Nourishing the future
Cristián García-Huidobro
CFO
Multiexport Foods
Agenda
I.
Chilean Industry Competitiveness
II.
Multiexport Foods Overview
2
Chile, historically has been one of the most competitive
producers in the world’s salmon industry…
Nourishing the future
Chilean Competitiveness
Period 1986 - 2006
Chilean salmon industry enjoyed two decades of healthy growth...
X
XI
Source: Multiexport Foods
4
Chilean Competitiveness
Period 2000 - 2006
EBIT per Kg (WFE) – ATLANTIC SALMON
Current
situation
Source: Multiexport Foods
5
Everything went well until the ISA virus hit the
industry, cutting production by half…
6
Chilean Competitiveness
The ISA Crisis (2007-2009)
Industry did not pay attention to strong sanitary alarms, Cáligus (sea lice) went out of
control and by 2007 the first sanitary crisis hit the foundations of the industry
Source: Multiexport Foods
7
Chilean Competitiveness
The ISA Crisis (2007-2009)
EBIT per Kg (WFE) – ATLANTIC SALMON
Source: Multiexport Foods
8
ISA Crisis Aftermath: Action Required
 Current model not working @ 600 Th Tons WFE
 Government awareness: Employment and regional
development
 Action required: Redefine production model
• Regulation / Enforcement required
• Neighborhood system - fallowing period
• Monitor ISA virus and Sea Lice levels
• Adopt Sanitary best practices
• Smolt quality control
9
Chilean Competitiveness
Post ISA (2010 - 2011)
Good production performance + high market prices  Historic high margins
Source: Multiexport Foods
10
Chilean Competitiveness
Post ISA (2010 - 2011)
EBIT per Kg (WFE) – ATLANTIC SALMON
Source: Multiexport Foods
11
Chilean Competitiveness
Post ISA (2010 - 2011)
• Production decreased by 40%  Cáligus decreased
 sanitary problems almost disappeared
• Low supply  historic high prices & margins
• Yield @ 4.5 Kg/smolt, Ex-cage cost @ 3.0 US$/Kg WFE
• New and aggressive growth period
(US$2,0bn investment)
12
But the industry grew too much and too fast…
making the same mistakes done in the past…
13
Chilean Competitiveness
Post ISA (2012 - 2013)
Too good to be true…the new production level reached by the Chilean industry
showed its old structural design problems.
Source: Multiexport Foods
14
Chilean Competitiveness
Post ISA (2012 - 2013)
EBIT per Kg (WFE) – ATLANTIC SALMON
Source: Multiexport Foods
15
Chilean Competitiveness
Post ISA (2012 - 2013)
What went wrong?
• Production grew 70% for two consecutive years
 Market price dropped 45%
 Sea lice out of control (again)
• Fast Sanitary deterioration  3 isolated ISA
virus cases
• Ex-cage cost increased US$ 1.0 - 1.5/Kg WFE :
a) Sanitary deterioration : 60%
b) Over regulation : 25%
c) Industry inflation : 15%
• Industry suffered strong losses…(US$ 1bn) and
stock prices dropped by 50-60%
16
Towards a more Competitive & Sustainable industry
Chilean industry has been working hard with the government to make further
improvements on existing regulation
General consensus, among a large majority of industry players, about the following issues
to be changed :
1.
Remove over regulation
2.
Improve biomass distribution throughout the maritime space:
a) Improve Neighborhood System: Sea current model, fewer and larger, calendars
3. Dynamic Carrying Capacity depending on biological and environmental performance
17
Towards a more Competitive & Sustainable industry
In the meantime, industry has made significant improvements:
1. Caligus Control:
a. New products
b. Area Coordination
c. Strict treatment trigger
2. Stocking Decision:
a. Stocking planning and individual site selection defined at board meeting level
b. More information available for risk management
c. Government approval of neighborhood stocking plans
d. New regulation: Stocking adjustments by previous cycle performance
18
Towards a more Competitive & Sustainable industry
19
Agenda
I.
Chilean Industry Competitiveness
II.
