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Good morning. Welcome to the first quarterly presentation for Mowi, but this is the presentation of the fourth quarter in 2018. To present today, Ivan Vindheim, our CFO, is here to help me on the numbers, and then I think we just go straight into the quarter.First of all, strong quarter for Mowi in this -- in the fourth quarter, EUR 213 million as operational EBIT, and this is on the back of really good prices in most markets and strong demand. The fact is that the production grew by close to 5% or the supply grew by close to 5%. Prices in Europe increased by 12.5% in euros. So if you think about that for a second, let that sink in, not many industries that actually can achieve that, a growth in supply of 5% and higher prices. So strong demand.In terms of our Feed operation, we produced 348,000 tonne of feed in the plant in Bjugn. That is a record production if you go back to when we designed that plant. It was designed for 220,000 tonne, started up in 2014. So a really good year production-wise. Challenging profit-wise because it's tough competition in the feed world, but maybe even more important right now in terms of making sure that the fish grow well on the feed. In terms of improvement in cost, this is something we have been working on throughout 2018. We managed EUR 61 million in our cost-cutting program for -- that we launched the previous year -- for previous year. We go into another one this year with new EUR 30 million, a combination of a more professional procurement, which we really have focused on over the last 6 months really, and even -- we can see even more structural changes that can be done to achieve this. But the low-hanging fruits are taken. In terms of launching our brand strategy and changing the name to Mowi, this we did on -- in November. The first Mowi fish was harvested on the 25th of January, already sold to high-end restaurants. So this is coming, and the products go into retail now during this first half of this year. So very excited about the development here.In terms of dividend, the board decided to pay out NOK 2.6 per share, and this is to be paid out in Q1 '19. Just a little bit around the numbers. Top line grew with 6% in Q4 against Q4 2017, so we ended a little bit north of EUR 1 billion. Operational EBIT grew by 18% in this quarter compared to the same quarter last year. In terms of harvest volume, slightly down 6%. I'll come back to the explanation of that later on and the guiding going forward. So all in all, the quarter, a good quarter, but also a strong year in 2018 all in all, second-best year in Marine Harvest history or in Mowi's history. I guess, this will go a little bit back and forth, but it was in the history of Marine Harvest.In terms of prices, already mentioned, increased prices in all market, maybe most impressive, the European market here, which I already mentioned the numbers on. So increased supply, higher prices is -- was the result in Q4. Impressive. In terms of our price achievement, good contract coverage or coverage as we predicted before last quarter, but good price achievement in most markets, I would say. Norway is strong. Scotland, especially strong. Canada is a spot market, so as expected; but also Chile has a good price achievement on its contracts.In terms of quality of the fish, good in Norway, excellent in Scotland and decent in Canada and Chile for this quarter.If you then look at the bridge from the EUR 181 million we made in 2017 to the EUR 213 million we made in the same quarter last year, you see that the major difference here is Farming, that's explained most of it, EUR 33.5 million. Costs, about stable, a little bit up and down in the different production areas, but then prices are explaining this. So that is the main explanation to the numbers.Then over to the different production regions. If you look at Norway, I would say good result, but regional differences here. Region North, very good result, we'll come back to the different regions, and improved biology. Region Mid, also a good result for the region, some biological challenges there, come back to those when I go into the different regions. And in the Region South, I think we see improvement, but low harvest volumes in this quarter, and the generation of 2017 in Region South was not the best. Somewhat increase in cost in Q1 versus Q4 volumes.Then if we go on to the contract coverage going forward, you see Q1 and Q2, we are in there with about 20,000 tonnes, so a little bit north of 20,000 tonnes. So fairly stable contract coverage if you compare it to the contract coverage we had 1 year ago, but okay prices.In terms of the different regions, and here, you see the result in operational EBIT, we start in the south, the -- all the regions improved, but that we should expect when prices are going up. Improvement in Region South to EUR 1.60 per kilo, EUR 2.47 in Region Mid, EUR 2.74 in Region North. Region North, I recognize is, I think, is a very good result. Region Mid, decent; and Region South can improve, no doubt about it. But all in all for the Norwegian unit, good result. If you then look at Scotland, they improved quite a bit in this quarter from EUR 15.4 million in Q4 '17 to EUR 27.3 million, Q4 '18. In terms of harvest volume, actually slightly a reduction. But even with a reduction in harvest volume in Q4 '18, you see cost improvement. So price is obviously explaining somewhat some of this but also that biology in Scotland is improving as we speak. High contract