N O R WAY R O YA L S A L M O N
Opportunities in the salmon sector in Iceland
Charles Høstlund, CEO
NASF 9. March 2017
1
N O R WAY R O YA L S A L M O N
Agenda
▪ NRS in brief
▪ Highlights in Q4 2016
▪ Opportunities in the
salmon sector in Iceland
2
N O R WAY R O YA L S A L M O N
NRS in brief
▪
▪
175 employees
Listed on Oslo Stock Exchange March
2011
REGION
NORTH
NRS Finnmark
(19)
Nord Senja Laks (6)
Nor Seafood
(4)
Farming
▪
35 licenses
▪ Region North 29 licenses
▪ Region South 6 licenses
▪ Volume 2016: 26 800 tonnes
▪
Associated companies
▪ Norway:10 licenses (3 companies)
▪ Iceland: Arctic Fish ehf
< 80% in Region north
Head office
Norway Royal Salmon
ASA
REGION
SOUTH
Trading
▪
▪
▪
Own and external volume
50 countries
Volume 2016: 66 800 tonnes
NRS Feøy (6)
Sales office
Norway Royal Salmon ASA
3
N O R WAY R O YA L S A L M O N
Volume development for NRS
80 000
80 000
External Volumes
NRS-Farming
70 000
70 000
66 800
70 000
62 200
50 000
40 000
59 100
57 500
60 000
45 500
47 200
49 500
60 000
50 500
42 100
37 000
39 500
36 500
50 000
40 000
36 700
40 000
32 000
30 000
39 500
20 000
30 000
39 000
40 700
25 200
35 100
18 500
10 000
0
21 000
27 900
26 800
20 000
22 400
10 000
10 500
4 400
6 000
6 500
2007
2008
2009
0
2010
2011
2012
2013
2014
2015
2016
4
N O R WAY R O YA L S A L M O N
Highlights in Q4 2016
▪ Operational EBIT of MNOK 101
▪
Year 2016 MNOK 641
▪ All time high operational EBIT per kg ex contracts of
NOK 33.70
▪ Strong salmon market driven by good demand and low
supply growth
▪
▪
High salmon price in the quarter
Fixed price contracts for 2017 of 8 100 tonnes
▪ Good production and growth in the quarter
▪ The Board proposes a dividend of NOK 9.50 per share
5
N O R WAY R O YA L S A L M O N
Region North
EBIT pr kg (ex contracts)
32,79
▪
Operational EBIT per kg ex contracts NOK 35.65
▪
Production cost of NOK 32.21 per kg
▪
Low harvest volume
▪
34,15
35,65
Q3 16
Q4 16
27,78
14,54
Operation
▪
▪
Region North achieved expected growth in the
quarter
Good fish health and sea lice situation
KEY FIGURES
(NOK '000)
Q4
2016
Q4
2015
Operating revenues
658 186
819 733
Operational EBIT *
75 163
98 948
Volume harvested (tonnes)
2 612
6 806
Operational EBIT (ex contracts)
Loss on open fixed price contracts
Operational EBIT per kg
35,65
-6,87
28,77
14,54
0,00
14,54
* EBIT pre fair value adjustments and non-recurring items
incl. allocated margin from sales
Q4 15
Q1 16
Q2 16
Production Cost - NORTH
32,21
28,94
28,92
Q4-15
Q1-16
29,81
29,47
Q2-16
Q3-16
Q4-16
6
N O R WAY R O YA L S A L M O N
Region South
EBIT pr kg (ex contracts)
▪
Further improvements in this quarter
▪
Operational EBIT per kg ex contracts NOK 31.26
▪
Production cost of NOK 37.26 per kg
▪
Operation
▪
▪
21,79
16,38
13,69
The growth has been better than expected
Satisfactory fish health and sea lice situation
3,63
Q4 15
KEY FIGURES
(NOK '000)
Q4
2016
Q4
2015
Operating revenues
524 083
173 903
Operational EBIT *
50 729
5 242
Volume harvested (tonnes)
2 080
1 445
Operational EBIT (ex contracts)
Loss on open fixed price contracts
Operational EBIT per kg
31,26
-6,87
24,39
3,63
0,00
3,63
* EBIT pre fair value adjustments and non-recurring items
incl. allocated margin from sales
31,26
Q1 16
Q2 16
Q3 16
Q4 16
Production Cost - SOUTH
49,79
41,86
44,66
37,26
36,01
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
7
N O R WAY R O YA L S A L M O N
Organic growth potential for Norway Royal Salmon
50 000
