Austevoll Seafood Asa Ord

It's a great pleasure for me to welcome you to Östervall Seafood's third quarter financial presentation. I will first start by giving you the highlights of the quarter. Thereafter, I will take you through the different segments in the group. Our CFO, Britt-Katrine Drivenes, will take you through the numbers more in detail, and then I will end this presentation by giving our view on the different markets we are operating within. So starting up, we have had, I would say, a quite good quarter and the contribution in particular from the pelagic activity of the group has been solid. The result is mainly driven from, or the change in the result from same quarter last year is mainly driven from improvement from our Peruvian activity and definitely also from the Scottish sea farms, which has had a quite good turnaround in their operation from same quarter last year to this quarter. All in all, I would say the operating revenue is just north of 9.2 billion NOK, EBITDA of just sort of 1.2 billion NOK, and EBIT, including income from associates, which is mainly Scottish E-form and Pelagia, of 802 million NOK. Looking on the bottom side of the page, you're also seeing our EBITDA, including 50% of the Pelagia Group. And as you can see, our EBITDA is 1.450 billion NOK, whereof 818 is coming from Pelagia. Larry, down 200 million from same quarter last year. And it's a considerable increase on the EBITDA for the pelagic segment. And it's mainly driven by our operation in Peru. I will revert to that later. Looking at year-to-date, revenue is 26 billion NOK, EBITDA of 5.9 billion NOK, and an EBIT of 4.7 billion NOK. And this is also including a gain of sales we did in the second quarter of 1.2 billion NOK. And you can see also that our balance sheet is quite strong. Total asset of just north of 52 billion, equity ratio of 53, and net interest bearing debt of 6.5 billion NOK. uh looking doing the same exercise on 50 share of pelago you can see also that our total ebt of the first nine months is 6.4 billion knock and 3.3 is coming from the salmon segment and approximately three from the pelagic segment but That's also including 1.2 million in gain of sales of two fishing vessels. So excluding that, you can see also that our EBDI is 1.8 billion NOC, up from 1 billion NOC, and it's mainly driven by a 900 million better performance in Peru. Höstvald Seafood is all about volumes, I would say. This year we have quite good volumes in all our regions. So we are expecting to catch 450,000 tons in Peru, Chile, and here in the North Atlantic. We are aiming to produce approximately 1.9 million tons on our pelagic factories in the three regions. And also we are expecting to harvest and produce just sort of 90,000 tons of whitefish. And this year we are aiming to slaughter approximately 200,000 tons of salmon. So starting up, looking at our Palladic business, starting up with Peru, and by 1st of November, the second season started up in Peru. As you can see on the graph here, which shows the second season of the last 10 years in Peru, you can see that... It's a biomass identified in the research just below eight million tons and a quota of 2.5 million tons. which is considerably higher than it was the same season last year. And as you can see also, it started up a bit later than last year. So I would say in order to catch this fish, we are in a hurry and we are estimating that we would probably and hopefully catch until the end of January in order to reach our quota. The biomass, as you can see, just sort of 8 million tons is 10% above the average of last decades. And also the quota is 25% above what's normal. So normally it's around 2 million tons. And this time they put the quota of 2.5 million tons, indicating also that the fish they have identified in the research is also on a correct size in order to be caught. In our case, our quota is 175,000 tons, and it's up from the 86,000 tons we caught in the second season the same year. Chile, normally second, third and fourth quarter, we have limited activity because the season often end by first half. This year has been a change, and as you can see in third quarter, we have had a catch-off. thirty seven thousand tons, which is quite good. And so far this year we have caught one hundred and twelve thousand tons, which is up from sixty one thousand tons the year before. And it's, I would say, a pleasant development if you look at the Chilean quota, where you can see the fishery was failing in 2010, 2011, and they have now slowly been rebuilding the biomass. And we are also expecting that next year quota, there will be a 15% increase. Looking at the raw material for the North Atlantic pelagic quota, you can see that There is a drop in particular on the capelin, but also for mackerel and also from North Sea herring. So the expectation for next year is it's going to be a more limited volume in particular human consumption and also a bit less trimmings for us in for the fish meal activity. All in all, Pelagia is delivering once again a good quarter. This quarter is mainly a slow quarter in terms of production, but it's a high quarter in terms of sales. So the main raw material input is trimmings and also