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Good morning, and welcome to the presentation of the first quarter of 2018 for Marine Harvest.Together with me to present the numbers, I have the CFO in Marine Harvest, Ivan Vindheim. And with that, I wish you all welcome.Just some few highlights in the beginning here. Operational EBIT, a decent quarter for Marine Harvest, EUR 158 million, backed on really strong demand and increased prices from Q4. This has been a kind of a step-based quarter. It's we've seen prices gradually increase through the quarter and continue into April and even into May basically for all areas. We've seen cost decrease in Norway compared to Q4 in this quarter. Especially, I'm happy to look into our Consumer Products division. When we come to that slide, you will see the volume is up. And you will see very good results in a quarter that's normally low and value added or in our Consumer Products division. Ireland is having an exceptional result in this quarter on the back of organic salmon more than EUR 4 per kilo at -- in EBIT per kilo.Quarterly dividend, NOK 2.6 per share, to be paid in Q2 2018.Just quick on the key financials. The top line here is down by 3% from EUR 892 million to EUR 862 million; corresponds with the lower volume to a certain extent, also down 3%. It is obviously we are comparing here to the first quarter of 2017, which was an exceptional quarter price-wise for salmon. We have to remember here that, in this quarter, the algae bloom situation in Chile was in full effect, so the prices in Q1 2017 was extremely high. So with that, you see a reduction in operational EBIT, and that is price driven. Cost is actually down in the quarter.Quickly into the prices. Ivan will go into details there, but it is as I said. What we have seen in the markets basically from January and onwards is a gradually increasing salmon price in all markets, continuing into April and May. And this is really good and strong demand for our products in the marketplace; and that is in all markets, basically almost everywhere. And that is on the back of supply increase of more than 10% in the quarter. So it's a very strong market for salmon we are experiencing right now.On to our superior share or our contract share and our price achievement. And contract share in Norway was 40% in the quarter. Price achievement was 97% compared to the spot price. Or you see Scotland, very good contracts in Scotland, 112% price achievement, 67% contract share. And then we do not have contracts on our Canadian West Coast volume. And in Chile we have a little bit contracts, lower -- well, we put in also the quality here, so you have to take that into account too. And the quality in Chile is lower than expected. Actually both in Canada and Chile it's below 90%, which drags the price somewhat down.To bridge the result in the first quarter 2017, we use this waterfall. And we see the Feed division slightly worse than what we had in Q1 '17. Come back to that and to the explanation of that result. Farming is down, price driven 100%. Cost is actually slightly down. And then we have Markets and Consumer Products doing better than first quarter in 2017. And ending up from EUR 220 million to EUR 158 million in this quarter.Then into the different entities where we operate.First, look at the Norwegian unit. What we see here is that price has come down, as I already explained, but all other costs are down compared to Q1 of '17. So volume is slightly up. Feed cost is down. Other saltwater cost is down, and nonseawater cost is also down in the quarter. So that's at least moving in the right direction, which is good. We have seen both lower Feed and health costs. So the control of sea lice in Norway now is better than it's been for a long while, which is a good signal. It comes with a cost in terms of gill issues and so forth because you have to treat more and clean the nets more and -- but other than that, fish health is pretty good. It's a little bit different along the Norwegian coast. I'll come back to that when we go into the different regions. Continued to see better biology on the 17th generation. Right now we are still harvesting on our 16th generation and will do so also in the -- for the most part in the second half. And at the end of the 16th generation, when we are changing generations, that's what we do June -- May, June -- or yes, May, June and into July, we see -- we'll see some sites here with higher costs. So we expect a little bit higher cost in the second quarter for -- then to drop for the rest of the year.On the contract portfolio and the volumes we have on contract, this was 20,000 tonne, as guided on -- in Q1 '18, as we guided on in Q4. We have in -- for Q2 slightly increased volume but basically around the same level around 20,000 tonne and stable also for Q3. So we are very okay with the contract portfolio going forward.Then into the different regions and the performance in the different regions. And I guess we can basically divide Norway into a South, North access, where in North the performance we have from [indiscernible] in Norway and the region goes down to Trøndelag. And good performance, good fish health and also very good production. Then region mid goes from, yes, partly North Trøndelag, all the North Trøndelag; and down to Sogn og Fjordane. The performance here is a little bit split in-between. It's better up North. And