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Edited Transcript of MHG.OL earnings conference call or presentation 21-Aug-19 2:00pm GMT

Q2 2019 Mowi ASA Earnings Call

STAVANGER Sep 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Mowi ASA earnings conference call or presentation Wednesday, August 21, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Glenn Flanders

Mowi ASA - Chief Strategy Officer

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Conference Call Participants

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* Fabio Fazzari

Equita SIM S.p.A., Research Division - Analyst

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Presentation

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Operator [1]

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Good day, and welcome to the Mowi ASA Q2 '19 Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Glenn Flanders, Chief Strategy and Investor Relations Officer. Please go ahead, sir.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [2]

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Okay. Thank you very much. Hello, everyone. Thank you for joining the Mowi presentation of Q2 '19 results. Let me first by -- start by apologizing for the delayed start here. We were scheduled to begin 10 minutes ago, and we had some technical challenges in doing so. I apologize for any inconvenience.

So let's get on with it. Q2 was a very good quarter for our company. In fact, it was the best second quarter for Mowi. I'm referring now to our presentation material, which I hope you all have access to. It can be found on our web page under the Investor Relations section. I'm beginning here with the highlights on Page 3. I'll quickly run through these highlights as many of the points that I'm about to make will be addressed in a bit more detail as we progress through this presentation.

We did have record high Q2 operational EBIT of EUR 211 million. This was largely driven on 26% higher volumes year-over-year, which was expected and largely consistent with our prior volume guidance. We enjoyed high achieved prices on strong demand. This is an ongoing condition, which we've had now for the better part of the last 3 years. Our cost per kilo harvested improved relative to the comparative quarter to 2018 and seasonally record high sales and production volumes in Feed. I would also add that we have new production now beginning at our Kyleakin facility in Scotland, and we'll talk more about that a bit later in the presentation. We also announced that we will plan to rebuild the Kritsen smokehouse in France, which, unfortunately, burnt in prior quarters. And we will then expand the launch of our MOWI brand also into the French market, following success that we've had to date in Poland. We've entered into an agreement to acquire farming assets licenses primarily in Region Mid of Norway. That transaction is expected to close this month of August, and that will provide us with some additional capacity, obviously, and also better control over an important region in which we farm from a -- both a biosecurity and production planning perspective. The Board resolved yesterday to a quarterly dividend of NOK 2.6 per share, which will be paid in this current quarter 3 2019.

Moving along to Page 4 of the presentation. Here are the key financials, again with some further details to follow later in the presentation. I think within this table, I would point out a couple of things. At the very top line, you'll see that we had revenue growth of approximately 15%, eclipsing EUR 1 billion in revenue, which is record high levels particularly in Q2. Moving down, we had a 21% growth in our op EBIT, as I mentioned in the highlights, primarily driven by volume, although we did have stable to improving cost in Q2 in many regions, but that was offset, of course, by lower prices, market prices for our products.

EBIT, financial EBIT, which is the third line, EUR 194 million. We'll look at some of the reconciliation items between our operational EBIT and our financial EBIT, but there is a couple of noteworthy points. One is a one-off connected to restructuring costs associated with the situation with the Kritsen plant, and also we had a very minimal effect in this quarter with regard to our fair value adjustment for our biomass. And we'll look at some of those items in further detail.

As mentioned before, we had a 26% growth in our harvest volume at just over 98,000 metric tonnes. I think we had guided at 98,000, so I think we're were quite spot-on in that regard. And then I think I would point out our operational EBIT on a per-kilo basis, blended average at EUR 2.14, which is really very good. It is down from the comparative quarter Q2 2018, really driven by the mix in country-level performance and the relative contribution of those regions. And we'll get into all of those regions in forthcoming slides.