Multiexport Foods Overview
20
Multiexport Foods S.A. at a glance
 One of the Leading Companies in the Chilean Salmon Industry
Top 3 in Chile and Top 10 in the world
$
MMUSD 400
Turnover (2014E)
MULTIFOO:CL
Listed since 2007
Santiago Stock Exchange
TON
60,000 Tons
2014E (WFE)
2,100
Employees
Sales By Country
Sales Mix
Harvest Mix
(2013)
(2013)
(2014E)
21
Multiexport Foods
25 years of growth
2013: JV MITSUI
ANNUAL SALES (MILLION USD)
2010: Capital Followon (USD 89MM)
2007: IPO
(USD 97MM)
2001: Acquisition
of Piscicultura del
Rio Bueno S.A.
1988: Salmon
farming in Chiloé
Island
2002: Smoked
processing plant
2008: ISA
Crisis
2000: Acquisition of
Chisal S.A.
1991: USA Sales Office
22
Multiexport Pacific Farms S.A.
Joint-Venture between leading partners
On January 2013 Multiexport Foods & Mitsui & Co. (USA) Inc, announced the joint initialization of a
company specialized in the production and commercialization of Coho Salmon and Trout destined for
Asian markets, with particular focus on China and Japan.
MITSUI acquired 30% of the JV company shares in USD 36 million
Nourishing the future
23
Multiexport Foods: Present in every stage
Minimum Cost
Maximum Value Added
Value
Chain
24
Farming facilities equipped with modern amenities to
accommodate our professionals in remote areas
25
Multiexport Foods: Farming Division (Fresh & Sea Water)
Sea Water
Fresh Water
•
•
•
•
State of the art technology
5 Locations
15 MM Smolts
7 river/lake concessions
•
•
•
99 Concessions
30 concessions in operation
23/62 neighborhoods
26
Our company is recognized worldwide
for the quality of its processing plants
27
Multiexport Foods: Processing & Sales
Processing:
•
•
•
Among top 3 largest Chilean processing plants
75,000 Tons WFE capacity (62 units/minute)
Largest Smokehouse in Chile (built in 2002)
Designed by top quality Japanese smoker (Oji
Salmon) Capacity: 7,500 tons WFE
Sales:
•
•
•
•
Competitive Sales Mix
Largest Chilean Smoked Salmon Exporter
Sales Office in USA
Experienced Sales Team
28
Multiexport Foods
Atlantic Salmon Ebit USD/Kg WFE
Q1-2014, first financial recovery signs…
29
Multiexport Foods productive performance
2013 harvests mainly from XI region (>90%) while industry harvested 60% from XI region
XI region highly deteriorated sanitary situation during S1-2013
•
•
•
•
High Sea Lice Count
High Mortality due to SRS
3 isolated ISA cases (Camanchaca, Los Fiordos, Multiexport)
Strong impact during 2013: Low Harvest Weight and High Unitary Cost
Site Sanitary
Condition
Good
Bad
30
Multiexport Foods today…
• Back to Basics: Farming focus and
implementation of a new farming
organizational model
• Analytic , informed and coordinated
stocking decision
• No stocking growth until the
performance improves
• Smolt size increase: >120 gr
• Operational Efficiency, Cash
generation and Debt reduction
31
Industry Benchmark - Financial Obligations
Leverage (Dec 2013)
8,82
1.88
1.75
1.23
1.02
AquaChile
Blumar
1.10
Australis
Camanchaca
Multiexport
Foods
Invermar
2014-2016 Financial Debt Repayment
(USD Millions)
217
178
66
AquaChile
Blumar
Australis
40
36
33
Camanchaca
Multiexport
Foods
Invermar
32
Multiexport Foods Stock
Shareholder Composition (Apr-14)
Traded in Santiago Stock Exchange Since July 2007
Free Float 35%
MULTIEXPORT FOODS
AUSTRALIS
INVERMAR
AQUACHILE
IPSA*
(*) IPSA Index : average of top 40 Chilean companies listed in Santiago Stock Exchange
Px: 118,9 -17,9%
Px: 35,0
Px: 43,1
Px: 353,6
Px: 3.773
-73,9%
-75,9%
-13,8%
-19,2%
33
Investment Opportunity
Strong
Growth Potential
Convenient
Consolidation Vehicle
Nourishing the future
Solid
Commercial Base
Experienced
Management
Specie diversification
with focus on Atlantic Salmon
34
Nourishing the future
Thank You