Austevoll Seafood Asa Ord

Then it's a pleasure for me to welcome you to Österval's second quarter presentation. I would first start taking you through the highlights of the quarter. Thereafter I would go through segment by segment and our performance in the quarter and try to give some insights in the quarter we are into now. Britt-Katrine Drivenes, our CFO, will take you through more in detail the numbers for second quarter. And I will end this session by giving our view on the different segments we are operating within. So starting up, I would say we are quite satisfied with the volumes we have pushed through, I would say, all our different subsidiaries in the quarter. Again, we have been harmed by falling prices both on salmon and trout and on fish meal and fish oil this quarter versus the same quarter last year, which has been putting pressure on margins. So we are delivering a weaker financial result in this quarter versus the same quarter last year. take you more in detail when I'm going through the different segments. So all in all, a revenue of 10 billion NOX, EBITDA of 1.3 billion NOX, and EBIT of 754 million NOX. Last year we had a gain of sales of two fishing vessels and 1.2 billion. So comparing this quarter with last quarter is you have to take that into the consideration. Going down on the bottom left on the table, we have excluded the gain of sales and included the 50% share of Pelagia numbers. And you can see we have an EBITDA of 1.3 billion NOx, where salmon and whitefish segments are contributing with 1.1 billion NOx. The pelagic segment is done by 450 million nok to 200 million nok, mainly driven by the performance in our Peruvian entity and in our Norwegian activity, mainly because of reduction in the fish, marine oil prices in particular. Looking at the first half year, just below 20 billion NOK in revenue, EBITDA of 3.2 billion NOK and an EBIT of 2.1 billion NOK. We have a total asset of 52 billion AUK, equity share of 52% and net interest bearing debt of 9 billion AUK. And it's also satisfying to see that despite The reduction of prices we have seen first half, we are now delivering a better contribution from Leroy first half, comparing with first half 2024. First of all, seafood is all about volumes. We are now aiming to catch in 2025 just below 500,000 tons of pelagic fish on our own quotas. If you include the fish we are purchasing from third parties, we are aiming to handle 1.9 million tons in both Chile, Peru and here in the North Atlantic. We are the largest whitefish producer in Norway and aiming to catch and produce approximately 80,000 tons in total. And this year we also have ambitions to slaughter just below 220,000 tons of salmon. Then starting up, going through segment by segment, starting up in Peru. And I would say in advance of the first season in Peru, they had a record high biomass measure of just over 11 million tons. And the quota was set on 3 million tons. The season started up the 22nd of April and stopped the 23rd of July. And as you can see, it was only approximately 83% of the total quota which were harvested. So approximately 17% were left in the ocean from the And this is also reflecting the performance of Austral, our company. And I would say that the season started up extremely well. In the first half of the season, our catch level was extremely good. And then I would say the oceanographic condition changed. The fishery was impacted by a high presence of juveniles, meaning that the area were closed and also a higher salinity level were pushing the fish closer to shore where we don't have access. So in that case we We were happy, I would say, with the volume we were able to catch, but I would say second half, the costs were much higher than it was in the first half, which also reflected those margins. If you compare with last season in 2024, you could also see that the yields are considerably lower, both I would say for fish meal and in particular on fish oil, which also impacted the margins and also the fish oil prices was approximately 50% of the official prices we had in second quarter 2025. So all in all volume was okay but the result is impacted by increasing cost second half, lower yields and also falling prices. In Chile also, we have seen falling prices both on fish meal, fish oil, and also on frozen products. But I would say Chile is delivering better this quarter than last quarter. Britt will take you through that afterwards. In terms of volumes, more or less on the same level. In the first half, it's a record year for us with 84,000 tons versus last. 75,000 tons same period last year. When we did our first quarter presentation, we didn't know when the new fishing law was coming into place, and we guided on 65,000 tons for 2025. But the new fishing law is not counting before 2026, meaning that the volume this year is going to be a bit higher than we guided last quarter. All in all, we are expecting in 2025 to produce 140 tons of jack mackerel, a bit higher than last year as a consequence of the new volume coming in. The new fishing act will come into force in 2026. And of course, I would say the fishing industry is a capital intensive industry. We are doing investments for 20 to 25 years. depreciations and it's of course not ideal for us changing the distribution from 90% to the industry to 70% of the industry and the predictability is challenged and it's getting more difficult to do investment based on that. In addition to the change of distribution, it's also implemented in 2026 a new international quota tax when you are buying quota from outside Chilean waters on 95 dollars per ton, which of course also is changing the predictability and of course my impact the financial result also for 2026. When it comes to the North Atlantic pelagic quotas, previously, if you look from 2014 to 2024, it's been a quite stable OTEC with an average of 3.5 million tons in the North Atlantic. While you see in 2025, the volume is stoned by approximately 500,000 tons, mainly driven