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The preferred partner
part of the Aker group
Drivers of value creation in harvesting
June 9th, 2011
Thomas Farstad, CEO
Aker Seafoods ASA
The preferred partner
part of the Aker group
Agenda
2
Aker Seafoods in brief
Value drivers in harvesting
Aker Seafoods Harvesting performance
The preferred partner
part of the Aker group
Aker Seafoods consists of two businesses
Aker Seafoods ASA
Aker Seafoods
Harvesting Norway Seafoods
100 % ownership
11 trawlers
29.6 licenses
Processing
Marketing
Sales and
Distribution
3
The preferred partner
part of the Aker group
Norway Seafoods
Aker Seafoods’ / Norway Seafoods’ position in the value chain
Harvesting
• Trawling in Norway
• Cod, Haddock and
Saithe
• Catch 2010: 51 000 tons
headed and gutted
• Fresh and frozen filet products
• Whitefish, salmon, trout
• Aker Seafoods covering 30 %
of raw materials in Norway
• Working primarily towards retail
• France and Scandinavia
© EFF: Tom Haga
Aker Seafoods details
• Primary processing • 9 in Norway • 1 in Denmark
• Secondary processing
• 1 in Norway
• 2 in Denmark
• 2 in France
4
The preferred partner
part of the Aker group
Q1 2011: Improved operations in Harvesting and positive outlook
Increased prices for white fish
Improved operations in Aker Seafoods Harvesting
Reduced capacity utilization in Norway Seafoods
Reduced margins for Norway Seafoods
Increased remaining quotas for Harvesting in 2011 compared to Q1 2010
5
The preferred partner
part of the Aker group
Aker Seafoods - financial key indicators – Q1 2011
Operating Revenues EBIT EBIT-margin (%)
780752
681702
786
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
72
34
8 9
59
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
9
4,5
1,2 1,3
7,5
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
Earnings per share (NOK)
0,15
0,42 0,360,11
-0,12Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
6
The preferred partner
part of the Aker group
Agenda
7
Aker Seafoods in brief
Value drivers in harvesting
Aker Seafoods Harvesting performance
The preferred partner
part of the Aker group
Value drivers in harvesting
8
EBIT
Harvested volume
EBIT / kg
• Quota sizes
• Utilization-rate
• Achieved prices
• Cost of harvesting
per kg
Key value drivers
The preferred partner
part of the Aker group
Quota system
9
• Total allowable catch (TAC) per specie set annually by the
government
• International co-operation
• Researched based approach – ICES recommendation
• The quota year starts for most species on January 1st
• Norwegian TAC distributed to different types of vessel groups
• Trawler fleet; Conventional fleet
• Other purposes (research, recruitment, recreation, etc.)
• «Trålstigen» - Trawler fleet 28 – 33 % of available quota
• Quotas distributed within each vessel group based on the
number of existing licenses
• Quotas can be reallocated during the year
The preferred partner
part of the Aker group
Trawler licenses
10
• A total of 87.8 licenses for trawling of Cod in Norway
• 1 license gives quotas for Cod, Haddock and Saithe north of 62
latitude
• Each vessel can hold up to 3 licenses
• Each vessel have 1 license to harvest Saithe south of 62 latitude
(Special vessels have 1.4 license)
• Vessels can also hold licenses for Greenland Halibut, Shrimp and
other permits
• Bi-catch (red fish, other species) also contributes to total value
creation
The preferred partner
part of the Aker group
Source: The Norwegian Ministry of Fisheries
North East Arctic Cod: Catches increasing
0
200
400
600
800
1000
1200
1400
1600
1800
0
500
1000
1500
2000
2500
3000
3500
4000
45001
94
6
19
48
19
50
19
52
19
54
19
56
19
58
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
Cat
ch (
tho
usa
nd
to
n)
Bio
mas
s (t
ho
usa
nd
to
n)
Umoden Gytebestand Bpa Blim Fangst
Catch
level
11
The preferred partner
part of the Aker group
Increase in Norwegian quotas for 2011
0 200 400 600 800
Saithe - S
Saithe - N
Haddock
Cod
Sum + 6 %
+ 19 %
+ 24 %
- 17 %
- 14 %
2010 vs. 2011 Quotas for Norwegian vessels (ktons)
Source: The Norwegian Ministry of Fisheries; Aker Seafoods analysis
658
310
147
150
49
All volumes in round weights
Increased by 10 000
tons on May 19th
12
The preferred partner
part of the Aker group
Price drivers
Fresh vs. frozen landings
Price point for different species
Cod highest revenue / kg
Global supply and demand
Salt fish segment important
Cost drivers – direct expenses
Price influences salaries – revenue sharing system
Crew receives approx. 1/3 of total revenues
Bunker oil prices
Repair and maintenance
Other costs (gear, admin, insurance, etc.)