share and good growth, and a lot of boats for Scotland will get good recovery in 2019.Canada. Maybe the region and maybe region on the western side of Canada that we -- is mostly challenged with, in a way, at the moment, but still improved result in this region as well to EUR 17.4 million compared to the EUR 9.9 million we had in Q4 '17. Harvest volume, slightly up to 12,000 tonne compared with the 10,000 tonne. But still an area where we have to work our way through the issues, especially some of the areas on the western side of Canada, and that has to do with gill issues especially, but recovering, obviously, in the winter time as it's normal because you have higher oxygen in the water when it's cold. Somewhat increasing cost in Q1 '19 versus Q4 '18 but on the back of lower volumes in this region.In terms of Chile, in regards to biology, quite impressive actually, one of the best regions in terms of mortality. The SRS vaccine here seems to be working quite good. In the report, you can read about the reduction in antibiotic usage, significant. So really good. And -- but the issue here is, of course, that the logistic cost of Chile is too high. So if you look at the margin, EUR 1.25 against Norway which were EUR 2.44. And the performance in terms of production in Chile, in fact, is better. It's not necessarily only the cost here that is the issue. It is unfortunately where we are placed. So we need to position the fish now gradually, and we see more and more sites going totally off antibiotics, which is great news for a higher price going forward. And that, we intend to do. So all in all, a good quarter also for Chile in -- taking into account the prices, maybe should have been better.Ireland, Faroe Islands. Good result in Ireland. Faroe Islands, we had some issues there, basically a mixed bag of issues. We had a somewhat higher cost, somewhat lower quality and somewhat reduced price achievement in the quarter. So mixed bag of explanation for the rather poor result in the Faroe Islands this quarter for us. If we then go into Consumer Products, record-high revenues shows that making good products sales, so high sale in the quarter, high operational EBIT, but we have to take into account that EUR 10 million out of the EUR 38 million here came from insurance payout in connection with the fire in Kritsen. That's certainly in its place for sure because we have been losing money in this unit throughout the year. So it needs to come back, and the cost has certainly been spent. But still, it's part of the explanation. Other than that, though, higher volume sold, good earnings in the quarter and especially fresh portions increased. The chilled or smoked salmon was flat -- flattish in development of volumes.U.S., positive development. The European market is good for the time being. But saying that, there is strong competition in this market. And in combination with Easter being in April -- late April in the next quarter, I think we will see a reduction in result also because of seasonality in the first quarter of 2019 compared to what we had the previous year. Feed, already spoken a little bit about that. In terms of operational performance in fish feed in Bjugn, fantastic. In terms of EBIT, we are struggling. I think most operators in this field have a tough time right now. But we made money in the fourth quarter, but obviously, we would have liked to make more money or made more money. Key issue, though, is to make sure that the feed is of excellent quality. The R&D within Feed has done a excellent job. And we see really good growth resulting actually in the highest biomass we have ever had in Mowi at the end of the year. So the Feed volume here is up, and so is the biomass in sea. So make sure that the feed is actually giving good results, especially important in times of strong competition.In terms of the operation, Kyleakin, I was there last week, it's delayed. We've spoken about that before. Start trial production now in Q2, and it's going to be excellent plant in terms of technology, flexible in terms of raw materials and can do productions that I think nobody else can do in terms of quality of small pallet or special feed. So really interesting development for us there. And I think, obviously, the competition will stay hard in this market for time to come, but maybe it's easing up if you think a little bit in the long run. In terms of the branding and that part of things, this is really a good tool because you can design almost the salmon and the feed in the specification you want. Back to this, spoke a little bit about it in the introduction. We achieved EUR 61 million compared to the target of EUR 50 million, as communicated earlier. I think it's impressive, and this just goes through the organization. We've been able to reduce cost in all divisions but also throughout everything we do, really. So I'm impressed with that.And I see also that the potential for being even more professional and you can say, well, you should have done this before, I agree. You can always agree to that. But at least when you see real professional people coming in to purchasing, things change. And they need to change because we get offered all kinds of strange solution these days, so it's important to be professional, especially in this area. We also still think we can take out EUR 15 million, further cutting cost and making our operations more efficient, and this will be taken and done in 2019. Then Ivan, a little bit on financial markets and harvest volumes before we end it.