salmon-based raw material in this quarter and more or less in line with how it was last year. The expectation for the year, 950,000 ton, approximately 40,000 less than last year. And I would say we have had a quite stable market out the 2024. When it comes to... when it comes to the human consumption activity, it's the main season we are in. We are in the tail of that season, and I would say so far the mackerel season and also the North Sea herring season and also the spring spawning herring season has been handled and tackled in an acceptable manner. And we are at the moment, of course, with high seasonal stock positions. So all in all, looking at the result, more or less in line with last year, four billion NOC in revenue, EBITDA of five and EBITDA of 410. And if you look at the full year, you see also that We have passed the 10 billion NOC in revenue, EBITDA of 100, now 1.1 billion NOC and an EBIT of just sort of 800. Then looking into the salmon and whitefish segments, and I suggest you to take a look at the webcast of LERE in order to get a more detailed description of how we have performed in the quarter, but also to look at how we are expecting both volumes and also market to develop. Shortly, you could say that the EBIT is down 200 million NOK, and it's mainly driven by a lower price achievement. There has been a lot of sea lice treatment, which has increased cost, and also comparing with the same quarter last year, you can see that You can also see that feed cost is a bit up, and it's mainly driven by the weakening of the nook. Slaughter a volume of 51,000 tons, which is 2,500 tons. less than the same quarter last year. And it's divided quite even with 17,000 tons in Leroy Aurora, approximately 17,000 tons in Leroy Mitt, and also 17,000 tons in Leroy Kjøtrull. EBIT per kilo, 9.2. It's also big variations. In the north, 19 NOC EBIT per kilo. In Leroy-Mitt, 12 NOC EBIT per kilo. And we have a negative EBIT per kilo in Leroy-Kyrtål. But we are doing better, I would say, this autumn versus the same autumn last year. In the end, we have taken down our expectation for 2024, 170,000 tons in Norway is our expectation. Next year, we are guiding on 2025 volume of 195,000 tons and including Scottish sea farms this year, 190, next year, 211,000 tons. When it comes to the wild catch segments of flerae, it's a challenging period. Quota has been down, which is also have an impact on the raw material, both for our fleet and also for our plants. And it's partly compensated by the increase of prices, but the disadvantage of lower quota is not compensated by higher prices. Quota prices is up approximately 25%. Haddock up with 52% versus same quarter last year, and SAIT prices up with 50%. approximately 6% versus the same quarter last year. And the expectation for next year is that the quota will continue down. Code quota for all vessels is down with 32%, and the hydro quota is down by 8%. So now I give the floor to Britt.

Thank you, Arne. As normal, we start with summing up the raw material intake in the quarter. And as you can see, there has been good activity in Chile, 37,000 tons compared to zero fishery in the same quarter last year. As normal, low activity in Peru. They finished their quota by the end of June this year for the first season. And here in the North Atlantic, we started an important food season in third quarter with intake of North Sea herring and also starting up with intake of mackerel from August of 2020. When we look at the salmon and troth, total for the group, the harvested volume is approximately or exactly the same as the same quarter last year, but there are some variation between the companies. I will come further into that when we go later in the presentation. Arne has gone through the key figures earlier, so I will just mention a few things here. This has, of course, included our 50% share of Pelagia. And we are glad to see that a normalized first season in Peru has given an increase in revenue this quarter of over 900 million and also an increase in EBITDA of 389 million compared to the same quarter last year. There has been a decrease in revenue and earnings from the salmon and whitefish operation, and that is mainly explained by lower price achievement in the quarter compared to the same quarter last year. Here we start with the income from associated companies, and that was 117 million in third quarter this year, up from 89 million in same quarter last year. And we are very glad to see that after very challenging years in 2023, For Norskott, we can see a very positive operational performance and also a financial performance. EBIT, including income from associated companies, was 802 million in third quarter, up from 603 million in same quarter in 2023. Looking at the profit before tax and fair value adjustment, that came in at 708 million, up from 300 million in the same period in last year. We have had a negative biomass adjustment in the quarter. It was minus 629 million, and of course that impacts our net result. And the net result in the third quarter this year was 168 million, a significant uptick. from the minus 508 million in the same quarter last year. That said, we also had a negative fair value adjustment