john paul mc-ginley - ceo morpol asa - salmon demand in europe
DESCRIPTION
John Paul Mc-Ginley, CEO i Morpol på Havbrukskonferansen 22. november 2011 på Radisson Blu Scandinavia i Oslo.TRANSCRIPT
1
Morpol ASA
Salmon Demand in Europe John-Paul McGinley – Chief Operating Officer
Havbrukskonferansen, Oslo - 17 November 2011
2
AGENDA
• Introduction to Morpol
• Market update
• Outlook
3
THE LEADING SALMON PROCESSOR IN THE WORLD
• Market leader in smoked salmon
• Consistent quality
• Innovation leader salmon VAP
• 72,000 MTs of raw material
processed in 2010
• Over 3,200 employees
• 22,000MT of salmon farming in UK
• 7,000MT of salmon farming in
Norway
(Million EUR)
Revenue CAGR of 33%, strong EBITDA margin
105 152
239 295
354 430
344
0
4
8
12
16
20
0
50
100
150
200
250
300
350
400
450
2005 2006 2007 2008 2009 2010 YTDQ3
2011
%
Revenue
EBITDA %
4
FULLY INTEGRATED BUSINESS PRESENT IN ALL MAIN MARKETS FOR SALMON
Waynor Trading
Purchasing office
Laurin Seafood
Production Site
MeridianSalmon
Salmon
Production
Laschinger Seafood
Sales office
Laschinger Seafood
Logistics and distribution
centre
Morpol France
Sales logistics and
distribution centre
Morpol
Main Production Site
Morpol Italia
Sales office
Morpol ASA
Corporate
Brookside Products
Production Site
Morpol UK
Sales Office
Morpol USA
Sales Office
Morpol Japan
Sales Office
Jøkelfjord Laks
Salmon Production
5
MORPOL MISSION & CORE VALUES
• Mission
• .....to be the most efficient producer of value added salmon products, exceeding customer expectations with excellent products that are attractive and convenient for consumers and food service. Morpol will continuously innovate in product concept, equipment design and food safety to set the performance standards for the industry.
• Core values
• Quality
• Reliability
• Innovation
• Convenience
• Value for money
• Food safety
6
OUR PRODUCTS
7
MARKET UPDATE
8
SALMON PRICES SPIKED IN 2009/2010
10
15
20
25
30
35
40
45
50
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
NO
K /
KG
NOS Price - Average all sizes
NOS Salmon Price
Linear (NOS SalmonPrice)
9
SALMON PRICES CONTINUED DECLINE Q3 Prices averaged NOK 26/kg in quarter
Source: NOS
15
20
25
30
35
40
45
50
1 2 3 4 5 6 7 8 910
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
NO
K /
KG
NOS Salmon Price (Ex Oslo) - Average all sizes
2011
2010
2009
10
SALMON IS NOW CHEAP RELATIVE TO OTHER PROTEINS
Source: DNB / IndexMundi
11
BUT RETAIL PRICES REMAIN HIGH Monthly Average prices, Jan 2000 – Oct 2011
Source: Kontali
12
GLOBAL PRODUCTION OUTLOOK Harvest volumes – Atlantic Salmon (tonnes WFE)
Source: Kontali Nov 18th 2011
2009 2010 Change 2011E Change 2012E Change
Norway 856 945 10% 987 4% 1074 9%
Chile 239 130 (46%) 227 75% 342 51%
UK 145 142 (2%) 157 11% 149 (5%)
Canada 115 118 2% 109 (8%) 112 3%
USA 16 18 10% 19 3% 19 4%
Faroe
Islands 48 42 (12%) 57 35% 64 12%
Australia 32 33 2% 36 9% 38 6%
Ireland 15 18 20% 16 (10%) 16 0%
Others 2 1 (18%) 2 50% 2 0%
Total 1 468 1 446 (1%) 1 608 11% 1815 13%
13
INCREASED SUPPLY OF ATLANTIC SALMON IN 2011 AND 2012 • 2011 Worldwide supply +11%
• Increase of 1 percentage point since
previous estimate
• EU supply +7%
• USA supply +9%
• Increased supply in all main markets
• 2012 Worldwide supply +13%
766 737 795 872
340 318
373
432
281 257
283
324 78
100
115
135
40 34
41
53
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2009 2010 2011E 2012E
JAPAN:
RUSSIA:
USA:
ALL OTHERS:
EU:
Atlantic salmon supply
2009 – 2012E (000’s MT)
Source: Kontali Nov 18th 2011
+11%
-4%
+13%
14
ESTIMATED QUARTERLY GROWTH 2012E CAGR: 2009 – 2012E PER QUARTER Y-o-Y growth is only part of the story due to low volumes in 2010
Source: Kontali Nov 18th 2011
15
RETAIL SALES OF SALMON – YTD Q3 Consumers have reacted negatively to higher prices in salmon
Fresh Smoked
Volume
development
Price
development
Volume
development
Price
development
France -14.5% +5% -2.6% 6.2%
Germany -3% +8.4% -2.2% 6.9%
UK -7% +5.5% -6.4% +6.2 %
Source: Europanel / NSEC
YTD Q3 2011 versus YTD Q3 2010
16
RETAIL SALES OF SALMON – Q3 Consumers have not yet got the full benefit of raw material price decreases
Fresh Smoked
Volume
development
Price
development
Volume
development
Price
development
France +5.7% -7.2% -8.8% 10.6%
Germany +34% -4.6% 4.2% 5.6%
UK -1% +1% -3.4% -3 %
Source: Europanel / NSEC
Q3 2011 versus Q3 2010
• Clear evidence in the quarter that recent price decreases have had a positive impact
on demand
• In Germany we have seen a price drop from Q2 2011 to Q3 2011
17
GERMANY Retail sales of smoked salmon
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
MT
p.w
. 2008
2009
2010
2011
Retail price moved
from €2.99 to €3.19*
Retail price moved
from €3.19 to €2.99*
Retail price moved
from €2.99 to €2.69*
Source: Europanel / NSEC
*200g pack smoked salmon
Retail price moved
from €2.79 to €2.99*
18
FRANCE Retail sales of smoked salmon
-
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
P01 P02 P03 P04 P05 P06 P07 P08 P09 P10 P11 P12 P13
MT
p.w
. 2008
2009
2010
2011
Source: Europanel / NSEC
19
OUTLOOK
20
THE WAY FORWARD Salmon fits with the global mega trends
21
LONG TERM CONSUMPTION GROWTH REQUIRES INNOVATION
Sashimi slices Salmon Trout
22
LONG TERM CONSUMPTION GROWTH REQUIRES INNOVATION
Pasta Salmon “Look, no brown meat!”
23
LONG TERM CONSUMPTION GROWTH REQUIRES INNOVATION
Infusions Additions
24
LONG TERM CONSUMPTION GROWTH REQUIRES INNOVATION
Paper packed Scottish organic salmon
Smoked Scottish salmon loin
25
SALMON DEMAND WILL PICK UP IN EUROPE
Demand will pick up as lower prices reach the consumer
• Supply increases will keep raw material prices under pressure
• End product prices will have to come down
• Lower prices to end consumer
• Demand for (smoked) salmon expected to increase
• As an industry we must focus on the customer
• Stable quality
• Stable pricing
26
THANK YOU
27
APPENDIX
28
WHAT IS DEMAND?
Elements of the Law of Demand
• The quantity of a well-defined good
or service that:
• People are willing and able to buy.
• During a particular period of time.
• Decreases/increases as the price of
that good or service rises/falls
• All other factors remain constant.