Yes. Thank you, Alf-Helge, and good morning, everyone. As usual, we start with the P&L, a turnover of EUR 1,074,000,000 this time. It's the second highest turnover for a fourth quarter for Mowi. To date, operational EBIT, EUR 213 million, also our second-best fourth quarter to date. Full year numbers, EUR 3.8 billion in turnover, as Alf-Helge said, record high. EUR 73 million in operational EBIT, second best so far. So all in all, financially a very good quarter and also a very good year, I would say. Further down in the P&L, net fair value adjustment this time, EUR 12 million positive, not because of price development in the quarter, but because of a big increase in biomass in sea from 258,000 tonnes to 305,000 tonnes. The last number is also record high for Mowi.Income from associated companies, first and foremost, Nova Sea, low volumes this time around, 5,600 tonnes. You find it in the appendix. And then operation EBIT of EUR 1.7, first and foremost, explained by low volumes to be at Nova Sea. Full year volumes for Nova Sea was approximately 38,000 tonnes. Again, you find all the numbers in the appendix in the presentation. Net financial items, negative EUR 55 million, highly impacted by the last fair value adjustment of the outstanding convertible bond. It's now converted, plus some FX fluctuations towards year-end, impacting the balance sheet recognitions, so more accounting-related stuff. Operational EBIT margin in the quarter, close to 20%, full year 20%, so still very attractive margins. Harvest volumes in the quarter, 106,000 tonnes, somewhat lower than last year; 375,000 tonnes on a full year basis. If we adjust for Northern Harvest, we are just south of 370,000 tonnes. So yes, more or less in line with 2017. Operational EBIT margin for the group as a whole, EUR 2.01, which is really good. And then a return on capital employed annualized of 26.6% in the quarter and close to 25% on a full year basis.So much about the P&L. Then over to the balance sheet, or the financial position which we call it these days. Year-over-year, substantially up on increased biomass in sea, approximately EUR 350 million. Net CapEx effect from 2018, above depreciation, north of EUR 100 million; and the acquisition on Northern Harvest, about EUR 200 million. So there is more or less only growth in this increase in the total amount of the balance sheet, which is good. Adjusted equity ratio year-end, 54%, obviously, highly impacted by the conversion of the convertible bond. If we had included IFRS 16 accounting standard, which we are as from the first quarter, it would have been approximately 50%. So the balance sheet will grow by approximately EUR 350 million according to our numbers right now.Net interest-bearing debt, in line with the expectation, a very good operational EBITDA in the quarter. The fourth quarter is the quarter we tie up working capital not only because of Farming, but also because of Consumer Products, particularly Consumer Products released their working capital in the first and second quarter. We are a little bit -- or I would say, some above the forecast we had for the year, EUR 120 million. Recall, a tonne of this is related to phasing of insurance. So in fact, it has nothing to do with the normal operations. So adjusted for that, we were quite spot on in terms of working capital tie-up for the year.Since cost has been stable, actually a little bit down, this is due to growth in the various divisions. On CapEx, we are somewhat low compared to the latest guidance we gave in the fourth quarter -- sorry, after the third quarter. If you remember, we have increased it from EUR 270 million to EUR 295 million. If you add up the numbers for Mowi as a whole now, you will end at approximately EUR 270 million. There is some short-term timing issues. So these numbers -- number will also be seen in connection with the CapEx guidance for '19, which we will soon visit. Interest expenses, normal. Dividend is dividend. The convertible bond, you are fully aware of. So we went from a net interest-bearing debt at the beginning of the quarter of EUR 1.2 billion to EUR 1,037,000,000 after a quarter. So a very healthy financial situation for the group before we start on '19. And then on the cash flow guidance. Working capital '19, we expect EUR 115 million to support further growth related to Farming, Consumer Products, but also the opening of the new Feed factory in Scotland. CapEx expenditure or capital expenditures, EUR 290 million, again must be seen in connection with the short-term timing issues we had last year. If we look at the part which is not maintenance, yes, EUR 65 million goes to freshwater expansion projects. In Norwegian, this is smolt facilities. We have built a few ones over the past -- or over the last years, and we will continue to do so. We see that the average size of our smolt is increasing, and we think this is very, very important in terms of also delivering growth in the future, particularly taking into account the biological issues that we see around the world.Seawater expansions, EUR 50 million. Bear in mind that we are going from 375,000 tonnes in '18 to 430,000 tonnes this year, so we