Austevoll Seafood Asa Ord

Then it's a great pleasure for me to welcome you to Österval Seafood's first quarter presentation. I will first start by giving you the highlights of the quarter. Thereafter, I will go in more in details through the different segments we are operating within. Britt-Katrine Drivenes, our CFO, will take you more in details through the numbers in the quarter. And we will end this session by giving a view on the different markets we are operating in. So before starting up, I would say that we ended last year without taking out the full potential, at least in some of our areas and some of our segments in the group. Obviously, Peru during 2023 had a challenging year with El Niño influencing both the first and the second season and had an extremely low season and lost money. And also, I would say that the biological situation in Scotland was extremely challenging during 2023. Starting up in this year, we have started the season in... Then it's a great pleasure for me to welcome you to Oosterwold Seafood's first quarter presentation. I will first start by giving you the highlights of the quarter. Thereafter, I will go in more in details to the different segments we are operating within. Britt-Katrine Drivenes, our CFO, will take you more in details through the numbers in the quarter. And we will end this session by giving our view on the different markets we are operating in. So before starting up, I would say that we ended last year without taking out the full potential, at least in some of our areas and some of our segments in the group. Obviously, Peru during 2023 had a challenging year with El Nino influencing both the first and the second season and had an extremely low season and lost money. And also, I would say that The biological situation in Scotland was extremely challenging during 2023. Starting up in this year, we have started the season in Peru, and so far it looks promising, and it's also... Very pleasant to see that the Scottish operation have turned the situation and are now delivering well, in particular in biological performance. So all in all, we had revenue of 8.3 billion NOC and EBITDA more or less on the same level as last year on 1.6 billion and EBIT, including income from associates of approximately 1 billion, 221 million, more or less in line with the same quarter in 2023. We have a strong balance sheet, total assets of over 53 billion, equity ratio of 52%, and a net interest rate of just below 7 billion NOC. If we include the 50% earnings from Pelagia, which is an associated company. We have an EBITDA in the quarter of 1.8 billion NOC, more or less in the same level as last year, a bit lower from Leroy and a bit higher from the rest of the pelagic activity in the quarter. First of all, seafood is all about volumes. And as I started, I would say we had a challenging year last year where we didn't utilize both our plants and fishing vessels in Peru. This year we are expecting to be more or less back on a normal level and are aiming to catch in total on our own vessel around 450,000 tons of pelagic fish on our own fleet. Processing just below 2 million tons of pelagic fish in our factory and fish and the process around 90,000 tons of white fish and slaughtering 200,000 tons of salmon for the year. Starting up with the pelagic business, normally we are comparing the first season in Peru with the first season, same period last year. I will not do that because the same period last year, there was put a quota of 1 million tons, but... The season were barely open before it was closed again. So the volume were extremely low. So I would say it's more accurate to look at first season 2022. And as you can see, the biomass is more or less estimated to be on the same level. Quota set in 2024 was a bit lower, but I would say on a historical average, just below two and a half million tons. Season started up quite early, which is, of course, an advantage for us. So we have now caught over 55% of the quota. And if you compare it with 2022, season started up 12th of May and season this year started up approximately 16th of April. So far, I would say a good progress on the quota. It's been catching, I would say, around all our factories in Koisko, Chiang Kai and Pisco. And the daily catch level for the first three weeks has been, I would say, on a record high. level compared with the latest eight years. Also pleasant to see that oil yield is coming up. I would say it's a big variation between oil yield from Our factory in South versus our factory in Coesco. But we are seeing also that throughout the season that oil use is coming up. And I think the oil use will end on a higher level than 3.1 as we have seen the first two and a half week of fishing. I would say on the negative part, you know, temperature didn't start to normalize before April. So the catches we normally have in the salt part for our factory in Ilo has not been happening. And it's also been a lower fishing for direct human consumption. But all in all, a good start. We are estimating production or fishing volumes in 2024 to be almost three times higher than it was in 2023. But of course, subject to EMAPA. Looking in Chile, I would say that we have had a good start on the mackerel fishing, a record