Moving along, please, to Page 5. Here, we have a chart which illustrates, really, the spot price development. These are the reference prices in many of our major markets. And what -- generally, we have seen falling prices in Q2, which we view as partly a seasonal effect but I would say exacerbated by certain conditions at sea that have driven some early harvest, some smaller fish as a result, which brings down the average price. And also, we've seen some good growth, which has brought us up against some MAB levels as an industry where we've needed to do some harvesting to be compliant with regard to our obligations to our regulators. I think this chart really speaks for itself, and we'll get into pricing a little bit later. Certainly, I would point out 2 more things. One, keep in mind that when we talk about pricing and the fact that prices have come down relative to Q2 2018, please keep in mind that Q2 '18 and '17, for that matter, were record high Q2 prices, and so we're comparing against a high base.

Moving on, please, to Page 6. This is -- this slide illustrates our blended price achievement for Mowi, taking into account contracts, spot price and quality relative to the reference prices that we just spoke about in the prior slide. In -- taken in totality, our global price achievement was 101% of reference price. I think this sheet is relatively self-explanatory. I guess I would just point out a couple of things. In the case of Canada, we have no contracts for Canadian salmon. That's not new. That's generally how we go to market with those products. We've had very good quality of salmon in Scotland, also not entirely new but certainly beneficial for our price achievement, which was, as you can see, 108% in the quarter. I think generally, contracts had a positive effect on our price achievement in all markets in which we enter into those types of arrangements.

Moving along, please, to the next slide. This is an operational EBIT waterfall, really bridging our Q2 '19 results with our Q2 '18 results. And I would say that generally, the beneficial result in Feed, Farming and Markets was largely driven by increased volume. I think it's noteworthy in the case of Feed, and we'll get into this in a little bit more detail later, that we did have some period costs, some start-up costs associated with the new plant in Scotland that was about EUR 4.5 million, which was a drag on our operational EBIT. Adjusted for that one-off, we would have had about a EUR 7 million EBIT in that aspect of our business, which I think is about an 8% EBIT margin.

Consumer Products, we've had an ongoing condition, which we described as really fierce competition. That's not necessarily the case in all markets, but certainly it's in the case in many major markets in Central Europe, particularly in France and in Poland, which is creating a lot of price pressure and a drag on our earnings for this aspect of our business in total. This was the case in the prior quarter, case in the current quarter, and we're providing some guidance that we expect this to continue into the current quarter. We'll get into that a little bit more in detail as we get to that division of our business.

So moving along to our farming regions, I'm on Slide 8, please. Looking at Norway, which is really a compilation of -- and an aggregation of 3 different regions in which we farm, and we'll look at those regions in a little bit more detail in the slides to come. But suffice it to say, it was a very good quarter. Our op EBIT was very similar to our comparable quarter, Q2 2018, at about EUR 126 million. This was on slightly lower costs, certainly higher volumes, a couple of thousand additional metric tonne, but both of these beneficial results were, in fact, offset by lower prices. We had about 100% price achievement in Norway, but prices were down about 10%. The reference prices, I should say, were down about 10% relative to the comparative quarter. So it was a good overall result and stable costs year-over-year.

The Region South, we were harvesting from favorable sites; Region Mid was impacted by harvesting of smaller fish, really driven by biological challenges; Region North, stable with a good performance. I will get into all of these regions in more detail in just a couple of slides.

If you look at the waterfall analysis on this slide, you'll see what I had referred to as really stable cost. I think it's noteworthy that our biological costs have actually decreased on a blended-average basis of about 3%. The non-seawater cost that is reflecting negatively in this waterfall probably should be embellished by pointing out that we had a one-off positive effect in Q2 of 2018, and then we had some incremental incident-based mortality in Q2 2019, which is really driving the -- what appears to be the increase in costs. The incident-based mortality was in Region Mid, and we'll talk more about that shortly.

Sea lice levels are beginning to increase. It's the time of the year where conditions catalyze the development of sea lice. We're watching this very closely, of course, and we are seeing some things increasing in that regard. Certainly, Q3 will be an important quarter with regard to this primary challenge in our industry.