then gradually south of [indiscernible] in that area, it's worse. And it has to do with gill issues on some of the fish. And we see it especially in the southern part of Norway, where we struggle a little bit with our operation just as of now. And you can see that in the numbers, and I think we will see -- or I know we will see similar developments going forward. And so the further north you go, the more money we make. Those things sometimes change as well, and so it's good to be in different places.Scotland, overall a good result even though it's reduced quite a bit from Q1 2017. We harvested 17,000 tonnes Q1 '17, almost 18,000, so we dropped harvest here with close to 10,000 tonne. Obviously, that has a volume effect and a cost effect in our operation. In addition to that and the reason for this has been timing of smolt stocking. We will come back to growth in Scotland in 2019. So somewhat increased costs based on scale, still some high mortality in our Scottish operations. And we do not foresee a dramatic change in costs going into the next quarter in our Scottish operations. So still at a high level. But price achievement in Scotland is very good.Canadian operation, also here a drop in harvest volume in the first quarter from 8,800 tonne down to 6,500 tonne. The operational EBIT drops significantly on the back of lower price, lower volumes but also other saltwater costs. Nonsaltwater cost, which is linked more into the harvesting and processing side of the business, is up. So this is a concern. The reason is we have on the back of a cold winter in British Columbia also had lower growth than expected. We have some biological challenges, in fact some jellyfish, some gill issues, some winter wounds in the region in this quarter. So it's not been the best of quarters for our Canadian operation.Then on to Chile. Chile is the production unit on the Farming side with the lowest cost in this operation. You can see also here price comes down. And price is really the problem for our Chilean unit. So the operational EBIT ended at EUR 16.8 million, up from Q1 '17 but on the back of much higher volumes, 12,300 tonne compared to 6,300. So this is about the algae bloom I spoke about earlier. And -- but the EBIT per kilo is down from EUR 1.87 to EUR 1.36. Cost is also down, as you can see from the graph, but the price is down more. So we need to reshape the image of Chilean salmon and get the price back up to where it should be. Slightly higher costs in the second quarter in our Chilean operation.Ireland, Faroe Islands. Ireland, a tremendous quarter in this operation. We had EUR 4.37 per kilo. And I think that must be -- well, this is very high for the Irish operation and a new record for them on small volumes but still 1,500 tonne but a significant impact. Faroe island operation, it's maybe we have a lower EBIT than expected, but we harvested from -- we have only 3 sites in Faroe Islands. And here we're at the end of one of the maybe not-so-good sites in this quarter. Going forward, low volumes in the second quarter for Faroe Islands before we come into the next harvest generation on our best-performing site.Then on to Consumer Products. We have made a change here compared to how we have presented before. Before, we -- Consumer Products has gone -- been only the European unit. We have taken -- because we have developed our Consumer Products segments in the U.S. with new factories in Dallas. We have -- we are moving in Miami, increasing the footprint there. We have put in factories on the West Coast as well. And we have done the same in Asia. So we have taken all value-added operations and put into one segment, Consumer Products. We're comparing obviously to the same numbers last year with -- so this is comparable numbers, but this is, I think, really encouraging: close to EUR 500 million in sales in finished products, up from EUR 434 million; EUR 21 million, up from EUR 13 million in EBIT margin, 4.2%; and really good demand in most markets, I have to say. And this is actually what creates them, new, better product in many, many countries. So this shows the versatility of salmon. And it's really a product that can be sold, and we know that, but in most countries. So we will continue this, continue to develop this. We are, just as we speak, making a factory in Sweden to supply the Swedish market with new consumer products. And we'll continue our organic growth in this area.Fish feed. First quarter for fish feed is a slow season or the low season, I guess. Both correct. In this quarter, we lost EUR 4.3 million compared to a 0 result in Q1 in 2017. We produced quite a bit of feed here in the first quarter, for the growth season really. And then we have some expenses when we are constructing the site in Scotland that we do not take all the CapEx but we expense off. So for this quarter, that has an impact on the result, in the first quarter. And slightly delayed from Q3 to Q4 on the construction of the plant in Scotland. This has to do with we've got all the permits now but took -- we have some permitting on some -- on a pier that took some longer time than we expected it to take, but now we are on track. And it's really going to be a great project. Plant is, as you can see from the picture, closing in to be finished.With that, I think I'll leave it to you, Ivan, to go closer into the financials and into the supply and demand side of things.