related to biological assets in third quarter in 2023. That was minus 710 million. Earnings per share came in, and that is X, this biomass adjustment, came in at NOC 2.70, up from NOC 0.4 in the same quarter last year. There is a year-on-year improvement in the biology in Leroy. However, there has been a very challenging third quarter with a high sea lice pressure. An increased sea lice treatment frequency has impacted the net growth, which came in somewhat lower than we expected. The price achievement for salmon and troth has also been weak. And a combination of weaker prices and some higher cost has given a lower earnings this quarter compared to the same quarter last year. The harvested volume was down 5%, a little bit above 51,000 tonnes, down from close to 54,000 tonnes in the same quarter last year. And it's not only for Lera we have had a challenging quarter that has been for the total industry here in Norway. And we see that the high harvested volume has given a high export volume out of Norway. So that was up 6% in third quarter this year compared with same quarter last year. And the spot prices are down with knock seven knock this third quarter compared with third quarter last year. EBIT per kilo X wildcatch came in at NOC 9.2, down from NOC 12.4 in third quarter in 2023. The quota reduction within wildcatch has been quite challenging. It's not is both for the trawling fleet but also for the onshore activity and maybe especially for the onshore activity because they have a combination of lower raw material availability compared with increase in prices for the raw material. So EBIT for the wildcatch segment is minus 58 million which is 20 million worse than the same quarter in 2023. As mentioned, no fishing activity in the third quarter for Austral Group, but there has been high sales volumes in the quarter. Austral finished the quota for first season by the end of June, and this quarter, third quarter, they have sold 31,000 tons of fish meal, up from 3,000 tons in the same quarter last year, and 6,000 tons of fish oil up from 300 tons same quarter last year. Fish meal prices are down 12% year-on-year, and fish oil prices are down 22% year-on-year. However, I would like to mention that the price achievement for fish oil in third quarter has been high, looking or comparing with a historical level for fish oil prices. Revenue in the quarter just above 1 billion, EBIT at 312 million and an EBIT of 254 million, which is an improvement of close to 400 million compared to third quarter in 2023. Food Corp has caught 37,000 tons in third quarter this year. And this is because we have a higher own quota in 2024, but we have also purchased a higher volume of quota from third parties. In third quarter last year, there was no fishing activity. We have sold 16,000 tons of frozen products, up from 9,000 tons in the same quarter last year. And there has been an increase in the prices for frozen fish of 24% compared with the same quarter in 2023. The revenue in the third quarter was 275 million, EBITDA of 73 million and an EBITDA of 59 million. Kobevik and Furholmen, they have harvested just above 1,700 tons, and that is close to 1,000 tons up from the same quarter last year. They have harvested from one site with challenging biology and on lower harvest weights. So this is, of course, giving low price achievement, but also some higher cost. The EBIT per kilo in the quarter was negative, NOC minus 9.3. What I would like to mention is that the remaining fish or salmon on this site has been slaughtered in October. And we see for the next generation coming up that there is a substantially better biology than this site. Not much to mention from Brøden Birkeland. They sold their pelagic activity by the end of second quarter this year. So now the remaining activity there is the two vessels fishing snow crab. The fishery for snow crab in Norway ended in March this year. Then the total quota was caught. So they have had no operation in third quarter and there will be no operation in fourth quarter either. So their operation will start up again in 2025. Brønnebyrkland has paid out a dividend in third quarter this year of close to 1.8 billion. Out of this, AUS has received 754 million and representing our owner share of 42.9%. Total assets by the end of September was 52.6 billion. There is a net interest-bearing debt of close to 6.5 billion. We have a strong balance sheet, or the group has a strong balance sheet. The booked equity is 27.7 billion, an equity ratio of 53%, and that has increased from 50% by end September in 2023. We have had a good cash performance from operating activities, 1.6 billion in the quarter. The cash from investing activity is minus 558 million. And in addition to the maintenance capex, we also do investment in shielding technology within farming. Cash from financing activity was minus 2.2 billion. You can see that there has been a change in short terms or working capital credit facilities of 645 million. But we also paid out dividend out of the group of a little bit above 1 billion. So we started the period or the quarter with a cash position of close to 7 billion, and we ended third quarter with a cash position of 5.8 billion. Okay.