NRS-Farming
45 000
45 000
+ 27 % yr/yr
40 000
34 000
35 000
30 000
27 900 26 800
25 200
25 000
22 400
21 000
18 500
20 000
15 000
10 500
10 000
6 500
6 000
5 000
4 400
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017E
Capacity
8
N O R WAY R O YA L S A L M O N
Development licenses
▪ Norway Royal Salmon
and Aker ASA have
applied for 15
development licenses
▪ The concept has a
significant degree of
innovation and requires a
substantial investment
▪ The Directorate of
Fisheries has informed
that our application is in
line with the criteria’s for
development licenses
9
N O R WAY R O YA L S A L M O N
Opportunities in the salmon sector in Iceland
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N O R WAY R O YA L S A L M O N
Iceland: The new frontier in salmon farming
▪
Big part of the Icelandic coastline is closed to sea-cage farming
▪
▪
▪
Two main areas for sea-cage farming: Westfjords and Eastfjords
Total allocated licenses in Iceland ~38.000 MT
Only 5 farming companies
▪
Farming condition similar to Finnmark in Norway
11
N O R WAY R O YA L S A L M O N
Significant growth potential in Iceland
Harvest volume 2016
• Iceland:
8 400 tonnes
• Faroe Islands: 76 000 tonnes
~10x
N O R WAY R O YA L S A L M O N
Significant growth potential in Iceland
Icelandic Atlantic salmon harvest
90 -100 000
4 000
8 400
2014
2016
Current licences and
applications
▪
NRS assume a 80 - 100.000 tonnes (annually) potential
in the future
▪
Icelandic aquaculture association says total production
could be between 50 and 90.000 tonnes annually
▪
Grow the industry step by step
13
N O R WAY R O YA L S A L M O N
Regulations can secure good sanitary situation
▪
Build a salmon industry that can take experience from other salmon
production areas
▪
Companies need to work together to secure a sustainable salmon
production
▪
▪
Ex . all farms running a generation model – “all inn - all out”
Working closely with government to secure a regulation for a
sustainable salmon industry
14
N O R WAY R O YA L S A L M O N
Benefits from it`s geographical location
Beginning of the year until March/April - low temperatures
▪ The goals is to put out larger smolts to avoid a second winter in sea
Westfjords provide a benefit in terms of day degrees
▪ Records from Icelandic farmers show „compensated“ growth in the
summer time
15
N O R WAY R O YA L S A L M O N
Challenges
▪ Lack of fish farming infrastructure
▪ Wellboat, harvest capacity, service, feed etc.
▪ Lack of experience in the governmental sector
▪ How to regulate the industry?
▪ General opposition towards salmon farming in
sea cages
▪ Limited capacity on the smolt side
▪ Fish health included sea lice
16
N O R WAY R O YA L S A L M O N
Joint Venture in Iceland
NRS agreed to acquire 50 % of Arctic Fish, forming a joint
venture with the existing owners
Why Arctic Fish?
▪ Attractive locations with licenses in three fjords in the Westfjords
▪ State-of-the art hatchery plant with an annual capacity of 7 mill smolt
when fully operated
▪ Goal is to produce smolt up to 500g
▪ Arctic Fish has currently licenses with a total allowed production of
9,000 t farmed fish
▪ NRS believes it can provide significant industry knowledge to Arctic
Fish, given the locations’ similarity to Finnmark
We are looking forward to develop the salmon industry in
Iceland
17
N O R WAY R O YA L S A L M O N
NORWAY
SALMON
NO
R WAYROYAL
R OYA
L SALMON
Thank you for your attention