Q3 2019 is expected to be impacted by lower harvest weights and higher cost and reduced price achievement. A lot of this has to do with what I was just alluding to, known challenges, such as some ISA fish, which we'll be harvesting and have harvested in Q3, bringing down the average weight and therefore also the prices that we might achieve in the marketplace. And just based on our production plan, we expect to be harvesting from some poor performing sites.

Moving on, please, Page 9. This is a snapshot of our sales contract portfolio for salmon of Norwegian origin. There's really nothing unusual here, and I'll only point out that we have good, stable price agreements and expect slightly more contracted volume in Q4 '19 as compared to Q4 '18. Q4, as I'm sure many of you know, is a period of heightened demand for our products.

Moving on. As I mentioned, here is a graph depicting the operational EBIT per kilo by region for Norway. And as you can see, we've had varied results, although we consider them to be quite good. Region South had notable improvement as a result of our harvest plan and harvesting from good-performing sites. We had good biology overall and lower costs. Region Mid, however, we had a decline in financial performance due to biological challenges, PD, sea lice treatments, which resulted in some early harvest and smaller fish, as I mentioned a moment ago. And we also had some incident-based mortality of approximately EUR 3 million, which was reported in this quarter. Overall, it was about a 15% cost increase in this particular region. Region North, a region with very good performance, generally stable cost in biology and we think quite comparable overall to the prior Q2 2018 but for effects of market prices.

Moving along to Scotland, please, Slide 11. Scotland was our best-performing site on a per kilo of salmon harvested. You can see that our operational EBIT grew from EUR 21 million to EUR 46 million, really on the back of volume growth, much like other areas in which we're farming but pretty significant percentage increase from about 9 million metric tonnes to nearly 16 million metric tonnes. So we've had good growth and reduced cost driven, in part, certainly, by scale and by volume, but there's generally good biology and harvesting from good sites.

We had positive -- as we saw in the achieved price table in prior slide, we had positive contribution from our contract sales, notwithstanding the fact that the spot price was down. However, that was offset some by the lower contribution from Consumer Products in the quarter. Here, we're suggesting that we expect costs to increase in Q3 2019. It has a lot to do with production planning and where we're harvesting and in this case, sites with higher cost. So far, the sea lice situation in Scotland has been stable, but again, Q3 is a very important period of time with regard to sea lice development.

Moving along to Canada. This is both a combination of our operations in Region West and also now Region East. You can see that we had an operational EBIT increase from EUR 7.8 million to EUR 10.4 million, again driven, in large part, by volume. We had good volume growth and contribution by Northern Harvest, which is the company we acquired just about 1 year ago, which contributed about 3,000 metric tonne of the 4,500 metric tonne increase you see from quarter-to-quarter. Prices declined due to general market condition and increased volumes of smaller fish. And in fact, prices -- and we'll see this in a later slide, but prices for Canadian salmon, depending on product form and location, declined 13% to 15% in market currency. With that said, I probably should point out that prices have started to recover, and August '19 is starting to look a lot like August '18 in terms of pricing. And in fact, Canadian prices are up about USD 1 per kilo.

Couple of points of distinction between the 2 areas we're farming in Canada. The Canada East struggled a bit with environmental conditions connected to cold seawater temperatures. We also had a loss of smolts on land as well in the period, resulting in EUR 1.7 million or so in the write-off. West struggled recently with algae, which resulted in the smaller fish that I mentioned ago. I should probably point out that many of the large fish that are produced in Canada are shipped to Asia, and we were unable to supply those large fish in the way that we have in the past. And so we think there's some market implication for us in that regard.

Moving along, please, to Chile. Chile had another good quarter, again higher earnings driven by the volume increase. In fact, it was very significant increase in volumes, not dissimilar from Scotland. We moved up from about 10,000 metric tonne to 15,000 metric tonne of harvest. There was -- like most markets reduced spot prices on increased supply generally. The supply out of Chile -- industry supply out of Chile increased by about 6%, and we saw spot market prices, reference prices decline by about 10%. Although we don't have a significant amount of product under contract, you can reference back to our achieved price slide. The product that we did have under contract contributed positively to our price achievement.