Then I will end this session by giving the view on the different markets we are operating within. I'm starting off with the fish meal market, and as you can see, for the main producers, more or less the volume is down versus the same period last year and yesterday at week 41. saying that you can see Peru by far has been increasing their production. And you can see the difference between having a weak season first half versus having a very good season now in 2024. And it has had consequences on prices. You can see fish meal prices has been coming down approximately $200 versus the end of third quarter. And that is for $1,490 per ton for super prime and a discount of $200 per ton on standard. Main consumer of the fish meal, both last season and also this season, has been China. As you can see, it's a record high offtake of volume, 350,000 tons, which is up 161% versus the same period last year. Offtake around 3,800 ton a day. And you can also see prices has been traded over the prices they are selling in Peru, also triggering more prices. more consumption and more demand. So in reality, you can also see prices is also coming down in China as a consequence of a very high quota in Peru. Same with fish oil, 96,000 tons in 2024, up from 9,000 tons same period last year in Peru. And in addition to an improved fishery, we're also seeing that the yield is considerably higher in 2024 versus 2023. So up 880%. And of course, when production is coming up, we also seen a reduction in prices and as a consequence of very limited volume in 2023 you can see prices has come down before the season started in peru now to approximately three thousand dollars per ton Looking at the Atlantic salmon supply, the three last year, there has been a negative to zero growth, which is not good if you want to develop the salmon market. The expectation for 2025 is up with approximately 5%, and we hope that the supply will end up like this so we are able to develop the market. And as you can see here as well, the prices are extremely volatile. And I would say the same pattern has continued as we saw last year, but with more extreme prices, both upward prices and downward prices. And still, I would say into mid-November, prices is a bit lower than we were hoping for, but hopefully it will come back now as a consequence that there has been taking out high volumes both in September and October of low-weight fish, which were supposed to come in the end of the year. So we have to look at how the supply is developing by the end of the year and how the consumption is developing, and hopefully we will have an increase of prices. We are lucky that we have seen an increase in the EU market, which is the main market, consuming 6% more than the same period last year. Other markets up with 5%, and the United States down by approximately 3%. So summing up, I would say that although it's been a challenging third quarter by the end of the quarter, mortality has been reduced versus the same period last year. And we have also been feeding more into the present day. Also, we have seen a considerable improvement in growth versus the same period last year. I would say all the measures and improvements we have done within the road genetics, small quality shielding technology are starting to show signs of improvement. So we are expecting 190,000 tons this year, 211,000 next year. And if we are avoiding jellyfish in the season we are into now, this is going to be an interesting, would I say, start of 2025. Whitefish, we had quota coming down in 2024, and the quota will also continue to decrease in 2025. Code quoted on with 32%, had it quoted on with 8%, and we are expecting a challenging year for this segment in 2025. Also, an OK start in Peru. It's approximately 400,000 tons landed and the quota is put on the higher side. So we are a bit in a hurry in order to reach the two and a half million tons by the end of January. Chile also, pleasant development, a high catch in the quarter, and also we are expecting 7,000 tons by the end of the quarter, and also hopefully we are aiming to break the trend to lose money in the fourth quarter and have positive margins. for the first time since we came into Chile. Normally the season is done in first and second quarter, and we are taking cost in third and fourth, but this year we hope to be different. And also pleasant to see the expectation of a 50% increase to 2025. When it comes to Pelagia and the North Atlantic, summing up, at least we are expecting a bit less trimmings into our factories in 2025, and also less volume in for our human consumption factories, but still, I would say, a high wild catch volume in for the fish meal and fish oil activity. And that is all, and I thank you for your attention.