Morten Vike - CEO Grieg Seafood - Canadian fish farming in a downturn cycle


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Morten Vike, CEO i Grieg Seafood på Havbrukskonferansen på Radisson Blu Scandinavia i Oslo.

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Morten Vike - CEO Grieg Seafood - Canadian fish farming in a downturn cycle

  1. 1. Grieg Seafood ASA Canadian fish farming in a downturn cycle Havbrukskonferansen Morten Vike | CEO 2011 22 November 2011
  2. 2. Vision and values ”Grieg Seafood shall be a leading aquaculture company” Our values: • Open • Respectful • Ambitious
  3. 3. Regions Finnmark Shetland Rogaland British Columbia
  4. 4. Business overview Grieg Seafood ASA Grieg Seafood Grieg Seafood Grieg Seafood Grieg Seafood Rogaland Finnmark BC Hjaltland Licenses 19 + 1 farming 24 farming 21 farming 37 farming 101 + 1 farming2011 guiding 16,000 tons gwt 17,000 tons gwt 13,600 tons gwt 16,700 tons gwt 63,300 tons gwtGrowth pot. +20% +39% +43% +27% +39% Capacity ~19,000 tons ~28,000 tons ~20,000 tons ~23,000 tons ~90,000 tons gwe
  5. 5. Regions – British ColumbiaWestern Canada Clio Channel21 growout licences Okisollo Channel110 employees Esperanza Inlet Walcan, Quadra Island Gold River20 000 tonnes GWE (capacity) Nootka Sound Jervis Inlet13 500 tonnes GWE (2011) Grieg, Egmont SecheltMNOK 554 revenue Calkins and Burke Vancouver Broodstock Freshwater Seawater Harvest Value added Sales
  6. 6. BC salmon farming - status• Higher costs than global cost leading regions: • Biological particularities (low dissolved oxygen, algal blooms, kudoa) • Infrastructure • High involvement permission to operate climate (regulatory, public relations etc.)• US – the domestic market for Canadian salmon farmers: • All other salmon farming regions have significant logistic disadvantages. • Chile traditionally the main supplier to the US – regaining position after the Chilean ISA crisis.
  7. 7. The global salmon market – Learnings from the last 2 years…• The farmed atlantic salmon market is a true global market: • Regional price differences on a net price back to farm basis are not sustainable over a longer period of time. • Volumes can be shifted between markets relatively flexibly to exploit price arbitration possibilities. • Logistic costs a real price differentiator between markets and farming regions.• Demand in the US market hit the hardest by the Chilean ISA downturn and subsequent surging prices: • Lower retail activity level (filets) • Less competitive pricing in certain horeca segments (casual dining).
  8. 8. Incremental logistic costs – US supply +7-10 NOK/kg +6-8 NOK/kg +6-8 NOK/kg
  9. 9. BC: Logistic costs offers price/costprotection• Current logistic costs suggests 6-8 NOK/kg price/cost protection for BC salmon farmers compared to global cost leading farming regions.• Average historical spot price difference between Norway and BC on FCA-basis: 5-6 NOK Despite an inherent cost disadvantage, BC salmon farming should be competitive with other global faming regions on the US market.
  10. 10. BC: Measures to reduce costs and improve biological performance.• Kudoa: • A limited issue on GSF sites – only one site with some impact: • Indirect entries have shown reduced occurrence of kudoa.• Algae mitigation system (bubble walls) protecting farms from toxic algae • Reduced mortality losses.• Re-oxygenation system to increase dissolved oxygen • Reduced mortality losses and increased feeding and decrease lost feeding days
  11. 11. BC: Measures to reduce costs and improve biological performance.• Freshwater recirculation facility for smolt production: • Improved smolt quality. • Reduced smolt costs • Smolt size – reduce seawater production time and reduce exposure to high- risk algae season.• Changed production and stocking plan to mitigate environmental risk: • Harvest out highest risk area prior to 2nd summer season (algea risk).• Site amalgamations to vacant underperforming farm sites (pending)
  12. 12. Market differentiation• Potential to exploit niche market positioning with a targeted and differentiated market offer: • Building on provenance • Differentiate the extended product – more than just salmon. • Target market segments with the lowest price sensitivity.• Grieg Seafood BC recently launched Skuna Bay Craft Raised Salmon: • High-end restaurant segment • Chef endorsement • Craft raised • Special product standards • Certified environmental standards • 1:1 fish in – fish out ratio • Short travelled salmon • Unique recyclable packaging
  13. 13. Market differentiation
  14. 14. Summary• A significant logistic cost advantage over other global farming regions offers 6-8 NOK/kg price/cost protection for BC salmon farmers.• Cost reductions and biological performance improvements with focus on certain particular cost and biological challenges.• Potential of increased market differentiation as Chile is regaining position as the major bulk supplier in the US market.
  15. 15. Thank you !