Grieg Seafood Asa Ord

Yes, then I would like to welcome you to the third quarter presentation for Grieg Seafood. My name is Andreas Kwame, I am CEO of Grieg Seafood and with me I have CFO Atle Harald Sandtorp who will take us through the financial after I take the process of the operational. Yes. Yes, the disclaimer I hope to practice. It will be up to each individual to study it. I will go a little through the highlights for the quarter. I will go through the operations in the company. A little update on strategy. Atle Harald will take care of the financial part and then we will look at the future and the outlook in that way. Then we go straight to Our operational result was negative with 175 million kroner, 9.8 kroner per kilo per quarter. In Norway, we had a positive EBIT at 69, and mainly due to the negative results in Greek Seafood, our operation in BC, which we managed to guide on Q2, that this would come. That said, we have a very good running in the company at the moment. In Norway, we have all-time high production. We have full utilization of the MTB. We already had that in August and September. So that was good. We have rebuilt the biomass in Finnmark. We are on full MTB in Finnmark and have gone fishing. We also have an advanced process when it comes to finding partners in Canada. It has taken longer than we had expected, so there may be a lot of news to tell. We have a good dialogue with various partners, stakeholders, both when it comes to partnerships and sales. of the company in Canada or parts of the company in Canada. In connection with the fact that it takes longer time, we have taken up a bridge loan to give us increased financial flexibility. We expect to slaughter 24,000 tons in Q4. And the target for 2024 is 78,500 tonnes, which we guided on in the last quarter. Then we will go straight into the different regions and look at them. We start with Rogaland. It is a stable region for Greek seafood and a lot of this is also due to the fact that we have come the longest in this region when it comes to mail. We have a result in the region of 75 million in this quarter and so far this year we have about half a billion in results. Production in the sea has gone well. Good MTB utilization in this region and probably one of the regions in Norway No matter the company, the highest performance on MTB utilization is in this region. The superior quality has come up on our fish, so that's good. Of course, this also affects that the prices have been relatively low in this quarter, with seasonal variations that have always been there. We develop Årdal Aqua. We have been doing this for a while. In October, we put fish in the first two modules. There are four modules in this facility, and the first two have fish. It is a facility with a capacity of up to 6000 tons of fish. We expect the costs in the next quarter to be stable at around 62 kroner, which we then had in the third quarter. We expect a reduction of 7,300 tons in the coming quarter. And we plan to increase the guiding by 28,000 tons, as previously mentioned. By 2025, we will increase the volume to 30,000 tons in this region. So stable. Finnmark. The costs also come down. We have been through two years with Spiro. We had a cost of 60-70 kroner per quarter. An EBIT that was at minus 6.2. The underlying production in Finnmark has been very good. We have not had any young quarter. In Finnmark, we have had as much as we have done in the third quarter. So production-wise, it has gone very well. We have full utilization of MTB at the end of the quarter. We have a very high superior share. The quality of the fish in the sea is very good. But we have also spent a lot of time and resources to have enough tools to help Finnmark. It was perhaps the region that had poor equipment last year, when it came to lighting, when the lighting problem arose, especially in the Hammerfest area. We have handled this in a much better way this year. The fish that was slaughtered in this quarter was slaughtered in the end of the year, or the end of the year, it was slaughtered in July. So we had a stop of slaughter in August, and then we started again in September. When we started to slaughter in September, the reason we did that was that we were at full MTB. this month, and we had to take out fish because we had too much in relation to the MTB, and then he usually takes out some small fish to let them open up so that there are opportunities to let the fish stand again and grow stronger. It stands again on the local MTB, which can be a challenge. But we are full, and the factory is full, and that is what we want to be. So the biological production has gone very well, and the cost of it was almost on the same level as Rogaland in the fourth quarter. But then we got the pearl number after, into one of our facilities. We have 16 facilities in Finnmark, and it hit one facility properly. Most of you have probably seen the pictures that have been posted. It is not easy to protect yourself against. We have done everything we could to protect ourselves against link magnets, including this one on Vindalande, which was this facility that was attacked. We had 10 meters long deep chute. We stopped foraging, we had no washing of the nuts during the period, we had to stop deworming and so on. But this gave an outcome in that we got acute mortality on the fish, roughly a decline of 50 million. We have taken advantage of the fact that it has a higher cost with the fish that we now have slaughtered. We have also taken a step forward to see how the development of the facility will be. We monitor this every day. It's fish health and welfare that decides whether we can leave the fish standing or pick it up. Therefore, we also say that the cost in the fourth quarter will be up to 70 to 90 million, which is then mainly the reduction of fish that die in connection with this attack by pearl snowshoes, and higher costs for the slaughter of small fish. In the fourth quarter, we expect to slaughter 11,400 tons. And that is in October, November and mid-December in the United Kingdom. We expect the slaughter, as previously announced, to be 20,000 tons. And our slaughter volume next year is 32,000 tons. And if you look at our guidance, 75% of the volume of Greek seafood will be in Norway next year. When it comes to BC, it was a catastrophic result. It was very bad with minus 217 in negative EBIT in this quarter. It was announced in the second quarter that it would be. Then we saw the consequences of low oxygen levels in the second quarter and the following algae pollination and poisonous algae in the beginning of the third quarter. So what happened was that we took out the fish. There was of course deadly heat as a result of this, but also that we took out the fish on a much lower average than we otherwise would have done. We would have had fish with us in the fourth quarter, but the fish welfare was too bad. That's why we chose to take it out. We have slaughtered 2,500 tons of sheep this year in BC. We are also waiting for the transition plan that the authorities have been working on. for a long time, we have decided that we will not take any investments. The amount will remain what we have, and then we will reduce some of the volume in relation to what we have had. This means that we can remove some of our fixed costs by going down in volume. Thus, we have said that 12,000 tons will be the volume for next year in BC. The production is going very well now. There are good conditions in the sea and the fish grow well. In fact, better than expected. As for Newfoundland, we haven't had any slaughter in this period. We started the slaughter in October. The fish is 96-97% superior. Someone who has been active for 40 years said that he has never seen such nice fish as he has seen on Newfoundland. It looks like a wild fish. It is very nice, very nice in color, very good feedback from customers on this. We have had good production in the sea. I expect to have slaughtered 5,700 tons of trout in the fourth quarter. It is equally distributed throughout the quarter. 11,000 tons is what we are guided by for 2024, and we will get a small gain due to 150,000 fewer fish set out in the sea last year. So 10,000 tons is what we are guided by. from Nyfondland next year. It is a start-up region with a great potential. It is probably the only place in the world where you can grow so that you can do at Nyfondland. What we have seen in the two generations we have had in the sea is that biologically it works very well in this area. We have had very good growth on the fish, we have had good yield on the fish, and very low mortality on the fish in this area. But we have to get the growth here, which depends on getting the finished post-malt under construction. Short about the strategy, I will not spend much time on it because it is well known, but this is the development of Gregg Seafood. We are far ahead of Rogaland compared to the other regions, but we are actually approaching, up to this year, we are approaching about 9,000 tons of post malt in Rogaland. And then we are constructing ourselves in Finnmark. It is under construction and there we end up with about 5,000 tons of coal. In Norway alone, we want 13-14,000 tons of coal capacity. Then I can choose whether to put it at 500 grams or 1 kilo. It has something to do with the use of MTB in the various regions. We also continue to work with downstream activity, which we have said is a very important area for us, and especially that we have a tool to be able to upgrade degraded products. But it is also a big question for customers to have more processed products, and then it's not just a chair, there is also something called Climate, CO2 emissions, and so on. And it is much more beneficial for the environment to transport feed and portions than to transport whole fish worldwide. So this is under construction and will be completed in the fall of this year, so we have a tool for the winter of next year. Then I don't think I should say much more. I'm Atle Harald, and Atle Harald will take care of the finances.