Unfortunately, we're seeing higher sea lice levels in Chile and not dissimilar from Scotland and Norway, we're starting to see some resistance to the conventional medicinal treatments that have been applied in that region, and so we're moving to take Norwegian technology and our learnings connected to sea lice mitigation in that region to Chile. And this will be a development that we will, of course, treat with very high priority. With regard to cost guidance, we're expecting cost to increase somewhat in Q3 2019 versus the current quarter we're reporting due to lice treatment and harvesting from poor-performing sites.

Moving on, Page 14, Ireland and the Faroes. Although relatively small regions, these are very significant and unique contributions to our business. Ireland is an organic-producing region, and Faroes uniquely sells to Eastern Europe and to Russia. We had good results from Mowi Ireland as the organic salmon market remains strong. It does -- in order to produce these types of organic products, it does have the highest cost profile of all of our salmon produced, but it also has the highest price as well. In the current quarter we're reporting, we had higher volume from 1.2 million metric tonne up to 2 million metric tonne on somewhat higher prices. Like other regions, we're expecting cost to increase somewhat in Q3 2019 relative to the current quarter.

Mowi Faroes really delivered satisfactory results, made about 100% increase in volume but very small volume, 700,000, 800,000 tonne to 1.4 million and quite limited in production. We only have 3 sites in the Faroes. And in this particular quarter, we had an EBIT decrease as a result of higher costs and some early harvest as a result of challenges at sea. I think the other thing I would point out to you is our superior share, which is our highest-quality grade, has declined from 94% in Q2 2018 to 80%. That's really disappointing and connected to some treatment effects and scale loss and things of that nature.

Moving along, please, to Slide 15, the Consumer Products division. This is our value-added business. I think most of you are probably quite familiar with it. And as I mentioned in my earlier comments, we are seeing some challenges in some aspect of this from a market perspective. We did enjoy seasonally all-time high volumes. We sold 47,000 tonnes versus 41,000 tonnes in Q2 2018. Much of this volume increase was driven by fresh products. We had about a 19% increase in fresh products sold.

Strong demand and increased consumption really in all regions. We had very good factory performance in many parts of our business in both North America and also in Europe. But really, it's more Central Europe, where we're seeing fierce competition really on price. Our costs are generally stable. Operating efficiencies are okay. It's really the price that we're feeling the pressure. And competition in the Chilled European segment, we think, will continue to negatively affect our earnings into Q3.

I think just as a general statement, I would say that if you look at this on the surface and you see an operational EBIT of less than 1%, I'd say 2 things. One, if you adjusted that for bulk trading, which some of which is actually included in this, it's actually more like 1.4%. But nonetheless, it may seem a bit underwhelming, but it is this aspect of our value chain that is really driving market development and growing demand in our view for the long term.

Moving along to Feed, Slide 16. Our Feed division is growing. It's growing, both in terms of results in the quarter and expansion of this aspect of our business. We had seasonally record high sales and production from our plant in Norway. We produced over 104,000 metric tonnes in Q2 2019 compared to Q2 2018. And connected to that, we sold 86,000 tonne in this current quarter compared to Q2 2018. This was a strong contributor to the good earnings from Feed in Norway. Increased Feed prices also contributed to these earnings. Although, our raw material costs -- some raw material costs were slightly higher which offset some of the beneficial increase in Feed prices. It was a very good quarter for Feed, having a lot to do with good growth and good conditions in Norway. Important to know that our new plant in Scotland is under commissioning and now up and running, and we're very pleased by this result. We did have, I think I mentioned earlier, about EUR 4.5 million in period costs, which is a drag on our EBIT margin in the quarter, which would have been on the order of EUR 7 million and about 8% had we not had those costs. The good news is the plant is -- in Scotland is producing feed, has a lot of flexibility to produce a variety of different feeds and is a very significant step forward in our self-sufficiency strategy around our primary input.