quarter for us. And I would say it's in line with the increasing quota. It's a lot of fish. And we're also seeing a mixture of different sizes now, which is, of course, good for the recruitment and an evidence that... You can see down on the bottom right graph that biomass and quota is increasing in sustainable matters. Expecting this year maybe to pass the 100,000 tons level in catches and in production in our factories and have now started to produce on quota we have bought from third-party fishermen caught by our own vessels. On a negative side, I would say two aspects worth to mention. The sardine and anchovy fishery from third-party fishermen has been lower this year, 30,000 tons so far last year. Now it's around 10,000 tons, and I would say also the oil yield is a bit lower this year compared with last year. Also worth to mention that we have had a harbor strike in the main port of Cornell, which has also influenced shipping. And we can also see some delayments in shipping into third quarter. But all in all, also a good start in Chile. North Atlantic quota start up, I say that the quota in 2024 in total in the North Atlantic is on a historical level, as you can see from the graph for the latest six years. This year, blue-whiting quota is up, North Sea herring quota is up, and it's also committed a catch in the Barents Sea for capelin. On the other hand, we have a decrease in macro quota and a decrease in NVG herring, and also Icelandic capelin didn't start up this season, so... I would say all in all, another year we are expecting that we will have high fish meal volumes, but I would say higher competition for raw material in our factories for food. Started up first quarter in the fish mill and fish oil segments with higher volumes. Anticipated an earlier fishery on blue whiting in the first quarter, so most of the quota is already caught in the first quarter. As you can see, the expectation for the rest of the year is that the total volume is a bit lower than it was in 2023. The human consumption fishery production has been marked by, I would say, two aspects. A reduction in the quota of NVG herring has led to higher competition with more press margins on that species. And also it's introduced landing obligation for the UK vessels delivering to the Scottish production units. So approximately 40% of the total catch needs to be delivered to the UK. back to Scotland, which has an impact on our Norwegian factories and of course also a positive impact on our factory in Shetland. All in all, I would say that we are delivering a bit weaker in this quarter from fish meal and oil and also from the food segments and a bit better from the health segments in Pelagia. But we are also leaving this quarter with a higher reserve on stock compared with the same quarter last year. So I would say it's more or less compensated with sales going forward. Strong balance sheets, 11 billion ok, net interest bearing debt of 5 billion ok. And as you can see, the sales has been approximately 20,000 tons less for human consumption and approximately 4,000 less for fish meal and oil in the quarter. Then looking into Lerøy Seafood Group, and I suggest that you look at the webcast from Hanning and Sjur in Lerøy in order to get an impression of, or more detailed impression of how we have done it in the quarter. But I would say that the first quarter has been marked by extremely low temperature all along the coast of Norway. But despite that, I would say we have delivered a quite OK and biological performance where the growth has been acceptable, I would say, in all regions. The whitefish segments are delivering smaller or lower EBIT in the quarter, and mainly based on lower quota available. Slaughter volume for salmon is approximately 2,500 tons lower. 6,000 tons in Leroy Aurora in the quarter, 13,000 tons in Leroy Mitt, and approximately just below 7,000 tons in Leroy Kjotroll. Spot prices is up approximately 5%. EBIT per kilo around 25%. Nock per kilo. It's divided between 44 nock per kilo in Leroy Aurora, which has a very good quarter, 31 nock per kilo in Leroy Mitt, and approximately 10 nock per kilo in Leroy Kjotroll. Then we are guiding our volume. We are maintaining our volume in 2024 around 175,000 tons in Norway and approximately 18,500 tons in Scotland. So altogether 193,000 tons for the total group. In 2025, we have reduced our volume with approximately 5,000 tons, and it's mainly explained by the reduction we have in MAB as a consequence of the Norwegian traffic light system has withdrawn some MTB in the regions where Lerøy Kjødtroll is operating. When it comes to wildcatch, I would say that the performance in this segment has been good compared with the reduction in quota in the quarter. Volume for cod is around 1,300 tons lower. For haddock, it's approximately 2,300 tons slower. And it's been compensated by an increase of prices for COD of approximately 11% higher and approximately 12% higher on HADOC. When it comes to SAIT, volume is a bit higher, but prices is approximately 22% down. It's going to be a remaining quota in 2024 on a much lower level than it was in 2023, which of course will have an impact on the earnings going forward into the three next quarter. Then I give the words to Hubert.