Thank you, Andreas. Let's look at the results first. We had a turnover of 1.4 billion kroner per quarter, and we received an operating EBIT of minus 175 million kroner. Andreas has been talking about the causes of the negative results, and it was especially the BISISO that brought this down. When it comes to the value adjustment of our biomass, it is positive this quarter with 343 million. This must be seen in connection with the fact that we are increasing the biomass, especially in Norway, which then raises the value. The financial line is negative with 124 million. There is some increased debt, and we also have a negative currency effect. The tax is at minus 75 million, which gives us a result after tax at minus 30 million. If we look at the analysis per kilo, the revenues are down in the quarter with 17.4 per kilo. What is also positive is that the cost is down, especially in Norway, the underlying cost is going down. So it's going in the right direction. We went into the quarter with around 4.3 billion in net income. Unfortunately, EBITDA did not contribute positively this quarter, so it was 8 million in minus, so the income increased. We have spent money on building a lot, especially in Norway. Andreas has been saying that we are now at maximum allowed biomass in Norway. So we used 547 million there. And Q3 is also a quarter where it was always good. We have invested 354 million. We also have other effects of 405 million, and then it pulls in the right direction. The main effect is that due to a lot of forage through Q3, we have some delivery fees that are against the forage suppliers at the end of the quarter. So delivery fees increased, and thus you got a positive contribution to the labor capital, which then pulls down the net and interest rates. And then we exit the quarter with 4.8 billion in net income. Our free liquidity out of the quarter was a little over 1 billion. We had 155 million in the bank and out of the bank facilities was 900 million. And this brokerage that Andreas has been involved in 750 million. It does not include digital, of course, because it will be done now in Q4, so that will come in addition to that. We have so far this year invested 946 million. We plan to invest around 400 million more, so that this year we are guided by a total investment of 1.4 billion. There are 300 million for balance investments, where we have cut as much as possible and are on the lowest possible level. Then there is a half billion in post-multi-investment in Finnmark. And then there are 600 million in Newfoundland. About half of the budget in Newfoundland is related to the land we are building out there, and half of it is localities in the sea. When it comes to biomass construction in Q4, we expect it to be zero. Maximum biomass in the sea in Norway, and we are now slaughtering out on New Forland so that we do not need to put off labor capital for biomass growth in Q4. This will be taken in Q3. We will summarize a little on the financial side. The process that Andreas has been talking about, in relation to partners and sales in Canada, will of course affect our balance and is an important process in relation to that. And as Andreas has been talking about, we have raised a loan of 750 million to get us financial flexibility in that process. The one-capital percentage was 39%. According to the Bank Covenants, it was 42%. Help per kilo at 61 kroner. The free liquidity, as I said, 1 billion. And if we count pro forma, including the bridge loan, it is at 1.8 billion pro forma out of the quarter. But as I said, the bridge loan was taken now in Q4. Finally, we have an obligation loan of around 1.4 billion, which falls in June. This will also be an important refinancing process for us in the future. It is also a process that we see in connection with the partner sales process that we work with. I'll give the floor back to Andreas.

