Leroy Seafood Group

Welcome to Leroy Sifo Group's first quarter presentation 2026. My name is Henning Beltsa, I'm a CEO in Leroy Sifo Group and with me today I have Kyr Malm, CFO. First of all, I will take you through the highlights and also give you a short strategy and targets update. And then Shuman will take you through the key financial highlights. And then I will come back and take you through some outlook for going forward. First of all, Lerøy Seafood Group is a leading global provider of high-quality seafood with a long history, reaching back all to 1899. We have 6,000 employees, 34 billion knock-in turnover, and had last year an operational EBIT of 2.5 billion. We catch close to 60,000 tons of whitefish, 195,000 tons production of salmon and trout, and had a WAP processing volume of 340,000 tons. We are a global company. Our goal is to create the world's most efficient and sustainable value chain for seafood and we are continuing improving our value chain and getting into new markets around the world. Leroy is a unique company, integrated both in redfish and in whitefish, and we have invested heavily the last 20 to 25 years. Our values are open, honest, responsible, and creative. And then highlights of the quarter. It's been a quarter with a strong biological development in farming. First quarter we harvested close to 40,000 tonnes compared to 38,000 tonnes last year. We have increased expectation for profitability in wildcatch after a good quarter. There has been some pressure on gross margins in some units in WAP sales and distribution and we keep our harvest guidance of 195,000 ton in Norway and the board proposed NOC 2.5 per share as dividend for 2025. We achieved operational EBIT of 858 million NOC compared to 1 billion and 50 million NOC in first quarter 2025. So a fairly good quarter for us so far. Then, on our capital market day, we presented our updated strategy. We are at a good place at the moment. We have a proven execution model of and how we work with the continuous improvements in the whole value chain. So we're at a good place there after eight years of hard work. We updated the strategy framework with the strategic priority on growth, cost, simplify and leadership. And we also sharpened the financial framework. with a focus on return on investment, CapEx discipline, strategic alignment and portfolio thinking. This is the base for our direction going forward and this is communicated well out to the whole company. On Capital Market Day, we presented new targets for 2030 and also 2026. We will, quarter by quarter, give you an update on where we are. Of course, it's a little bit early after one quarter, but we keep our route to 220,000 tonnes in Norway. We are at 196,000 tonne today and 197,000 tonne rolling. 1 billion NOC cost base reduction through initiatives in 2026. We realized 173. We are on the track to 50 billion NOC turnover and we also have a good speed in WAP sales and distribution. If we look at the cost reduction progress, we had a good start. We realized $173 million so far through the first quarter. We identified and have an execution on $573 million. 86 million and we have a gap to target of 241 and we have a motivated organization that's step by step now and are implementing this cost culture in the whole value chain and we believe that it's achievable to reach the goal of 1 billion target. Then I will go through the different segments. We start with the farming, then wildcatch, and then we take WAP sales and distribution. And the farming highlights for the quarter, we have continued strong biology. strong growth rates, low mortality, high harvest weight, 4.8 compared to 4.2 the same quarter last year, and year-on-year improvement in quality, but some maturation on the trough, which have given a little bit downgrades in Lerøy Kjøttroll. The prices in the quarter is four knock lower than the same quarter last year with reference to SSI price and And as expected, quarter on quarter cost increase and lower share of volume from Lerøy Rora and harvest guidance is reiterated at 195,000 tons. Then we go into the different regions, and we start in the north with Lerøy Rura, continuing strong biological development in the first