Thank you, Alf-Helge. And good morning, everyone.As usual, we start with the P&L. A top line of EUR 862 million this quarter, a little bit down compared to the same quarter last year on the back of lower prices; and yes, to a large extent, I will say, offset by better contract prices and the growth in -- within Consumer Products, as Alf-Helge just told us about. Operational EBIT, EUR 157.6 million. So although it's substantially down compared to the record-high level we saw last year on the back of the algae bloom in Chile, it's still great numbers, yes, at least the way we see it.Further down in the P&L. Net fair value adjustment of biomass, this time as much as close to EUR 90 million due to the increased prices we saw during the quarter. Income from associated companies, EUR 12.6 million, 100% related to our associated company Nova Sea. An underlying EBIT of as much as EUR 2.58 per kilogram in the quarter on 7,000 tonnes, so another great quarter for our associated company Nova Sea. And net financial items, negative EUR 38 million. Underlying interest expenses, as they are, normal. This is driven by the mark-to-market accounting of the last outstanding convertible bond.We saw an -- we saw a significant decrease in the share price during the quarter; and consequently we have to charge the P&L with this equity expense, as you can call it.Underlying EPS in the quarter, EUR 0.25. Net cash flow in the quarter, EUR 0.21. Dividend paid in the quarter and related to the fourth quarter, NOK 2.6 per share. Harvest volumes, 81,000 tonnes, in line with the guidance we had before the quarter and somewhat down compared to the same quarter last year.With that, we go to the balance sheet or the financial position. Total balance sheet now amounts to EUR 4.4 billion, which is almost exactly the same as the number at the end of the comparable quarter last year. Net interest-bearing debt, that's EUR 857 million. And an equity ratio of 51%.Then over to the cash flow. Strong earnings in the quarter but also strong cash flow, I would say. And first quarter and second quarter are the quarters we release working capital in this industry, whereas we tie it up again in the second half. We also paid taxes this quarter, EUR 50 million, so 1/3 of the total forecast for the year which is EUR 150 million. So all in all, EUR 192 million from operational activities. Cash flow from investments, EUR 85 million, in line with the CapEx budget and the forecast. The increase from last year is mainly driven by the completion of the feed factory in Scotland. Yes, in the interest expenses, as already said, normal. The dividend, we have visited. So we went from EUR 832 million (sic) [ EUR 842 million ] in net interest-bearing debt, when we started the quarter, to close in at EUR 857 million, so i.e. quite stable over the quarter.Then over to cash flow guidance. No changes as last time, so I will not spend time on the details here, leave that to the reader. The quarterly dividend, as already said by Alf-Helge, NOK 2.6 per share.Overview of the financing. Since last time we met, we have repaid the high-yield bond, NOK 1.25 billion high-yield bond, we had in Norway. It expired during the first quarter. Other than that, no changes.Then over to supply development; overall in line with our forecast and, I also would say, the expectations in the industry but a little bit different distribution than what we foresaw. Somewhat lower volumes in Europe 10,000 to 15,000 tonnes because of a colder winter; and somewhat higher volumes in Chile at the same amount because of the, first and foremost, accelerated harvesting due to algae issues. So a high supply growth in the quarter. Despite that, we saw a significant increase in the prices during the quarter compared to the fourth quarter at more than 20% in Europe and 10% in Americas. That development has continued into the second quarter, so as Alf-Helge said, we see a strong demand for our product. And yes, the prospects, as we see it, in the short term, they are still very favorable from a price point of view. And year-over-year, yes, it's down from an unprecedented level in the first quarter last year in the wake of the algae bloom in Chile in 2016. So this is normalized levels. And we think that the market adapts to the increased prices impressively, especially taking into account the growth in supply we have seen during the quarter.Then other markets, positive figures in all markets apart from Japan. Japan has been stable for the last 10 to 15 years. So Japan is Japan, but the rest of the world is eating more and more salmon. And so the underlying demand is again impressive and something we also see in our prices.Then over to industry supply growth. Since last time we spoke, we have taken it down by 2 percentage points, so from a range of 3% to 8% now to 1% to 6%. And for the remainder of the year's, the second quarter and the second half, it's the growth is close to 0. So in terms of supply growth year-over-year, it looks like, yes, it's over for now.Then over to our own volume guidance. We have also taken our own volume guidance down somewhat, 7,000 tonnes in Norway, now 242,000 tonnes, due to a cold winter and less growth. We want to get those volumes back. Scotland unchanged. And Canada, we have taken down by 3,000 tonnes to now 43,000 tonnes. Chile unchanged and other units unchanged. And all in all, 400,000 tonnes versus 410,000 tonnes since the last quarter.That's all for me. So with that, I would like to leave the word to Alf-Helge again. Thank you.