and macro quota is down by 22%. North Sea herring quota is down by 21%, meaning that there's a higher competition in order to get raw material. For Pelagia segments, again, looking at volumes, it's not far away from the volumes we had last year. I would say we have received blue whiting and trimmings from both herring and salmon in the quarter but it's also fair to say that we have experienced decreasing prices in particular on marine oils both on salmon oils and fish oil which has putting pressure a lot on margins and also total earnings this year versus same period last year and I would say drop in the financial resort in And pelagia in this quarter is mainly coming from the drop in margins from the fish feed or fish meal segment. When it comes to the direct human consumption production, volume-wise better than last year. We have committed a good North Sea herring season and it's also fair to say that the period we are now entering into is the most critical period for this segment when the mackerel season is starting up and also the herring body in the end of the year. So I would say so far the food segment is delivering according to the expectation. Now looking at the result, you can see that the result is done by 260 millions. And again, the majority of the explanation is that the raw material has been too high priced according to what the market is paying for, in particular, fish oil and marine oil in the quarter. Then entering into the salmon and whitefish segments, and I would say it's fair to say that LRE has shown a quite good biological performance compared with the same quarter last year. I would say the growth, mortality, superior share. And also the slaughtering in the quarter has been far better than it was the same quarter last year. And we're also seeing that the underlying result now is improving as a consequence of the different measures which has been done in Lerøy. But that's more than compensated by a drop of the spot price. So spot prices is down 30 NOK per kilo versus same quarter last year. And you can also see that EBIT per kilo is down by approximately 15 NOK per kilo, meaning that we are performing much better if you look at the reduction of prices. Volume-wise, up at 33%. It's double volume in Leroy Aurora in the quarter, 11,000 tons. Leroy Mitt, 19,000 tons. And Leroy Kjøtroll, 21,000 tons in the quarter. EBIT per kilo of 12.4 NOC. which is distributed with 90 NOK per kilo in Lerøya Rua, 11.5 NOK per kilo in Lerøya Mitt, and just below 10 NOK per kilo in Lerøya Kjøttroll in Lerøya Vest. Maintaining the guidance, 195,000 tons in Norway and 16,000 tons in our share in Scotland, bringing the total volumes of Leray to 211,000 tons, expecting slaughter in 2025. It's also comforting looking at the financial performance on the wild catch side of Lehre Seafood Group. Although we have a reduction of the filet mignon in the whitefish segment, the cod quota of 31%, and we are seeing that the increase of prices is more than compensating for the drop of the quota. We have an increase of quote prices of 22%. The increase of header quota of 55% and SAIT quota of 69% comparing with the same quarter last year. And you also see that we are more or less having the same volumes left for the remaining of the year. But I would say the two first quarter in the wildcatch segment is the most important quarter for the financial resort of the wildcatch. Then I will give the floor to Britt-Katrine.

Thank you, Arne. As usual, we start by looking at the table that summarizes the volumes for the different companies in the quarter. And I would like to highlight that we have a substantial increase in the slaughtered volume of salmon and trout. 57,000 tons compared to 45,000 tons in the same quarter last year. And that is due to a clear improvement in biology in Lerøy and also the increase is coming from Lerøy. Arne has taken you through the key figures, so I will not repeat too much, but this graph includes our 50% share of Pelagia in the revenue and the EBITDA and shows the changes in the revenue and EBITDA from the second quarter last year. I would like to highlight that in the second quarter in 2024, we had a large one-off. Brøderne Birkeland AS sold shares in two Pelagic companies, and you can see the change in the graph here, which of course affects Q2 last year substantially, so it's not quite comparable. If we look at the revenue and look at the revenue excluded this one off, there is a 12% increase in revenue this quarter compared with the same quarter last year. I will comment a little bit more in detail on the earnings when we come to the different companies. The operating revenue in the second quarter was close to 10.1 billion, up from 8.6 billion, which is an increase of 17%. And as you can see here, we have the total gain from the sale of shares, the one-off in the second quarter last year, of close to 1.3 billion. The EBITDA in the quarter was 1.3 billion, compared to EBITDA of 1.8 billion if we exclude the one related to the sale of shares, and that is down 480 millions. And as Arne has mentioned already, we have seen a significant reduction in the prices for salmon and troth, which of course has impacted the earnings from the farming activity. In addition, there has been a decrease in prices for fish meal and fish oil, which has also affected our earnings in South America. Depreciation is increased, it's 544 million up from 502 million and can be explained by investment program in new technology in farming, but also some investment in increased capacity related to service and treatment vessels. Income from associated companies are substantially down, minus 13 million, down from 142 million. The two largest associated companies are Pelagia and Norskott Havbruk, which owns the Scottish Sea Farms, the Scottish farming company. Arne has already commented on Pelagia and the result there and the reason for the decrease in earnings from that company. When it comes to Norskot, the reason behind the reduction in earnings