I think the real important takeaway for you and certainly for us is that basis, the development of this facility and where we are today, we're quite confident that our capacity, which we had targeted at about 170,000 tonne is now notably more than that at about 240,000 tonne. It's really quite an exciting development for us. In the quarter, we were 94% self-sufficient on our feed demand in Norway, which I think is fairly consistent with prior quarters.

Okay. Well, let's move on then to financials, markets and harvest volumes. A lot of this we've already discussed, but perhaps I can add a little bit more color to some of these points. I'm on Slide 18, which is statement of profit and loss. And as stated, our view is this was a very good quarter. I mentioned the reconciliation of our operational EBIT to financial EBIT. I think there's 2 things that I would particularly point out, and they are in the right-hand margin, which is we had a one-off restructuring provision of EUR 19 million connected to the Kritsen smokehouse in France. These are industrial and social costs incurred in the period. And then income from associated companies, although not new, we like to point out the earnings that we generate connected to our investment in Nova Sea in this particular quarter, EUR 10 million. Just a couple of metrics, underlying earnings per share, EUR 0.29 and return on capital employed of 21.6%, again driven by, in large part, harvest volume increase of about 26%.

Moving on to the balance sheet, Slide 19, please. What you'll probably see immediately is about a EUR 1 billion increase in our balance sheet. This is connected to our organic and acquisitive growth and some accounting, I suppose, more specifically IFRS 16, which requires a capitalization of leases, is not -- and it's not included in our Q2 2018, is about EUR 346 million of the EUR 1 billion increase. We also have increased biomass in the sea, which you can find in our footnotes, which is reflective of about EUR 100 million in additional inventory; new CapEx -- or excuse me, net CapEx over the last 12 months and purchases of new licenses in Norway which we did last year at about EUR 50 million. And then the acquisition of Northern Harvest, which I referenced earlier in the call, about EUR 215 million, this is also not included in the Q2 2018. I think that closed in July in 2018.

Moving along, cash flow and net interest-bearing debt. Couple of points. We started the period, the quarter at about EUR 1 billion in net interest-bearing debt and ended at about EUR 1.1 billion, so not a lot of change in that regard but certainly a lot of activity in the middle. We had about EUR 248 million in operational EBITDA. This was offset by some working capital buildup connected to more biomass at sea, connected to supporting that growth and the feed production that we spoke about earlier and the feed inventory as well.

Just below that line, taxes paid, EUR 81 million, also noteworthy. This largely addresses our tax obligations for the year and is higher than perhaps predicted by some connected to higher earnings. CapEx at about EUR 69 million was in line with expectations, both in terms of our guidance and our own internal budgeting. And then I think the other noteworthy point that I would share with you is the dividend of EUR 137 million paid in this particular quarter declared in Q1.

With regard to cash flow guidance on Slide 21, really no change here other than taxes, as I just mentioned, so very consistent with what we reported in Q1 and I won't spend a lot of time going through this. We did -- as I said, we did increase taxes paid in totality by about EUR 20 million, but all of our investing is in keeping with our strategic initiatives and our budget as previously described.

Moving along to financing. Here, again, only one change. We increased our German loan by EUR 20 million -- excuse me, EUR 30 million, and this was very cheap money and gives us some additional borrowing capacity, otherwise no changes. Long-term net interest-bearing debt target is unchanged.

Moving along to supply development, please, Page 23. In the quarter, we had about an 8.3% industry supply growth. This growth was in the upper bounds of our guidance. We had suggested in the prior quarter 3% to 7% growth. In Norway, we had slightly more harvest than we would have predicted, connected to good growth and strong feed sales but also on the downside, connected to algal bloom and some other biological challenges which pushed forward some early harvest and therefore additional volumes in Q2 that might have been in the subsequent quarter.

In the case of Chile, the harvest is generally in line with guidance. Average weights have been reduced in 2019 due to the higher sea lice levels and increased resistance to medicinal treatments. Anytime we treat for sea lice, particularly with the mechanical treatments, we have lost growth, and that's potentially what's at play here.