need both net cages, barges, et cetera, in order to do that. Consumer Products, they are continuing their growth. We are building a factory in the U.S. as we speak. We also started on several automation projects in Europe, and we are also expanding our operation in Asia. So all in all, a CapEx of EUR 290 million for '19.Interest expenses, EUR 55 million. And taxes paid, that is payable tax this year, firstly, it's most related to the profit last year, EUR 140 million. The quarterly dividend, Alf-Helge has just been through, NOK 2.60, which is the same as for the last quarter or the third quarter. Then over to our financing. We have converted the convertible bond. Further to that conversion, we have increased our bank facility. So in other words, we have exercised our accordion option, EUR 200 million. So in total now, we have EUR 1.4 billion in bank financing with our long-term debt target of EUR 1.4 billion. Plus we have a high-yield bond of EUR 200 million at very attractive terms, as you can see here. EURIBOR, which is not very high at the moment, as you are aware of, plus 2.15% in the margin. So you could, I guess, argue if this is high yield, but at least that's the expression.So to sum up financing, a very healthy situation at very attractive terms, so I think the -- we are well supported by the financial position going forward. So much about the financial figures.Then over to the fundamentals. First, supply development. Almost 5% in the quarter, somewhat higher than what we expected. All regions were in line with our guidance after the third quarter, apart from Chile. Chile has really surprised and impressed on the upside. The biology is looking really good down there, high harvest weights. And I think we must all agree to that they delivered both better results and biological numbers in '18 than most of us thought was possible. So I will commend to them.So -- but despite the higher supply than expected, the price development was really good in the quarter, as Alf-Helge truly pointed out to begin with here, 12%, 13% in Europe; but also Americas, really great, 8%, 9%. So a very good quarter in terms of prices, also price achievement for Mowi, as we have been through. So I think yes, there is reason to also be positive going forward. In terms of the demand in the various markets, Europe grows, more or less, at least on a full year basis, in line with the global supply. Americas, they have a quicker growth, really impressive was in the fourth quarter. U.S. and Brazil, the 2 big markets, they are the drivers here.Asia, a little bit disappointing, I would say, particularly China. Japan is flattish, but Japan has been flattish for years. But I think the expectations for China was somewhat higher than what we saw last year. We still see that there are trade restrictions or barriers through the sanitary regulation, which you are fully aware of. In addition they also want a big size fish which was a problem in the fourth quarter.But China, again, is still -- and yes, what should I say, an undeveloped market. So we must increase our efforts in China and get out or tap the potentials there because that is huge. For Mowi's part, we think that the opening of the new factory outside Shanghai will really help us. It will give us selling arguments. It will also help us to start to work with the retail chains in China. So far, this is very much of a [ wrecker ]. So we are still in good faith. But I think when we -- since we are summing up '18 today, I think we must all agree to that '18 was not good enough.On a positive note, the rest of the world is going great. So a fantastic year demand-wise, or should we say another fantastic year, so no reason to go out of this room with a negative outlook. Then over to the supply outlook for '19, more or less in line with '18 on a global basis. We are a little bit higher on Chile than what Kontali is and a little bit lower on Norway than Kontali is. And why, you can ask, well, this is our belief, so let's see when we stand here or somewhere else at the end of '19. But overall, we think that '19 will be more or less like '18 on total global supply. And in the end of day, this is a global market, although we tend to see some short-term differences.For the first quarter, 4% to 9%, so somewhat higher than full year. We think we have seen that generally start off with high volumes. If you are following the export volumes for Norway, they don't look so impressive. But if you include Scotland and the rest of the world, I think you will see that January has been on the upper range of this interval. Then over to our internal volumes. No changes since last time we spoke or presented, still 430,000 tonnes, well-supported by the biomass in sea. So if you take '18 biomass and add it up to the final numbers and do the same for '19, you will see that the math adds up. Actually, there could be some potential in the numbers. So we still have a strong belief in this growth, which is big for Mowi. But again, if you adjust for Northern Harvest, look a few years back, you will see that this is not more than a recovery.That's it. I would like to say thank you and leave the word to Alf-Helge.
