Glitnir Securities Seafood Conference
Oslo May 27th 2008
Eirik Bloch Haugland CFO
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Ou t lin e
Company presentation The Glitnir Challenge:
How to manage and create values through high growth
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Grieg Seafood Our Vision
Gr ie g Se a food sh a ll be on e of t h e le a din g sa lm on fa r m in g com pa n ie s in t h e w or ld ba se d on : profitable growth sustainable use of nature being a preferred supplier to selected customers
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Close t o t h e fr e sh food m a r k e t s
GSF Finnmark GSF Hjaltland GSF BC
GSF Rogaland
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Significa n t gr ow t h pot e n t ia l
Grieg Seafood ASA
Grieg Seafood Rogaland
Grieg Seafood Finnmark
Grieg Seafood BC
Grieg Seafood Hjaltland
Licenses
15+1 farming
23+1 farming
21 farming
42 farming
101 + 2 farming
Harvest ยด07
11.500 tonnes gwt
7.650 tonnes gwt
8.500 tonnes gwt
12.700 tonnes.gwt
40.500 tonnes gwt
Growth pot.
+52%
+100%
+100%
+57%
+98%
Capacity
~16.000 tonnes
~24.000 tonnes
~20.000 tonnes
~20.000 tonnes
~80.000 gwe
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Gr ie g Se a food t oda y
A focused salmon farming company
4 independent production regions Significant organic growth potential
Target: Doubled production in 2010
From 40 tons in 2007 to 80 tons in 2010
Ready for a new phase
Successful M&A accomplished Production development according to plan Solid financing secured 2H 2007 New CEO from august 2008
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GSF Products
Rogaland Atlantic Salmon* gutted Pacific Salmon ** Trout* Fillets* Organic Salmon*** Smoked products****
* Fresh and Frozen Cohoo and Chinook *** Naturland and OFF **** Starting in 2008
Finnmark
Shetland
BC Canada
x
x
x
x x
x x x x x
**
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St r on g gr ow t h in t h e pipe lin e
Group harvesting development
90 80 70 Thousand tonnes 60 50 40 30
100 350
Capital investments
R CA G
200
6
20
: 09e
~ 30
%
300 250 MNOK 200 150 Processing Seasites Smolt
20 10 0
50 0
P = Pro-forma, e = estimates
2006P
2007P
2008e
2009e
2010e
2008e
2009e
2010e
Estimates are based on organic growth GSF offers a unique growth and operational leverage potential compared to alternative investment opportunities
Total capital investments 08-10 is MNOK 534 Some 70% is new seawater locations MNOK 70 smolt capacity investments in 2008 Extensive projects in all regions
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Grieg Seafood Norway
Grieg Seafood Rogaland (South) Grieg Seafood Finnmark (North)
GSF Norway: 32 + 2 licences Production capacity of 40 - 45.000 tonnes gwe 24 locations in 2008 increasing to 28 in 2010 Three smolt facilities producing 6 mill ( 08) increasing to 11 mill ( 09)
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Gr ie g Se a food H j a lt la n d ( UK)
Production data 42 farming concessions (10 acquired in 2008) Production capacity 20 000+ tonnes ( gwe) Processing unit for pre- rigor fillets in place and for smoked products opens in August 08 Shetland Salmon Farming Industry
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Gr ie g Se a food Ca n a da
Production data 20 farming concessions Production capacity 20,000 tonnes ( gwe) Own production of 15 million eggs from the most modern plant in Canada Production areas
Farming Smolt Processing/HQ
Vancouver Island s length is the distance from Bergen to Trondheim by air and is just under half the area of Scotland. BC s coast is 7 000km long.