Moving along to Slide 24, development in reference prices. I think we've talked about this a fair bit. This quantifies some of the change in price from the comparable quarter Q2. And as you can see both in market currency and in euro, we've seen declines in prices, again partly to do with seasonality, partly to do with smaller fish, shifting the price, average price and partly to do with higher volumes and other factors of course. It's hard to make sweeping generalizations about a global marketplace for our product. But as I mentioned before, we are seeing some price improvement, and August, so far, is quite similar to prior year.

I think the other thing that's kind of interesting about this, which is quite obvious to all, I'm sure, is that you can see quite clearly in this graph, now that we have full 3 years more or less, reflected that we really had a demonstrable shift upward since 2015, which is no suggestion of the future. It's just an obvious point that we, as a company and as an industry, have enjoyed higher prices since that period of time.

Moving along to the next slide, global volume by market. Consumption increased by 6% on growth in really most all markets. I think the markets that I would point out on sort of negative side is Russia. The way we view this, based on our market analysis, is really a shift in terms of where we're directing product coming out of Chile. Brazil, as you will see, has increased by 14.5%. Russia has decreased by 11.5%, and we certainly know that we're moving a lot more product into Brazil at the expense of the Russian market.

I think the other thing I would point out on the negative is sort of the China, Hong Kong situation. We're both disappointed and a little bit surprised by the sideways movement, essentially no growth, which I should probably point out there was some growth in the Chinese market, which was dragged down and diluted by negative growth in Hong Kong. In the case of China, though, we had about 5% growth, which we still think is disappointing and again has to do with the kind of a hangover effect of trade restrictions, particularly around sanitary restrictions connected to where we can harvest fish for the Chinese marketplace.

On the upside, we see very good growth in Europe, which is the most significant market for our product, had about nearly 8% growth. And then the U.S. had about 3% growth, is very good. Asia, other than China and Hong Kong, Japan, a little bit underwhelming, but it's a very mature market. And this type of growth or decline, this range of growth and decline is pretty common, I would say. And other than that, all in all, a very positive market development, I think, for our product.

Industry guidance, moving on, please, to the next slide. We had guided global growth of about 4% to 7% for 2019. I think industry consensus is about 6%. And in the next 2 quarters, we're guiding for 3% to 7% growth accordingly. We thought we would share with -- the Kontali guidance for 2020 at about 4%, which really I think is further indication of the structural condition our industry is in and has been in with regard to growth potential. We'll see and continue to revise that as we get new visibility into the future growth.

With regard to our own organization and our own production, Slide 27. There's no change here. We're still guiding for 430,000 metric tonne of production, and the next quarter will be an important one in terms of our growth.

So moving along, I guess, in part summary, really, our outlook is that the sector fundamentals remain strong. Fish Pool forward pricing, as I last looked at it, was EUR 5.9 per kilo. We're identifying and capitalizing upon organic growth opportunities really across the value chain, and then we're hoping to complete this acquisition, which we think is really important, as I previously stated. I think that's just a matter of days away from concluding that. And then the feed plant, I think we have already spoken about, but this has a long-term implication on our business which we think is tremendous. And then to repeat, the quarterly dividend for Q3 2019 at NOK 2.6.

So that's the quick run-through of Q2 2019, and I think I would open it up for any questions that anyone may have at this time. And also please know that I will be on a road show in the U.S. and Canada next week, and my colleagues are on a road show this week in Europe. And of course, we're all available by phone and e-mail if you have any specific questions you'd like to address. So again, thank you all very much for your time on this call, and please let me know if there's any questions.

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Operator [3]

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(Operator Instructions) It appears there are no further questions at this time, and I'd like to turn the conference back over to Glenn Flanders for any closing remarks.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [4]

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Okay. Well, again, thank you very much. And should you have any questions following this call or your further digestion of the information you've received today or...

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Operator [5]

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Pardon the interruption, Glenn. We did just have one person queue up last minute for a question. Would you like to take the question?