Thank you, Arne. To sum up short, we have had good activity in the North Atlantic, both within the pelagic segment and the whitefish segment. Moving over to South America, Chile has had a good start of the horse mackerel season. And as normal, Peru has had low activity in the quarter. Looking at Selman and Troth, we have slaughtered approximately the same volume this quarter compared with the same quarter last year. Revenue in the first quarter, and this also includes our 50% share of Pelagia, came in at 9.8 billion, up from 9.5. And we have had an increase in oil segments, except Pelagia, and I will touch base on that later on. EBITDA in the quarter, and this is the operational EBITDA, came in just below 1.8 billion, and that is more or less in line with last year. Then we had an EBITDA of a little bit over 1.8 billion. Anna has touched base on the key figures, so I will not repeat everything, but I will just comment some of the lines in the P&L. And we can look into income from associate, which came in at 62 million, almost the same as last year. But there is some changes in the mix where the income comes from in the quarter. The two largest companies or the two largest associates are Pelagia and Norskott Havbruk. Norskott Havbruk is the owner of Scottish Seafarm. And as we have reported earlier, Scottish had a very challenging year in 2023. It started actually in the autumn of 2022. And it's a pleasure for us to see that the improvement in operation now are showing in the earnings for the company. And the earnings in first quarter is up by 50 million compared with same quarter last year. Pelagia has had a very good season and a large production of finished products. However, the sales volumes are a little bit lower in first quarter this year compared to same quarter last year. And that means there will be some sales volumes that moves into the upcoming quarters. However, their reserves in their inventory is higher going out of first quarter compared with the same period last year. But lower sales volume means a little bit lower income or earnings in first quarter this year compared with same quarter last year. I also want to touch base on this fair value related to biological assets that varies a lot between the quarter. It's 62 million in first quarter this year, but as you can see, it was substantially higher first quarter last year, 460 million. And of course, this impact our results or net results. Then I move on to profit before tax and fair value adjustment, and that came in at just above $1 billion, down $100 million from $1.1 billion same quarter last year. And to explain it simple, we have a higher... net interest bearing debt and some higher interest rate levels. So the net interest is up by 50 million in first quarter this year compared with same quarter last year. And you can also see that our depreciation is up by 50 million. So that is the simple explanation. Looking into the segments, we start with Lerøy, and they have slaughtered a lower volume disc warder compared with the same period last year, 26,400 tonnes, down from 28,600 tonnes. And of course, lower volumes impact the cost per kilo harvested. The price achievement is also impacted by several factors. Of course, the share of contracts, the size of the salmon slaughtered, and also quality. And as you all probably are aware of, the market has been influenced by downgraded salmon in the first quarter and this is also for Leroy. However, the company has been able to take good care of this fish through its wholly integrated value chain. The contract share in the first quarter was 50% compared to 18% in the same quarter last year. Looking into the wild catch segment in Leroy, the fishing vessels had a good catch. But of course, and they have had also very good prices and very high prices for cod. But of course, the reduced quotas for 2024 gives less quotas for the remaining year. For the onshore activity, lower quotas and also higher prices on raw material are extremely challenging. Revenue in the quarter came in at 7.1 billion and the EBIT came in at 842 million. And the EBIT per kilo X, the wild catch segment, was 24.9%. down from 26.6 NOC. And the EBIT from the wildcatch segment came in at 187 million, down from 229 million in the same quarter last year. As mentioned, we have had low activity in Peru, and the company has used this period to do maintenance on their factories and fleet, waiting for first season 2024 to start, and that started up April 16th. Luckily, we had a second season in 2023, and the production of finished products from this season was sold in first quarter. The sales volume, as you can see, is more or less in line with the same quarter last year. However, the prices for fish meal was up with 13% and the fish oil prices up with 172%. However, of course, very low volumes sold of fish oil. Revenue in the quarter was 570 million. And we also got the insurance for one of the fishing vessels that we lost in November 2023 in this quarter. And that is 46 million. The EBITDA came in at 115 million and the EBITDA at 57 million. In Food Corp, we have had a good start of the horse mackerel season and also a good production of frozen products. However, the coastal fleet have had a challenging start on their catch for sardine and anchoveta, and there has been several stops in the season. And that means that we have purchased a lower volume of anchoveta and sardine in the first quarter compared with the same quarter last year. The sales volumes of frozen fish is almost 25,000 tons, up from 21,000 tons, and the price achievement is up by 8%. Revenue in the quarter, 325 million, EBITDA of 122 million and an EBIT of 108 million. And that is in line with the same quarter last year. There is a strike going on in the harbor of Coronel, and that means that there are some delays in our shipments of frozen products now in the second quarter. So there will be more sales going into the third quarter. Brønne Birkeland Farming has slaughtered 3,200 tons, up from 2,400 tons. They sell all the fish in the spot market. The spot prices are up. However, the price achievement for for the company has been impacted by downgraded fish due to winter bones. The revenue in the quarter was 314 million and the EBIT is 106 million and that is more in line with the same quarter last year. However, we can see that EBIT per kilo is down. It's 33 NOC this quarter, down from 44 in the same quarter last year. And this is a combination of A little bit lower price achievement, but mainly due to higher cost. The four fishing vessels have all had good activity in the quarter. The two pelagic vessels have caught blue whiting and capelin. And the blue-whiting fishing started early, and it was a very good fishery going on in February. And both of the vessels have caught their quota within the first quarter. Last year, the