there are, of course, linked to the substantial reduction in the salmon prices in the quarter. We have a negative fair value adjustment related to biological assets and I have to comment that this biomass adjustment does not have any cash effect. It was minus 513 million in the quarter, it was positive same quarter last year, 178 million. To sum up this gives us a operating profit of 128 million down from 2.8 million but again I have to remind you that last year we had a one-off related to gain from sale of shares of close to 1.3 billion. Net profit is 106 million, and that gives an earnings per share of NOC 0.3. If we adjust for the biomass adjustment, the earnings per share is NOC 1.3, down from NOC 5.10 in the same quarter last year. The main value drivers for Leroy is of course slaughtered volume of salmon and trout and also the catch volume in the wild catch segment. The slaughtered volume is up 33% and close to 49,000 tons. There has been, as I mentioned, a clear improvement in biology and this has also given us lower cost per kilogram year on year. Prices, however, has been substantially lower. Spot prices don't knock 30 in the quarter. and this has given us a substantial decrease in earnings related to the farming part of the segment of the company. If you look at the EBIT adjusted per kilo and this in the value chain and this includes the earnings from farming and the WAP sales and distribution segment that is NOC 12.4 down from NOC 27.1. The VAP sale and distribution segment has continued its positive development, had a record quarter. There has been structural improvements and also a strong demand in the end market. And the EBIT from this segment is 351 million, up from 217 million in same quarter last year. Within wild catch there has been a significant quota reduction and that of course impacts the catch volume for the trawling fleet. But we have seen also a substantial increase in prices for our raw material and that has compensated for the reduction in quotas. However, this is quite challenging for the onshore activity because a combination of lower raw material and combined with higher raw material prices is extremely challenging. The catch volume is more or less in line with the same quarter last year and the increase in prices has given a quite good contribution to the segment and the EBIT here is 148 million up from a negative EBIT of 4 million in the same quarter last year. Going into looking at the Austral group in Peru and the first fishing season started up the 22nd of April. Austral caught 160,000 tons in Q2 and in the beginning of the season during April and May we had very high daily catch rate. However, due to sea conditions and other factors, the daily catch rates slowed substantially in June and July, which of course has impacted our cost on this production from the season. Sales volumes are substantially up, however prices are down. Fish meal prices down 11%, fish oil 58% and that of course impacted quite significantly the earnings in the quarter. Revenue in the quarter of 691 million, EBIT of 85 million, and an EBIT of 26 million, down from 233 million in the same quarter last year. Our inventory by end of the second quarter is a little bit over 42,000 tons of fish meal and over 5,000 tons of fish oil. Chile had high activity in the quarter, despite the stop in fishing for 27 days in May, waiting for the final quotas to be settled for 2025, as Arne has already explained when he went through the operation in Chile in the quarter. We have had higher sales volumes for frozen products and fish meal and a little bit decrease in sales volume for fish oil. Price achievements are down, fish meal down 17%, fish oil down 68% and frozen down 16%. The revenue came in at 400 million, the EBITD at 94 million and the EBIT at 80 million, an increase from the 61 million in the same quarter last year. Koppevik og Furholmen is a small farming company on the west coast of Norway, and they have slaughtered a little bit less than 2,000 tons in the quarter, which is 25% down compared to the same quarter last year. The company sells all its fish in the spot market and of course are significantly impacted by the decrease in spot benchmark prices of NOC 30 in this quarter compared with the same quarter last year. In addition, we have had a cost increase year on year due to slaughtering from a high-cost site. So the EBIT per kilo is negative, NOC 4.3, down from a positive of NOC 45.2 in the same quarter last year. And last year, we had the opposite situation. We were slaughtering from a low-cost site. in addition to a substantially higher price achievement. The company has finalized their slaughtering from this high-cost site now in Q3. Revenue in the quarter was 160 million, EBITDA 4 million and a negative EBIT of 8 million. Brønnebyrkeland's second quarter this year is not comparable with the second quarter last year. As you can see, we had this one-off because we sold the shares in two pelagic companies in the second quarter in 2024. The remaining operation in Brønnbyrkeland is two vessels fishing snow crab and they finalized their quota now in second quarter and as we also commented when we reported our first quarter figures there has been a substantially higher price achievement in 2025 compared with 2024. Since they have finalized their quotas for the year, there will be no activity for the remaining 2025 and the necessary maintenance are carried out in this laid up period. Revenue in the quarter was 55 million, EBIT of 11 million and EBIT of 6 million. Looking at our statement of financial positions, we have total assets close to 52 billion by the end of June this year, compared to close to 54 million by the end of June last year. As you can see, we have had an increase in tangible fixed assets, and I mentioned it already. We have been investing in new tech, in addition to the CapEx, maintenance CapEx, we have invested in, among others, shielding technology and farming, and also we have bought two second-hand