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [6]

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Sure.

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Questions and Answers

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Operator [1]

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So this question comes from Fabio Fazzari from Equita.

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Fabio Fazzari, Equita SIM S.p.A., Research Division - Analyst [2]

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Kim, just to understand this, so how do you see and which kind of impact could have the recent news we read about the situation in Alaska? Don't know if you have an idea of potential impact on the market.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [3]

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Yes. Well, yes, this is Glenn Flanders. Kim is a colleague of mine and was unable to take the call today, but I'd be pleased to try to answer your question. But before doing so, what specifically are you referring to with regard to the news in Alaska? Are you referring to the possible U.S. federal regulations associated with offshore farming? Or is there something else that you're thinking about?

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Fabio Fazzari, Equita SIM S.p.A., Research Division - Analyst [4]

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No, is this point.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [5]

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Yes. Well, I really -- I don't have a lot to say about it, actually, because it is only notional at this point. There is some proposed legislation that's grinding its way through the U.S. bureaucracy with the outcome uncertain. But in the current drafting of this legislation, as I understand it, it would mandate that all states, including Alaska, provide some various mechanisms for offshore farming. That's farming outside of 3 miles of the coastline of any given state. Certainly, Alaska has the potential in places to farm Atlantic salmon, but there is quite a bit of political and NGO resistance to the idea. And so what the implication is for our industry I think is really to be determined, and I think we're probably some months, if not, years away from understanding whether there is an actionable opportunity or none. And I think the last thing I would say about it is, of course, we need the proper technology and protocol for offshore farming in any region, whether Norway, Alaska or anywhere else. And those types of technologies are not well established from a commercial point of view at this time.

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Fabio Fazzari, Equita SIM S.p.A., Research Division - Analyst [6]

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And sorry, just a follow-up about the other situations about the hot temperatures of water that is killing a large number of salmon. I was wondering if this could have an impact in terms of supply, so demand on price in general.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [7]

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Do you mean the warm water temperatures, which is a naturally occurring event in this time of the year and some of the environmental implications associated with it? Or is there something -- specific area or something more specific that you're thinking about?

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Fabio Fazzari, Equita SIM S.p.A., Research Division - Analyst [8]

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Both, in reality, because I was wondering if this situation that we are seeing in Alaska could be something that could happen also in other regions because it's linked to a change in the planet situation. And also, if considering the fact that this hot temperature is killing a large number of salmon in Alaska, if this could have an implication on the average price this year because...

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [9]

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Oh, okay. Yes. I misunderstood your question initially. Yes, yes. So it's -- well, first of all, on the climate change, it's certainly something that we monitor very closely in connection with our ESG strategy. And of course, we're evaluating our environment in all aspects as it applies to the biology of salmon intensively.

In the case of what's going on from a water temperature perspective in Alaska, I really don't know, frankly, all of the details associated with that in terms of the effects on the wild capture fishery. I think a lot of that is unfolding now. We're really in the middle of the wild salmon capture period or season, and so I really am not well suited to respond to that. There probably is some influence between -- on price and market development when the wild capture salmon season is underway. But generally, they are quite different products, at least in my mind. Our aquaculture platform can provide a consistent product 24 hours a day, 7 days a week on a year-round basis. And of course, the wild capture is connected to 5 different species of Pacific salmon not all consumed in the same way that the farmed Atlantic is, take sushi, for example. And so certainly there are some overlapping effects, but I don't think they're dramatic, and I really don't have enough information about what's going on with the wild capture quota and volume to really give you any insights as to what it might mean for our market.

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Operator [10]

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(Operator Instructions) It appears there are no questions, and I would like to turn the conference back over to you again, Glenn Flanders.

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Glenn Flanders, Mowi ASA - Chief Strategy Officer [11]

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Okay. Great. Okay. Well, once again, thanks so much for your attendance. Please stay in touch with me and my colleagues as you continue your review of our industry and our company, and thanks again, and wish you all a great day.