 2014 and 35 in 2015  Significantly reduced level of investment  Strategic focus areas  Successful development of green-field feed capacity  Acquisitions in Norway and Chile  Integration of Morpol  Expected impact from the higher than normal investments in 2013  65 000 tonnes increase in 2014 harvest volumes  Significant feed capacity in Norway from 2H 2014 22

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