Thank you very much, Ivan.Just to sum up and look a little bit ahead. Marine Harvest has a strong financial position. We continue with our organic growth initiatives. We've looked at the Feed part, and that is ongoing. On the Farming side we are working on the East Coast of Canada. We have got some fish into our hatcheries there and have started up at least. The Northern Harvest acquisition is still not finalized by the Competition Bureau, but we are awaiting the outcome. And we have a substantial potential to grow also in other countries. Scotland, for example, next year has potential for more fish. And the same goes really for Norway, if we can get biology and everything in the way we want it. And we continue to invest into the freshwater side of the business in many of our countries to take throughput time a little bit down and to increase the smolt size a little bit. That's -- also will be a help here. On the Consumer Products side, that is in focus: continue to build up plants, some small and efficient, some modernization of the big plants. But for us it is extremely important, to have a good product development team be in many markets and develop new and better products for the consumers going forward. And I think Marine Harvest does that in a scale that nobody else is even close to on a global scale.And I guess I already touched on the Northern Harvest side of things. So we have submitted all information and just now awaiting the result for the bureau's decision.In terms of global cost savings program. We showed that last time. So far, we have done -- about EUR 23 million is finalized, so -- and that's in the first quarter of Norway, so well underway. Again, we have many times said around or spoken around the positive demand response in several markets. Fish Pool also kind of confirms that, has gone from EUR 5.50 per kilo in February to EUR 6.40 on a 12 months horizon.And dividend, we have spoken about many times, but just to pinpoint it one more time: NOK 2.6 per share to be paid out in Q2 2018.So with that, I think we will open up for questions. So Ivan, maybe you can come up and help me and answer some of them probably, yes. We'll give it a good shot.So there are many. Maybe we start with -- Alexander has -- or is closest to the microphone. Sorry, Kolbjørn.
Alexander Stein, DNB Markets. For next quarter, you have 37% on contracts, which is surprisingly high compared to what the other companies have reported. They've indicated it's been difficult to sign contracts because of large variations in price expectations. So a comment on how you see the contract market and also the price levels of your contracts would be appreciated.
Well, we contract with the big retailers, first and foremost. And we have a long-term relationship. So that work goes on when it's good times and when it's bad times, so there is nothing new under the sun in that regards. The 37% of share is in line with our strategy, so this is planned. And going forward, we expect to maintain the same ratio on average. When it comes to prices, that depends on the market. So sometimes, you get extremely good prices, and sometimes not. I would argue that the market right now is very good, so good timing for doing contracts. But for an industrial player as ourselves, we look through all this. So this is the strategy we have. We are working with the big retailers. We are into this in the long run, and so are them. So -- and then you need contracts. So this is a never-ending story; and business; and not to mention, work, hard work.
Kolbjørn was next, but -- okay...
[indiscernible].
[indiscernible].
Tore Tønseth, Sparebank 1 Markets. What about compensation growth, have you taken that into account charting the 2018 volume forecast? What do you think about it? Will it kick in? Or is it an important factor, or not?
Well, compensation growth is something we saw. If you go back into the old days when we had feed quotas and we had to starve the fish for 4 and 6 weeks, you could to a certain extent see that. This is back in the '90s, almost. I think we have fed the fish. And they are satiated every day, so it's not about that. It's just that they're eating a little bit smaller. So I think that is a small factor, to be honest with you, in this time that we are now.
The last question. If I read the report correctly, you have 5% less biomass in the sea at the moment. Is this that -- is that correct?
What do you mean...
The biomass, the total biomass in tonnes. Is it 5% less year-over-year at the moment -- in the end of the quarter?
No, no. It's up year-over-year.
Slightly up, okay.
[ Right ].