blue-whiting fishing also took place in April. The two-vessel fishing snow crab... I've caught a little bit over 800 tons, up from 665 tons last year. The snow crab fishery is still Olympic. And in the middle of March, the total quota was finalized for the snow crab fleet. And the fishery was stopped. Last year, this quota was caught in the beginning of April. Revenue in the quarter, 155 million, EBITDA of 70 million and an EBITDA of 54 million. Brønnebyrkland has entered into an agreement to sell the two pelagic vessels or the companies owning the two pelagic vessels. And subject to completion of the share sales, this will give a cash effect to Brønnebyrkland and us of a little bit less than NOK 2 billion. And Österva Seafood owns close to 43% of Brøndbyrkland AS. Moving over to our financial position, we have a strong balance sheet. The total assets is 53.6 billion. As we have talked about earlier, we have inflation and also increased activity has given us some higher working capital. And in first quarter, we have an increase in our biomass related to salmon and troth. And we have a higher volume and we also have a higher weight on the biomass in sea. So you can see that the biological asset that cost is 6.5 billion. It's up from 5.5 same quarter last year and 6 billion by the end of 2023. The booked equity is 28 billion, and the equity ratio is 52%. That is down from same quarter last year. However, this resource rent tax was implemented in second quarter 2023 in our tax cost, and the implementation effect alone was 1.8 billion, and that has impacted the equity ratio, as you can see. And this was not implemented in first quarter. So it's not comparable. Net interest bearing debt by the end of March was close to 7 billion, up from 6.7 billion by the end of 2023. Looking at cash from operating activities, that was close to 600 million and we have touched base on increased working capital. And you can also see that we have paid taxes, knock 443 million in first quarter this year, up from 103 million in same quarter last year. Cash from investing activities are a little bit less than same quarter last year. And in addition to maintenance capex, we also invest in shielding technology within farming. We also do some improvement in the small facilities and also some investment within whitefish. Not much to say about the cash from financing activity. It's 214 million, more or less in line with same quarter last year. And we have a net change in cash of 337 million in the quarter and gives us a cash position by the end of March of 5.8 billion. And last, the board has recommended to the annual shareholder meeting in 2024 to be held on May 29th, a dividend of NOK 4.5 per share. And if this is approved by the shareholders meeting, we plan to pay the dividend around 12th of June.

Then I will end this session by giving our small view on the market, starting up with the fish milk production. And so far this year, the volumes are down compared with same period last year. But I expect this to recover during the next quarterly presentation when we have the outcome of the fish meal production, in particular from Peru. When the quota was announced during the start of the fishing period, we have seen also a drop in fish meal prices. Low quality is around $1,600 per ton, and high quality fish meal is around $1,845 per ton. So the gap between high quality and low quality has decreased, and I would say that it's been... I would say a normal development looking at prices. China, the major market, looking at the stock level in China, you can see that the stock is up 9% compared with the same period last year. And also the offtake now is a bit higher than it was on a weekly basis now compared with the same period last year. You can also see that the current prices traded in China is higher than the Peruvian prices, and this stimulates to, I would say, an increased trade as well. Looking at fish oil, volume down by 26.3%. It's, as I mentioned, pleasant to see that the oil use are recovering in Peru, and we are also expecting that it will continue increasing. Volumes from Peru this season compared with the same season last year. So I would say all in all, lower yields in Chile, better yields in Peru. So in volume, I think it's going to be a higher production this year compared with the same 2023. Prices, feed grade now around 7,000 tons. And I would say it's a waiting position looking at the omega-3 grade. I think it could be a downside in these prices as mentioned here. Looking at the Atlantic salmon supply, zero growth in 2024. The underlying fundamentals on the supply side, I would say looking good to have a strong market also going in for the rest of the year and also I would say into 2025. Spot prices in Norway in first quarter, you can see it's up in NOK, but I would say it's unchanged in euros. So the increase you see on this table is more or less based on the weakening of NOK versus euro. The main market for Atlantic salmon, still EU for us, is the main market. It's an increase of 5%. Other markets is down by 1% and US market is down by 2%. So all in all, I would say that it's a positive start in 2024 when it comes to biological performance. We have done some significant improvements in the whole value chains, I would say from raw to small quality, new farming technology. And also we are improving our processes as well. So I would say all in all, hopefully we are better prepared to meet the summer this year than we were last year, where we were not happy with our performance. So guiding on 193,000 tonnes this year, which is substantially up from last year. Whitefish is going to be challenging this year. It continues to be challenging next year. Lower quota and also a new quota law has been implemented. Moving cold from the trawler fleets to the coastal vessels are challenging our operation. So we are expecting, I would say, the next three quarters to be challenging and also 2025 to be challenging. Good to see in South America the start in Peru has been okay. And the progress has been on a very good level. I would say that we are expecting probably to sell most of our production into Turkwater. And hopefully this is a picture of the recovery of our operation in Peru. Chile as well, very good quarters in first quarter. And as I said, we are expecting that it will be probably some moving from second to third quarter of sales, particularly on frozen products, mainly due to a port strike in Corona where we're having our factories. North Atlantic is still a good quarter from Pelagia. We are seeing a press margins in the food segments. Feed segments are having good volumes. And obviously also the health segment is delivering well into first quarter. And we are leaving the quarter now with higher reserve on our stock versus the same period last year. So that was all. Thank you for watching.