Thank you very much, Ivan. Let's just quickly go through the outlook. There's no reason to believe that demand globally should be weaker based on the supply outlook from what we see. We see a strong market going forward. Fish pool prices for the 12-month period supports that at EUR 6.3 per kilo. For our own case, just described by Ivan here, we have a record high biomass in sea, and that should significantly increase our volumes to the 430,000 tonne that he has predicted in '19.So organic growth for us going forward, I think almost the best kind of growth if you ask me, in terms of both feed with a new plant in Scotland coming online, which has high potentials; also, the feed production in Norway farming basically in all units, but you just look at the slide for our own supply outlook, especially Scotland and, obviously, Canada, but also Chile is coming on strong and also recovery in Norway.And then in the processing area, we keep on adding on facility and making facilities more efficient going forward, and that is highly important for building market. If you don't have good products, why would you buy it? That is the key essence here.Cost has been described. It's important for us to keep the focus on cost, keep professionalizing this, and we can do more and we know that. So our target is to further reduce cost with EUR 30 million in '19. In terms of Consumer Product, I think we will see a reduction in the result in Q1, a little bit around competition in this area, but also the fact that the Easter comes late this year. Mowi branding strategy is going on. And really, this is obviously something that is -- takes time, and we already said that when we presented this. But this is something that is transforming this company from what it is to be actually more driven from quality throughout the value chain and a bit focused on the end consumer. And I think we can get a lot better in that area in this business. And we need that to take out higher prices, better products, higher margins, key.And in terms of dividend, already said many times, but NOK 2.6 per share paid out Q1 '19. With that, I would like to thank you for coming, but also open up for questions first. So we have a few guys with microphones here. And please state your name and where you work, and then we take it from there.
Christian Nordby, Kepler Cheuvreux. You say that you now sold Mowi fish to restaurants and that you're starting to the retail market in the first half. Can you tell us something about how the restaurants are taking the fish? Are they paying -- willing to pay extra? And which markets are you starting in, in the first half?
Feedback on quality and for what we see on this product is fantastic. So the first feedback is really good, and we see it with our own eyes, too. So -- and you can basically feel the texture. You can see the color. You can see -- and you can taste the difference. So fantastic products, so we have -- I believe in it.
Kolbjorn Giskeodegard, Nordea Markets. Questions on the markets. Can you say something more about the competition in Europe? How crowded is the market? And to what extent is Chile still -- or the big supply from Chile still blocking from options in overseas markets, Asia and then North America for Norwegian salmon?
Yes. In Europe, maybe especially in the smoked market, we have strong competition. We know that there are facilities opening up. And this is obviously also dependent on what kind of raw material strategy you have, what kind of belief you have in raw material prices going forward. So there is no doubt there is strong competition in that segment. We will feel it for certain. In terms of Chile, and your question is blocking into Asia or competing hard in Asia, I think Chile has done a good job into Asia. But bear in mind that the freight cost from Chile kind of more of outweigh the fact that they have a free-trade agreement with China. So I think with more focus from the industry in Norway, we should absolutely be in a place where we should be able to compete. So hopefully this is coming. We have had great success, for example, in Mowi with our factory in South Korea. You saw the growth in South Korea where we have a factory in the marketplace, where you can go directly to retail. So we have a high belief, but it's going to take hard work. And Chile has done a good job there to place itself in a position -- in a period where we have been forced out of the market.