But it's -- compared to your growth, total growth, it's still below. One, expected harvest volume...
How do you calculate it then?
If you look at the total harvest volume in Marine Harvest, it's higher than the standing biomass. So which region? And when do you expect -- when and which region do you expect to grow better, if you understand? And where did you have problem last year? If you understand my question correctly.
If we go back 1 year, we had 210,000 tonnes for Norway; according to the latest forecast, 242,000 tonnes. So the lion's share of the recovery here is in Norway. And the 17th generation is crucial in that regards. And so far, it performs better. So I think you suggested that we were a little bit on the positive side here, but I would argue that things are looking much better this year than what it did last year, at the same time. But you, we never know. We have the summer. The biggest part of the growth takes place in the second half. So it's not like we can guarantee anything, but according to the capital, which is the biomass, yes, we think 400,000 tonnes is doable. And back to your question, where is the recovery taking place? It's Norway.
Yes, I called you, Kolbjørn.
I'll go for 2 questions then. First of all, how do you experience the situation with regards to China/Vietnam after the turbulence that has been taking place over the past months? And secondly, some views on the suggested or the process on the resource tax in Norway.
Yes, first one, on to China/Vietnam situation. In that case, Marine Harvest had a very clear strategy. We follow local laws and regulations in this case and have done so the entire time. So in regards to that -- and also, we -- it's obviously not good when things like this is happening, but we have to do our part and do it right. And that's what we do. So I think the Chinese government is well capable to see through the -- whatever challenges there are. Then on to you said -- I guess you said resource tax system. There are many proposals just as of now. I think my statement will be that I think everybody can agree that there has been a cost challenge into the Norwegian industry. It is a fact that the cost over the last 6 year is up 100%. And then we know that this is -- industry is in international competition, and that is without any doubt. Salmon can be produced in many countries, so I think any cost increase to introduce a business is not certainly a good thing when cost is the biggest challenge. And tax we look upon as a cost as any other thing. I think I've heard from -- at least from many politicians that the tax burden shouldn't be totally increased, but there is a lot of tax suggestions, so I think the good thing here is to go in and take a good look at all these different suggestions. Our policy has been that what we think is a good thing is that local communities get more of the value-creations on the basis of not an increased total tax burden for the industry. But right now many, many different suggestions on how to do it and what should go up and down. I think it's very smart to evaluate this question.
Vidar Strat, ABG. Just a quick clarification on the cost savings program. You say EUR 50 million and that EUR 23 million of those is taken out. Or are they already taken out as we've already seen the effect in the first quarter? Or are the investments made so we will see them coming very soon into the P&L?
Well, you know the system in this industry. Cost-to-stock, 1.5 year on inventory, at least for some of the costs, the seawater cost. If you include the freshwater cost, it's -- it can be as much as 2, 3 years. So there's truly an effect in the P&L. It will take some time, but in the end of the day, this is about cash and the measures that have been taken. And the full year effect on a cash basis, we will see by -- close of play this year, but unfortunately because of the way accounting works, it takes longer to -- yes, to see it in the P&L. That's the way we do it in the -- in business. So we phase everything. So cash is one thing; and yes, P&L is something else. In short, in the long run, it's the same obviously.
Lage Bøhren, Carnegie. We're now, given a record-high price level in spot markets, contract prices moving up, be likely going to get the same retail prices now being pushed to the consumer in the next months. And then in a low-growth scenario for supply in second half of the year, we will have more fish coming into the market than last year. And as you remember, last year, we had a very unexpected dramatic drop in the spot price. So my question is do you feel that the market is now better equipped to handle that level of supply we saw in the second half of last year.
Do you want to take it?
Yes. We think so. We do. So it's same amount of volumes. And you've had 1 year to bid markets. So we think so, but in the end of the day, proof of the pudding is in the eating. So we will see. We will see, but we believe in this also in the short term. So the first quarter and the market response was much more impressive than what we expected. And I guess, yes, we could say the same for the industry in general. So there are no indication of that second half like-for-like should be better, so -- but you have seasonality. You have followed this for a while. So that will take place also this year, I think, but in general, yes, a better market, relatively speaking.
Any more questions? If not, do you have one, Kim, no?
No more questions.
No, no. Okay, then I would like to thank everybody for coming. And have a great day [ and continuous ].