quarter, strong growth rates, high survival rates, high superior share, and high harvest rates. And we see the harvest rates have been going from 4 kg to 5.3 kg this quarter, compared to the first quarter last year. Cost in Q1 lower than Q1 25 and lower than fourth quarter if adjusting for utilization effects of infrastructure. We expect a marginal cost increase in second quarter. Estimated harvest volume is 49,000 tons. The operational EBIT in the quarter is 24 NOC per kilo compared to 29 NOC per kilo last year. There is also a strong biological development in the quarter, strong growth rates, high survival rates, high superior share and high harvest rates. And here we have been going from 4.4 kilo to 4.9 kilo. The cost in first quarter is marginally higher than first quarter 25 and in line with fourth quarter 25. And we expect marginal quarter and quarter cost reduction in second quarter. And the estimated harvest volume for the year is 73,000 ton to, yeah, compared to 71,000 ton to 25. Yeah, and we also need to take the operation at EBIT, which is a strong performance in this quarter, close to 23 NOC per kilo compared to 32 NOC last year. Leri Kjøtroll, also here, strong biological development through the quarter. Strong growth rates, high survival rates, and higher harvest rates. And for the harvest rates, we go from 4.1 kilo to 4.4 kilo. I expect marginal cost reduction for second quarter and potential significant cost reduction for second half 26 if the biological trends continue like we see today. Price achievement in the trough is influenced by maturation in this quarter. Estimated harvest volume of 73,000 tons. Then Scottish EFOM, weak quarter on low volumes and high cost stock. It's been a challenging year of 2025. The volumes are down 36% to 5,400 ton. Low volume impact unit cost, particularly on wellboat and processing. and harvested fish impacted by challenging situation in 2025. But the next generation of fish is performing well. We estimate volume of the year to be at 43,000 ton compared to 33,000 ton last year. So a strong improvement in volume in 2026. And then to update the farming volumes, we estimate 195,000 tons in 2026, about the same level as 2025, and a total with our 50% share of Scottish e-farm of 217,000 tons. And then if we go to sales and processing operation, we have sales and processing operation in 80 countries and sales to more than 80 markets. To have a good spread in markets is good to have when you have a situation like today with a lot of unpredictability globally at the moment. But we see that to have a big spread on available market is a good thing to have both with operations but also with branch offices in overseas markets. And for this quarter, it's continued growth in volumes and in revenue, but the operational EBIT is reduced from 212 million NOC in first quarter of 2025 to 160 million NOC in 2026. many units, increasing profitability but a negative impact on gross margins in some units and also affected by increased logistic costs to some high margin markets. But we believe we have a strong position. We have handled the situation in the first quarter in a good way and Everyone in this segment are really working hard to stabilize the end of the value chain even though it's fluctuating exchange rates and changes in cost of especially transport to the overseas markets. While catch, a very good quarter, strong performance in light of the quarter situation. The catch volumes are down, prices are significantly up, and we also see clear operational and financial improvements in land-based industry, but we also are affected by increased fuel costs toward end of the quarter, and of course, especially for the fishery side for the strollers. Challenging operation conditions, but operational EBIT increased from 148 million NOC to 228 million NOC. So very good and strong performance in this quarter. And we increased the profit expectations for the year as a whole. Yeah, and if we look at the cash volumes in the quarter, we catch the 14,000 tonne compared to 19,000 tonne same quarter last year. The remaining quarter for 26 is 20,000 tonne compared to 21,000 tonne in 2025. So then, Kyrmalen will take you through the key financial highlights.