The Canadian operations are located at Vancouver Island, near Vancouver (BC) Significant organic growth potential Ideal temperature conditions
Celcius) (7- 15 degrees
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Grieg Seafood Canada - main markets
High end markets where quality is paramount:
Western Canada & Asian exports 10% Eastern Canada - 10%
Sushi Sashimi White table cloth, and Quality processors
West Coast 40%
East Coast 30%
Southern USA 10%
Customer value we provide: Large size salmon Freshness Superior quality
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Supply of Atlantic salmon to the US market and market shares 2003 2008 (tons wfe)
Market Shares
2003 Chile Canada Norway UK US Other Total 2004 2005 2006 2007 Ch 03/07 -4 % 24 % -12 % -4 % -43 % -54 % -1 % Q1 2007 50 100 18 000 3 900 4 200 2 100 800 79 100 Q1 2008 46 000 22 800 2 200 3 700 400 300 75 400 Ch 07/08 -8 % 27 % -44 % -12 % -81 % -63 % -5 %
80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0%
2003 2004 2005 2006 2007 Q 1 2007 Q 1 2008
195 300 207 900 202 900 184 100 187 500 64 800 16 400 16 400 12 200 5 900 62 200 10 200 11 100 6 100 3 500 78 900 9 000 6 200 2 900 1 600 86 000 9 500 11 000 2 800 1 200 80 100 14 400 15 700 7 000 2 700
311 000 301 000 301 500 294 600 307 400
Source: Kontali Analyse - market models
Chile UK
Canada US
Norway Other
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Price trends US Market - West coast vs East coast Fresh Atlantic salmon vs Fresh Atlantic salmon fillets
12,00 11,00 10,00 9,00
USD / kilo
8,00 7,00 6,00 5,00 4,00
2006
3,00 1 7 13 19 25 31 37 43 49 3 9 15 21
2007
27 33 39 45 51 5
2008
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East Coast - fresh Atl. salmon -FOB North East North East Atl. Salmon fillets fresh - FOB North East
Source: Urner Barry, Kontali Analyse
West Coast-Fresh Atl. Salmon -FOB Seattle West Coast Atl. Salmon fillets fresh - delivered FOB Los Angeles
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Th e Glit n ir Ch a lle n ge :
How to manage and create values through high growth ?
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H ow t o m a n a ge a n d cr e a t e va lu e s through high growth ?
Why grow?
Top line growth is required to provide a basis for long term profitability. Licences and good locations are essential available now! Economies of scale Size and potential matters to investors
How to grow? Mergers & Acquisitions
GSF: 20-25 acquisitions in the last 10 years Last 18 months: 5 M&A s
Organic growth
Develop current capacity from 40.000 80.000 tons ( 07- 10)
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Or ga n ic va lu e cr e a t ion :
What is required EBIT to return 10% on the investment? Harvest annually 1000 tons:
(MNOK)
Buy licence
20 12 8 40
Free licence
0 12 8 20
Licence Fish stock 600 t * 20 NOK/kg Equipment (barge, pens) Total
10% return:
4 NOK/kg
2 NOK/kg
A low average license cost is a good basis to build shareholder values. GSF is build up through a combination of organic growth and M&A s since 1995. Conclusion: Grow on existing capacity before major M&A's.
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Va lu e cr e a t ion w it h h igh gr ow t h - GSF su cce ss fa ct or s ( 1 ) Experienced cluster management with ownership to decisions.
The acquired companies have wide regional autonomy
Diversified production units
Four clusters reduce risk
Short travel to our local fresh markets.
Volume increase is supplied to our targeted customer base who value long shelf life and predictable fresh supply.
Product diversification.
Part of the volume increase will be to source new value added production lines and speciality niches such as organic salmon production.
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Va lu e cr e a t ion w it h h igh gr ow t h - GSF su cce ss fa ct or s ( 2 ) GSF company culture
From private to public ownership with the Grieg Group as a solid and committed long term investor Entrepreneurial spirit still in place in all regions A fast responding and lean head office administration
Company growth provides cost benefits:
Supply agreements on feed, finance, equipment.
Cost control and margin focus
Low unit cost is essential Margin focus even more important in VAP and niche segments
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GSF in 2010 - se n sit ivit y of EBI T m a r gin de ve lopm e n t
two examples as illustration:
Harvest volume: 80.000 tons EBIT =4 NOK/kg (320 m) EV/EBIT = 10 EV= 3.200 mnok Debt =1.500 mnok MCAP=1.700 Shares: 76,5 mill Implicit share price: 22
Harvest volume: 80.000 tons EBIT=5 NOK/kg (400 m) EV/EBIT = 12 EV= 4.800 mnok Debt =1.420 mnok MCAP=3.380 Shares: 76,5 mill Implicit share price : 44
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Su m m a r y
Clear company vision and objectives Production development is progressing as planned Market presence with regional identity and autonomy Plenty of market growth opportunities for high quality farmed salmon in our target markets Focus on organic growth to build shareholder value
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Th a n k you !
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