the global salmon industry 2015-2025
DESCRIPTION
Henrik Heiberg, head of IR and treasury in Marine Harvest details MHGs aquaculture, processing and now also feed production is moving into the future.TRANSCRIPT
Marine Harvest Havbrukskonferansen Oslo 28 November 2013
Implied protein consumption driven by population growth only
Sources: FAO (2009); FAOstat Food Balance Sheets, United Nations population data; World Population Prospects: the 2012 Revision
Assumption: Constant consumption of protein per capita
Farmed Atlantic salmon relatively small
3 Sources: OECD-FAO Agricultural Outlook 2013 Kontali Analyse
Atlantic salmon
Large opportunities within aquaculture species
4 Source: Kontali Analyse
Examples of protein co’s and area of potential
5
A unique nutritional package
6
Proteins:
High quality, easy digestable
proteins
Omega-3:
High content of Omega-3 fatty
acids
Vitamins:
Rich in A, D og B12 vitamins
Mineral:
High content of iodine & selen,
taurin og sterols
7
Farmed salmon - Highly efficient use of resources
8
Value CAGR of 8% - Volume CAGR of 6%
Historic price–volume relationship
9 Source: Kontali Analyse
Both 2012 and 2013 clear outliers compared to historical relationship
10
2014 growth expected between -1% and 5%
Growth in 2015 also expected to be moderate
11
Tough biological conditions in Chile….
Weighted average EBIT/kg for selected listed companies in Chile and Rest of World
12
…leads to strong cost increases…
Weighted average EBIT/kg for selected listed companies in Chile
13 Source: Sernapesca
…and declining yields per smolt for the industry
Cannot rule out unprofitable operations next few years Slight decline in industry volumes expected in 2014
MHG – Sea lice treatments per site in operation in Chile
14
Initial signals implies more liberal licensing regime Introduction of average Maximum Allowed Biomass constraints Assessment of current licensing system in general
This may lead to increased biological risk and reduced sustainability
Marine Harvest perceives this as a threat due to the industry’s dependency
of a well regulated and sustainable framework
Marine Harvest’s recommendation: Continuation of current system with maximum allowed biomass Predictable annual capacity increase of 3-5% for ten years if deemed sustainable Aquaculture Stewardship Council (ASC) certification should be encouraged Establishment of Aquaculture Directorate to secure uniform approach Proceeds from increased capacity directed to host communities
Expectations for new Norwegian government
15
MHG – Leading position across the value chain
16
Feed Farming Sales/VAP
220 thousand tonnes vs. global production of ~2.6m
Marine Harvest business areas
New #1 #1
405 thousand tonnes vs. global production of c.1.85m (22%)
Global sales network Leading position in VAP
Focus areas: Successful construction and implementation by July 2014
Acquisitive growth in Norway and Chile
Integration of Morpol Restructuring programme in VAP Organic growth in VAP
Position:
Fish feed project proceeding according to plan
17
220 thousand tonnes capacity – 60% of MHG requirement in Norway ~NOK 800m investment - Completion July 2014
18
Canada Volume: 28 000
Chile Volume: 56 000
Faroe Islands Volume: 9 000
Scotland Volume: 50 000
Ireland Volume: 8 000
Norway Region North Volume: 62 000 Norway Region Mid Volume: 59 000
Norway Region West Volume: 77 000
Norway Region South Volume: 56 000
Marine Harvest farming regions
19
MHG – Volume recovery from drop in 2013
Marine Harvest sales & marketing structure
20
Europe, Sales & Marketing: • VAP Processing: 60,000MT
finished product, turnover 4,5BN NOK (VAP)
• VAP Production: France, Belgium, Holland, Poland, Czech Rep
• 2500FTE • Sales to retail, food service
and industry • Sales office: France, Belgium,
Spain, Italy, Czech Rep, Norway, Scotland and Ireland
Asia, Sales & Marketing: • Sales 1,1BN NOK. 25,000MT
finished products • VAP Processing: Tokyo &
Shanghai • 115FTE • Sales Office in: Japan, China,
Korea, Taiwan, Thailand and Singapore
America, Sales & Marketing: • VAP Processing: 13,400MT
finished product, turnover 1,0BN NOK
• VAP Processing: USA & Chile • Sales to retail, food service
and industry • 485FTE • Sales Office in: Miami, LA and
Puerto Montt (Chile)
Note: Figures in Europe excluding Morpol
Morpol – Competition clearance obtained
21
Major step in becoming a leading integrated protein player The leading secondary processing entity in Europe Complementary market position to Marine Harvest ~30 thousand tonnes HOG farming assets ~18 thousand tonnes in Orkneys and Shetland to be divested ~12 thousand tonnes to be integrated Norway and Scotland Location in Northern Norway where MHG is not currently present Well positioned for further licences in this region in 2013 licencing round
About 4,000 employees
Outlook
22
Strong market poses attractive 2014 net cash flow opportunity Forward prices of NOK 38 per kg in 2014 and 35 in 2015 Significantly reduced level of investment
Strategic focus areas Successful development of green-field feed capacity Acquisitions in Norway and Chile Integration of Morpol
Expected impact from the higher than normal investments in 2013 65 000 tonnes increase in 2014 harvest volumes Significant feed capacity in Norway from 2H 2014