Depreciation
Fleet structure
Capacity vs. need (and vs. regulation)
Catch rates, peak capacity per vessel
Price and cost drivers
13
The preferred partner
part of the Aker group 14
0
4
8
12
16
20
2005 2006 2007 2008 2009 2010 1Q11
NO
K /
kg
FERSK Hyse FRYS Hyse
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 1Q11
NO
K /
kg
FERSK Torsk FRYS Torsk
Prices 2005-2010
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010 1Q11
NO
K /
kg
FERSK Sei FRYS Sei
Average
gap: 2.7 NOK / kg 4.1 NOK / kg 3.0 NOK / kg
Cod Haddock Saithe
Prices fresh and frozen – main species
The preferred partner
part of the Aker group
Cost overview* - main categories
14 %
31 %
12 %
18 %
4 %
22 %
Bunker Oil
Personnel costs
Maintenance
Other costs
Administrative costs
EBITDA*Share of
revenue
Figures illustrate AKS Harvesting 2010 performance
The preferred partner
part of the Aker group
Agenda
16
Aker Seafoods in brief
Value drivers in harvesting
Aker Seafoods Harvesting performance
The preferred partner
part of the Aker group
Total harvested volumes 2008 – 2011
Harvested volumes
Quota utilization 2011 MT (H/G weight)
Cod Haddock Saithe N Saithe S Other
Remaining Quotas 15 282 15 490 8 525 4 314
Catch Q1 7 160 1 703 4 453 871 461
0
5 000
10 000
15 000
20 000
25 000
2008 2009 2010 YTD 2010 YTD 2011
Total catch 41 011 46 780 51 254 16 616 14 647
0
10 000
20 000
30 000
40 000
50 000
60 000
Challenging availability for Saithe
Remaining quotas of Cod and
Haddock 5 500 tons higher than
Q1 2010
25 % increase in harvested volumes
2008-2010
Increased quotas for Cod and
Haddock in 2011
MT (H/G weight)
17
The preferred partner
part of the Aker group
Quota utilization
18
0 % 50 % 100 %
Saithe S
Saithe N
Haddock
Cod
Total
0 % 50 % 100 % 0 % 50 % 100 %
2010 2009 2008
Quotas include all reallocations during actual year
• Total utilization from 64 – 72 %
• Cod quotas fully utilized
• Lost opportunity on Saithe
The preferred partner
part of the Aker group
Achieved prices per quarter
Price development
Q1'10 Q2'10 Q3'10 Q4'10 Q1'11
Cod 16,0 15,3 15,5 18,3 18,4
Haddock 12,1 11,8 10,7 11,6 12,2
Saithe 11,4 10,9 11,7 12,3 13,4
6,08,0
10,012,014,016,018,020,022,024,0
Cod continuing at a level comparable to
Q4 2010
Haddock back to a level above Q1 2010
Very strong development for Saithe
Increasing prices for all species
following price drop linked to 2008
financial crisis
Significant increase for Saithe – strong
salt fish markets
Cod prices below 2008 level
2008 2009 2010 2011 YTD
Cod 22,9 15,7 16,4 18,4
Haddock 11,0 10,3 11,3 12,2
Saithe 8,2 8,7 11,6 13,4
6,08,0
10,012,014,016,018,020,022,024,0
NOK/KG NOK/KG
Achieved prices 2008 - 2011
19
The preferred partner
part of the Aker group
Operating cost development
Bunker oil costs reduced from 2008 – increasing trend
Personnel cost increases with higher prices
Maintenance and deprecation level per kg stable – increasing in absolute
value
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Bunker oil Personnel costs
Maintenance Other costs Depreciation
2008
2009
2010
2011
YTD
NOK/kg
Cost development 2008 - 2011
20
The preferred partner
part of the Aker group
EBIT per kilo
1,51,3
2,0
3,9
0,0
1,0
2,0
3,0
4,0
5,0
2008 2009 2010 2011 YTD
EBIT per kilo 2008 - 2011 EBIT per kilo per quarter
3,5
1,7
0,70,9
3,9
0,0
1,0
2,0
3,0
4,0
5,0
2010 profitability per kilo significantly improved over 2008 and 2009
Increased prices
Improved profitability continuing in Q1 2011
NOK/kg NOK/kg
Non recurring items excluded. Overhead costs in 2008-2009 not distributed to segments (not included)
21
The preferred partner
part of the Aker group
Outlook 2011
Increased profitability in the Harvesting segment is expected in 2011
Quota situation is positive for the remainder of 2011
• 5 500 tons additional quota of Cod and Haddock remaining
compared to Q1 2010
• Reallocation in May increases quota with 900 tons of Cod
Increased prices for white fish
Increased fuel costs
Increased quotas and renewal of trawler fleet enables more efficient
fisheries
• “Havtind” to start fishing in Q2 2011
• Evaluating technical and financial aspects of possible new
vessels
22