Tore Tonseth, Sparebank 1 Markets. Your biomass is up by 18% year-over-year, and it seems to be some kind of some upside in harvest volume guidance for 2019. Which region is performing better than you expected given that the biomass is 18% up?
[Foreign Language]
Okay. Secondly, about Chile, you're almost not using any antibiotics in the fourth quarter. And compared to rest of the industry, it's quite an achievement. Is it the SRS vaccine which is the main cause of this? Or is it other factors that are having an impact?
Well, I think we have been -- not to brag, I don't like to brag too much. But in terms of bio security, in terms of smolt quality, I think we have been performing well in Chile over time. Also I think if you look at antibiotic usage over time, the transparency we've had over time and focus also have an effect, but there's no doubt that vaccine has helped. And then we have areas where we are pretty much alone in Chile, if you can say that, which has -- which are not using even in Region X, which has not been using antibiotics, which is good. So all good. But then again, it's important now to keep focus.
The last question, are you seeing any resistance towards different chemicals used in treatments of sea lice in Chile?
We always monitor that and we pay attention to that, and we have a plan in place. I think we have been driving the industry towards change there. And we know there are remedies that will work because the sea lice in Chile, I guess, many of you know is called Caligus, it's a different lice than the Norwegian Lepeophtheirus, easier to deal with, with freshwater treatment. So we have a plan in place, and we're working with the industry. But so far, also sea lice treatment in Chile has been good for our case. But that is something you have to look at all the time.
Carl-Emil Johannessen, Pareto. Can you say something about your plan for Northern Harvest and what we can expect in terms of growth in East Canada going forward?
A little bit. We are to build a new hatchery there, so that is the first part of the deal. Ivan showed it in the CapEx part. And then we will gradually expand this business. We have -- I believe in that and -- but we have to start with the smolt. So a bigger smolt, a high potential there and also, obviously, better equipment over time is important and then gradually take it up to its potential. We have not guided on volumes there.
Lars Konrad Johnsen, Fearnley Securities. Two questions. Could you give us some details about your thinking around, you said you're lower on Norway compared to Kontali and higher than on Chile, and I guess it's something about regulations, biology, just give us some details about your thinking there? And second question, about contract share and what kind of bulk prices are we seeing from now on and what's kind of the long-term strategy in terms of the share?
On Norway -- or Ivan has basically already answered on the guiding of Norway. But I think also it's fair to take into account that we have accounted in that part of this -- we don't know yet, but part of this will be read in the traffic light system. There is a hearing out there now on how this is going to end up and so forth, but that's also part of the argument, I think, in our calculations. Contract share and then prices, we -- prices, we certainly don't comment on. And the contracted volumes going forward, you have seen. I showed a slide. It was 21,000, 25,000 tonne or something like that. You can look at it in the -- it's there. Yes. Did you have a follow-up to that?
It was just a question regarding how the contract volume functioned because it was a bit slow versus the second half of '18 and we see some kind of development.
Yes. So what you see from the numbers here was that the contract, we are at the same level Q1 '19 as Q1 '18 for us. So -- and then you saw maybe a slight reduction in Q2, but there are still negotiations going on. So -- but that is the contracted volume as we speak. Okay.
Mikkel Nyholt, Carnegie. Could you maybe repeat or elaborate a bit further on the biological situation in the Faroe Islands and the low margin this quarter there? Was it purely generation-based? Or is biology more or has been tougher all over the place?
No, I think this -- we have to speak for ourselves. We didn't have a good quarter in the Faroe Islands in the fourth quarter. If there was -- yes, way under expectation for ourselves and it had to do with several reasons, as I already said. Price achievement was one of them. We didn't manage to take out the price we should have probably taken out for the products. So the performance should have been better in Faroe Islands for our sake. Cost was up on the site we harvested. And then also a third component here, which is quality of the product, wasn't the best as you will see in the report, which also drags down this price achievement. So I think it's special probably for our sake. I can only comment on us. We are not happy.More questions? If not, have a fantastic day, and thank you for coming.