Thank you, Atle Harald. First, the guidance for 2025 in the various regions has been summarized. Rogaland will slaughter 30,000 sheep. Finland is going to slaughter 32,000 tons, British Columbia 12,000 and Newfoundland will have 10,000. That means that we go up from 78,500 tons that we have had this year to 84,000 tons next year. And as I mentioned earlier, about 75% of what we slaughter comes from Norway next year. We still expect a good and strong market. It has been a special year this year. Underlying, the demand is good. We can't see a big increase in supply. On the contrary, we have seen from what we see in Norway today, with all the slaughter of small fish, In terms of biomass and the number of fish in the sea, we believe in a 0-2% increase in supply. That is, a stable supply. It remains to be seen what the market will be like after the question is asked. The challenges are mostly political. What is happening there? Trump has come to power in the United States. We see rumors about tax cuts and so on. But it is also the case that we have had this before in our industry. Over the years, there have been different regimes that have found new ways for salmon. Salmon is in a global market, and we must take part in this. We have a relatively small contract ratio in the fourth quarter, around 7%. We have 8% now in FF25, or FF24. We want to increase the contract ratio in FF25, and that is being worked on as we speak. We still have a mission of 25% of our products in 2026. It may seem a bit ambitious, but it is a mission we have. We are working a lot with dairy production for the time being to increase it so that when the factory on Gardermoen starts, we are in full swing. Looking at the different brands, I am especially happy about this, even though I have been through an expensive time in many brands, especially the USA brand. A small increase there, but we see now in the last quarter that this has peaked again. Europe, which has been through the same inflation challenge, has had an increase of about 6% so far this year. Asia, especially China, is a market that has grown a lot, especially in the last quarter. In this way, there is a positive view of market development. In summary, In Norway, we are very good. We are at full utilization of the capacity at the end of the quarter. We have built up the biomass again in the third quarter after the Spiro case that we have been through. On both sides of the bench, there is no sign of Spiro. Neither in Ferskvannet nor in Kjø in Finnmark. I think we have learned a lot from the measures I have implemented. Biological challenges in BC we had in the third quarter, especially in relation to algae. It looks good now in the fourth quarter. We work with this partner search or a full sale of our operation in in Canada, it goes far forward. So it has taken some longer time than expected, but there is good progress. In order to achieve full financial flexibility, we have taken up a loan of 250 million for the insurance company to facilitate this transition. Then we open for questions.