Yes, thank you, Henning. I'll sum up into our P&L and balance sheet the comments already given by Henning. So if you look on our P&L, key drivers are shown on the letter lines. We see that the profitability per kilo in salmon and trout, which here includes the profitability downstream, is lower per kilo than last year. The key driver for this is lower price realisation. We also have a slightly higher cost position and a lower margin per kilo downstream. I will return with more details on the latter. But we harvested also a slightly higher volume. In Wildcatch, as commented, we have low quota, low volume, but price development has been very strong, which has given a high margin increase. And in sum, this makes our operational EBIT at 858 million compared to 1 billion and 50 million last year. Our lower price is the key driver. We also see that the decline in EBITDA percentage-wise is a bit smaller. And we are doing investments, particularly in farming. I'll comment on those later, which we yet have to realize the full potential of. On a balance sheet, there are no big changes. We see that total asset is around the same level as last year. The investments, particularly in farming, is increasing tangible fixed asset. Our biomass is a little bit lower in volume and in value. Our other inventory is a bit lower than the same period last year, but in the quarter we built some working capital related to whitefish inventory. And in general, we are an investment grade rated company. We have a strong balance sheet and equity ratio of 50%. Looking into changes in interest-bearing debt, I think the key point to comment on this slide is the change in working capital, and that is majority driven by inventories in the whitefish, which is seasonal. CapEx, I will return to comment, and in general, we reduced our debt from 8 billion to 7.7 billion in this quarter. This shows our historic capex and best estimate for 2026. There are no changes on this slide from previous quarter. As I said then, we had guided for 2 billion in capex in 2025. There are some periodization effects moving some of that into 2026, which makes the best estimate as of today at around 1.7 billion. On top of the maintenance level at around 1 billion in Lerøy, we are investing in new technology. The biggest investment this year is the closed containment system Aquatras, where we are building three units and the first will be operational in 2027. We're also making some investment in wildcatch related to new and more efficient engines, as well as capacity for cooking more prawns, which has a higher price realization. We're also making some investment in expansion to follow the growth that we see downstream. This slide is also then targeted a bit for Norway, where there are at times our discussion on the ripple effects from our industry. And we just want to highlight that Lerøy and this industry has very strong ripple effects in Norway. The dots highlight where we operate and where we have suppliers. We have employees in 50 municipalities. We operate in 50 municipalities and have employees in 190 municipalities. We bought goods and services for 20 billion in Norway last year. Tax impact from our company and our employees was around 2 billion in 2025. So this is a very important industry for Norway. Then, at the Capital Markets Day, we gave some more insight into the drivers of profitability in our downstream segment. For those who would like more details on that, please look into that presentation. We divide it into three segments. Primary processing, which is basically fillets and slaughtering. Sales and distribution, which is sales, distribution, logistics globally. And the consumer products, which is a lot outside Norway, but we also have some units in Norway, which are processing all materials then into finished products. So this shows the overall profitability drivers for the segment, and Henning has already commented on them. We see down to the left that the 12 months rolling revenue is on a continued positive trend. That is good. But we also see that the profitability trend is a little bit lower this quarter, which is a reflection of then a lower operationally with this quarter compared to the same quarter last year. And I give some insight into that. So looking down at those three parts of this operation, starting with sales and distribution, we see that sold volumes, shown up to the right, is showing a healthy development, around 8% growth in volumes. Revenue is up 7%. So the low profitability is not a reflection of poor demand or poor volumes. If you look then into the drivers of the profitability shown down to the right, we also see that OPEX per kilo is reduced, but that the key driver is the lower gross margin per kilo. That lower gross margin per kilo is basically driven by two things. One is the logistic cost into some of the higher margin markets, and the other part is related to the fact that this is not an only layers volume, but we are a buyer of production grade volume in Norway. The availability of those volumes has been significantly reduced in the first quarter, which is a reflection of the very strong biological development also for Norwegian farming. Looking then into consumer products, also here it's healthy and positive volume and revenue growth. We also see a slightly lower profitability this year. That is mostly related to one unit and related to access to whitefish, which has been lower due to low catch volumes. having some impact on gross margins there, while other units are performing very well. So we see also here, opus per kilo is reduced, gross profit per kilo is also reduced, and in sum, the EBIT is marginally down from last year. Within the primary processing side, we see that the bit is at level with last year on a