fishing vessels this quarter, one for Peru and one for Chile. Looking at the biological asset at cost, we have a higher standing biomass and that increased this line, the line biological asset at cost. Also, there is a sharp reduction in fair value adjustment of biomass by the end of this quarter compared to the same quarter last year. And finally, also our cash position is down and the cash position by the end of June in 2024 was highly impacted by the income from the sale of shares in the Tupelagic company and that was close to 2 billion. Net interest bearing debt by the end of June is 9.1 billion, up from 6.1 billion by end of June last year. We have a very strong balance sheet and we have an equity ratio of 52%. Looking into our cash flow, the cash from operating activity was 1.2 billion in second quarter this year and looking at first half it was close to 2.8 billion and that is substantially up compared to same periods in 2024 and reflects a very positive development in working capital now in 2025. Cash from investing activity is minus 430 million. And in addition to the maintenance capex, we have also, as I mentioned, bought two secondhand fishing vessels in the second quarter. Last year, the cash from investing activity was impacted by this one-off sale of shares, which was close to 2 billion. Cash from financing activity is minus 1.5 billion, and as you can see, we have paid a dividend of close to 2.1 billion, and that is up from 1.6 billion in the same quarter last year. And to sum up, we started the quarter with a cash position close to 5.2 billion and we ended the quarter with a cash position of close to 4.5 billion. Then Arne, I give the floor to you.

Then I'm shortly going to take you through the outlook in the different segments we are operating within, starting off with the fish meal segments. And as you can see, fish meal volumes among the largest producers up by 13%, mainly driven by an increase of 21% from Peru and 16.5% of Chile. Repeatingly, you can see that volumes more or less on the same level from Peru in second season than same season last year. And prices now is $1,740 for high quality fish meal and approximately a discount of $220 for standard. Also, looking into China, which is the main market for fish meal, we are seeing that stock-wise it's 27% up versus the same period last year. I think China has been taking approximately 80% of the volumes from the production, and the offtake is on a high level, and there's limited volume left to be traded. Now we are concentrating on the next season's quota to sell to China. You can also see prices is a bit higher in China also stimulating to additional trade. Fish oil, less increase than fish meal, 4.5% up, and you can see it's negative due to the low yield in the seasons in Peru. Prices been dropping 2.4, $2,400 per ton for feed grade, and over $3,000 for omega-3 grade in the quarter. Then taking a look into the salmon supply and I can see it's in 2025 it's a 9% increase in the total supply worldwide. In Europe 10% up and Norway 10.4% up. So I would say we are coming from three years with zero growth to a year with approximately 10% growth. And looking into 2026, the expectation out of Europe is just below 1% and Norway more or less on the same level, meaning that the MAB regulation is, I would say, fully utilized. in 2025 when there is limited room to grow based on the license we are having in Norway for 2026, which of course could also give some basis for improving prices. So we don't expect the same supply increase in 26 as it was in 2025. And one of the explanation behind the lower prices we are experiencing now is the volumes coming out of Europe, which has been tremendously higher on a monthly basis than it was, I would say, the last three years before. You can see also that volumes also continue to increase in July and thereafter you see that the expectation is a zero growth for the remaining of the year. So I would say we are expecting a flat supply going forward from August until December. And as a consequence of the higher volume coming in, you can also see that spot prices are considerably lower in the second quarter. And now you can see that spot prices are lower than the operational cost of raising a kilo of salmon. So what we are experiencing now as an industry is too low prices versus the cost it is to produce. Market-wise, EU, again, the main market for Norwegian salmon, increased by 9% during this year. Other markets, mainly driven by demand from Asia, is up by 15%, and the US market is up by 12%. So summing up, I would say we are satisfied with the biological performance in Leroy. And we can also see that the measures we have initiated is now showing and also reflecting in the financial result. We have had a contract share of 30% in the second quarter, expecting 25% by the end of the year. And again, spot prices now we are seeing is below production cost that will of course impact profitability. When it comes to whitefish, the gold quota, as I mentioned, was down by 31%, but I would say that the increase of prices has more than contributed to the reduction of quota. You also see that the 2026 quota is The code is down by 21%, but we are expecting that that will be the floor, and we are expecting also volumes to come up after that. South America, we are satisfied with the volume, but again, not happy with the profitability for the season. And we have to admit that the cost by second half of the season were higher than what we were expecting. And it's also impacting the financial result together with the lower prices achieved in particular for the fish oil. We're going to have a good year in Chile and new changes in the fishing law will have a new distribution. Depending on the increase of quota for next year, we are expecting that the volume drop will go anywhere from 13,000 tons to 6,000 tons. depending if we have a 5% increase of quota or 15% increase of quota. In the North Atlantic, we are into the most important period for our food