We can start with some questions from the web. There are some questions that go around the Canada process. We put them together here. Andreas, can you say something more concretely? You said in the Q2 presentation that you had several proposals. Are you now evaluating a proposal? Is it a final process? How far are you from a conclusion?

I'll start with the last thing. In such M&A processes, it is very difficult to say exactly what time you are ready for. As long as you have several people interested in this, and have different solutions, you have to use some time together with them to figure out what the best alternative is for Gregg Seafood. As I said, it is a prerequisite. I have been working hard on this for some time, but I do not dare to state exactly what time this should be completed.

And again, there are questions about this with sales versus partnership. If we can say something more concrete about which direction it goes in. And you have been aware of that.

I have been aware that we are open to both solutions. Full sale of our entire operation in Canada, but it can also be a sale of parts of the operation in Canada, for example Newfoundland.

And finally, regarding the sales process, the question is, can the entire Norwegian business be for sale?

No.

But not. Yes. The next question is on Carpex, and that is how much remains of the post-investments in Finnmark and Nufroland into 2025?

In Finnmark, we will guide that in the next next quarter, but now it's about 1.2 million, 1.2 billion that is deposited in Finnmark and in PSA, so it's about 60 CAD.

Yes. So you can sum it up, in Finnmark we have used half a billion In the next year, it will be about 1.5 billion, and then there will be a half of it. The total budget is a little over 1 billion. In Bici, we have used about 300 million, and if we take the Norwegian krona, it is about 600 million. Maybe 400-500 million will be used next year, and the rest will be used in a hall in 2026. I saw a little on 12, increased 12 from Canada to the USA. Do you have the opportunity to send a... Do you have the opportunity to send slaughter volume of salmon with aircraft from Canada to other markets there, such as Asia?

Yes, and we do. And today, if you have the right size for the slaughter fish, there is a significant volume. For example, B.C. is the simplest place to take it. It's from B.C. to Asia 10. I have to remember that the domestic market in Canada is roughly 70-75,000 tons. Total production in Canada would be 100-150,000 tons. That's the total volume. The domestic market is also very large in Canada compared to the production over there. But of course, all 12-sats are negative. That's something I'm not very excited about. But now that Trump has come up with these 25%, we'll see what the answer will be from Canada. Canada has a lot of products that the US is asking for, and the US really needs a healthy good food and a sustainable So I don't think the last word has been said in this matter either. But numbers are never positive.

Then we open up for questions from the audience.

Hi, I'm William from Danske Bank. Is it possible to say how much of Canadian production goes to the US today?

If I were to take it from the top of my head, 70-30. 70% to 60-40. 60% to the US, 40% to the domestic market, or export?

Yes. The increase in costs, as it goes from 70 to 90 in Finnmark, says that most of it is from the winner country and the cost on the Peerless Nordmanet. But is it possible to say anything about the cost development if you exclude that event?

Yes, that's right. If you excluded that event, the cost would have been on the same level as Rogaland in Finnmark.

Okay, thank you.

That was Alexander.

Hi, Alexander Aukner, DNB. Can you say something about how long the running time has been?

18 months.

18 months, okay. Great. Question 2 is on labor capital development. In Q2, you are guiding for 500 million in labor capital development in 2024. To me, it seems as if it is not materializing now. We do not understand that you are building up much less.

What we were guiding for in Q2 was a half billion development in the second half of the year.

And how much did you build in Q3?

Circa en halv milliard. I tre kvartal. I tre kvartal.

Takk. Kristian Rupi, Arctic Securities. Kan du fortell lite om kostnaden på pro-lån og eventuelle covenants?

Vi kan ikke kommentere på det. Yes, if there are no more questions, we will not be late tomorrow.

Thank you for coming.