slightly higher volume, but no big changes there. But during Q2, we will integrate also this activity from Lerøy Mitt and Lerøy Rora, and that part of this segment will then be larger. Then also on capital markets day, we give some insights into the driver of our wild catch segment. And on the wild catch segment, it is challenging to estimate profitability from quarter to quarter, basically because timing of of the fishery and sales of fishery is challenging. But if you look at the year, it's much, much easier. So what we highlighted there, and again, I refer to the Capital Markets Day presentation for more details, was a simple model on how to estimate profitability for the year. And that profitability is basically a reflection of catch values. The cost of the trawling operation, the result in the land-based industry and depreciation and amortization. So at the capital markets day, this model indicated EBIT level of 250 to 300 million in 2026. And there has been some changes, and we just highlight these changes. So our new estimate for the year is not 250 to 300, but it's increased to 500 million to 350 to 400 million. The drivers for that is the increased catch values. So here we've given some estimate on catch volume in 2026, and we highlighted what prices were in Q1 2026. If you look, for example, on shrimp, to make one comment on that, the price level for the year will be lower, because this is a quarter where we sold only consumer-graded shrimp, and for the year we will also sell industrial-graded shrimp, which has a lower price point. But still, it highlights that the price level is vastly higher in the start of 26 than what we saw last year. and that catch values are then significantly increased. An estimate and indication then for the year is that catch values will be significantly up despite the lower quota. On the negative side, we know fuel prices have increased a lot. How Fiske is using MGO as fuel. And towards late quarter, we saw a significant increase in fuel price. With what we've seen so far, and forward prices for 26, we get to a best estimate as of today, that fuel costs should be around 10,50 kroner per litre. and that consumption should be around 38 million liter. That means that the fuel cost will be around 130 million higher in 26 than in 25. But summing up these two factors into that model shown on the previous slide, the best indication today is that the EBIT in this segment would be in the range of 350 to 400 million in 2026. Then I give the word back to you Henning for outlook.

Thank you very much Kyr. Then I will summarize a little bit and see a little bit going forward. First of all, we start with the supply of Atlantic salmon globally. We have had a 2025 with a strong growth in volumes of 12% globally. We've seen Norway was up 12%, Faroe Islands up 30%, Chile up 15%. and then we had a reduction in the UK. But a very strong growth in 2025 and we passed 3 million tonnes of volume for the first time. For 2026 it's a small increase. We estimate a 2.4% increase and for 2027 a small increase of 1%. So we believe that going forward for the farming side, we believe that with the development that we are doing in the markets, we believe that we can develop even more. We have a good momentum in the overseas markets and especially in China. So for the demand of Farms Helmet, I see that will increase going forward. But the most important thing is, of course, the strong biological performance that we see is continuous. And we are very happy for that. we also have a good speed now with the cost reduction program gradually impact cost of harvested fish with the lower cost from a second half of 26 and then into 2027 we keep our harvest volume at the 100 estimate of harvest volume of 195 000 And even though there might be a little bit upside in these numbers, if the biological situation continues in the strengthening like it's been so far. And the total volume is close to 270,000 tons, including our 50% share in Scottish seafarm, which also are showing. great improvement in biology so far in this quarter and also into this quarter that we are in today. And the Wildcatch, a very strong quarter and we believe with the quarter situation that the prices will stay high. We see strong operational development in the industry segment with nine factories and believe that Yeah, there is still a huge potential of improvements going forward and WAP sales and distribution are, you know, we have a good structure, we have a good setup in European markets with distribution and processing centers and in the overseas markets with branch offices. and the increased demand for integrated sustainable value chain is strong and we see a strong demand in emerging markets and some tailwind on lower than expected prices in 2025 for 2026 expectation of continued growth and slightly lower margins but we have a good speed in that segment also. So this is just summarizing long and medium term ambitions and we believe, as I said, the farming is for the short term. We are on good track for the long term also. It is long term, 2030, but we really believe that with the hard work that we do in the value chain, it will drive us to reach the 220,000 ton goal. The wild catch, it depends of course on the quota, but the indicative operational EBIT for 26, as Shu said, is adjusted to 350 to 400 million. So a good performance in this segment. we will keep up a good good good speed for up sales and distribution a little bit down in 26 but we keep our goal and believe that this is is possible to achieve and with the investments that we have done with the potential to improve all our units in in europe for for distribution centers we believe that also the long-term goal is really achievable. So that was all and thank you very much for