CMU: A salmon farming pioneer entering the digital era

2020 volume target reaffirmed, ensuring a platform for sustainable growth

Grieg Seafood is hosting a Capital Markets Update in Oslo, Norway today 5 September 2018 under the headline “A salmon farming pioneer entering the digital era”.

Grieg Seafood represents 25 years of salmon farming. While the company’s harvest volumes have remained stable for a period of time, revenues have grown substantially in recent years driven by higher salmon prices. This has also led to improved profitability. Looking ahead, Grieg Seafood plans to grow harvest volumes substantially and continuously improve the sustainability of operations.

The company today confirmed its growth ambitions with a target of annual harvest volume of 100 000 tons in 2020 with cost at or below industry average. Furthermore, that the company is building a platform for further sustainable growth beyond 2020.

Grieg Seafood’s operational and financial targets presented at the capital markets update today are:

  • Harvest volume of 100 000 tons in 2020: Increasing harvest volumes to 100 000 tons in 2020, mainly through improving utilization of current capacity.
  • Cost at or below industry average in 2020: Aiming for a production cost in line with or below weighted industry average, targeting NOK 37.90/kg by 2020. Reduction mainly driven by better operational efficiency from higher volumes and improved biology.
  • NIBD to EBITDA ratio below 4.5: Balancing the Groups net interest-bearing debt with level of earnings before interest and depreciations, not exceeding a ratio of 4.5 times.
  • Equity ratio above 35%: At any given time, the Group shall have a level of equity which is appropriate in relation to the Group’s cyclical activities. The Board requires that equity consistently stay in accordance with current loan terms, as a minimum.
  • NIBD/harvest volume of NOK 20/kg: Balancing the Company’s debt levels with harvest volumes, aiming for a net interest-bearing debt of NOK 20 per kilo fish harvested.
  • Return on capital employed (ROCE) of 12%: Requirement of a minimum of 12% return on capital employed for all investment decisions.
  • Dividend policy to distribute 25%-35% of the Group’s net profit after tax adjusted for fair value appraisals: The Group’s objective is to give the shareholders a competitive return on invested capital through dividend payments and value appreciation of the share, which is at least at the same level as other companies with comparable risk. The future dividend will depend on the Group’s future earnings, financial situation and cash flow. The Board believes that the dividend paid should develop in pace with the growth of the Group’s profits, while at the same time ensuring that equity is at a healthy and optimal level and that there are adequate financial resources to prepare the way for future growth and investment and taking into account the wish to minimize capital costs. The Board believes it is natural that the average dividend, over a period of several years, should correspond to 25-35% pre-tax profit, adjusted for the accounting effect of fair value adjustment of biological assets.

Furthermore, it is reasonable that the company’s net interest-bearing debt per harvested kg at NOK 20. Based on this, the size of the dividend could be corrected both up and down according to the 25 – 35 % share of profit after tax.

Grieg Seafood’s strategic focus areas to achieve its targets and ensure sustainable growth are:

  1. Sustainability: Grieg Seafood wants to actively ensure sustainable food production in the ocean and invest its resources accordingly. Healthy fish, clean seas and economic profit are not regarded as contradictions. The company’s sustainability strategy is based on five pillars; sustainable value chain, profitable growth and innovation, good jobs for everyone, sustainable faming and productive oceans, and local value creation.
  2. Post smolt strategy: Through investments in post-smolt production, Grieg Seafood aims to improve biology, increase productivity and reduce cost. The main effect from larger smolt is increased robustness and shorter time to reach harvest size. The combination of stronger fish and reduced exposure to biological risk, will improve biology and increase survival rates.
  3. Digital salmon farming: By applying advanced sensor systems, big data, artificial intelligence and automation, Grieg Seafood aims to generate actionable insights to increase yield and resource efficiency.
  4. Biosecurity and fish welfare: Biosecurity and fish welfare is vital to secure sustainable growth and high harvest quality. Grieg Seafood aims to secure strong biological performance through implementation of a broad range of technological and operational initiatives, including post smolt strategy, GSF Precision Farming and preventive measures to prevent sea lice and algae issues.
  5. Expansion opportunities: Expansion to secure fulfillment of Grieg Seafood’s goal of harvesting 100 000 tons in 2020 will mainly come from improved utilization of existing capacity, driven by post-smolt strategy, digital salmon farming and improved biosecurity and fish welfare. To secure sustainable growth longer term, additional opportunities will be pursued, including acquiring new capacity, acquisitions and joint ventures and development of new concepts.

Commenting on Grieg Seafood’s capital markets update, Andreas Kvame, CEO, said:

“Our objective is to ensure sustainable growth in the years ahead by combining great people, nature and technology. We believe salmon will be an increasingly important food source globally, and that Grieg Seafood will be able to create value for multiple stakeholders, including the communities in which we operate, our employees and shareholders, while we provide salmon to the world.”

Presentation and lunch

The Astrup Fearnley Museum Strandpromenaden 2, 0252 Oslo Norway

Registration at the event from 8:30am CEST and presentations from 9:00am – 1:00pm CEST.

Lunch will be served from 1:00pm CEST.

Break-out sessions from 1:30 CEST.

Webcast

A live webcast of the presentations will be made available on our website: https://www.griegseafood.no/inverstors/webcast-2/ 

Materials

The presentations held at the Capital Markets Update event will be available on the company’s website www.griegseafood.no.

For further information, please contact:

  • Andreas Kvame, CEO, tel: +47 907 71 441
  • Atle Harald Sandtorv, CFO, tel: +47 908 45 252

About Grieg Seafood

Grieg Seafood ASA is one of the world’s leading fish farming companies, specializing in Atlantic salmon. The company has an annual production capacity of around 100.000 tons gutted weight.

The Group is today present in Norway, British Columbia (Canada) and in Shetland (UK), employing approximately 700 people. Grieg Seafood ASA was listed at the Oslo Stock Exchange OSEBX) in June 2007. Our headquarters are located in Bergen, Norway. The business development of Grieg Seafood ASA focuses on profitable growth, sustainable use of resources and being the preferred supplier to selected customers. To learn more, visit www.griegseafood.no

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Webcast

Sections and presenters

1 A salmon farming pioneer entering the digital era – Download
Andreas Kvame, CEO

2 Ensuring sustainable growth- Download
Andreas Kvame, CEO and Trond Kathenes, CDO

3 Our four regions and their priorities – Download
Finnmark, Roy-Tore Rikardsen, Regional Manager
Rogaland, Knut Utheim, Chief Operating Officer
Shetland, Grant Cumming, Regional Manager
British Columbia, Rocky Boschman, Regional Manager

4 GSF Financial targets and investments in sustainable growth – Download
Atle Harald Sandtorv, CFO

Download the GSF CMU presentation

Transcript from Norwegian to English

Transcript Grieg Seafood CMU_Finnmark and Rogaland