The answers to “your”

questions….

CHRISTMAS SEMINAR

Bergen, 19. November 2014

By / Ragnar Nystøyl

Agenda

- Norwegian Production & Supply issues

- Global Production & Supply issues

- Market- & Price-related issues

Answering Your Questions

Norwegian Production Issues

Feed sales down on higher biomass ?

Change %

2008 2009 2010 2011 2012 2013 2014 13/14

January 63 800 71 200 69 200 71 000 101 600 93 000 109 900 18 %

February 54 600 58 000 56 400 55 800 86 100 60 200 90 500 50 %

March 57 100 54 100 61 900 61 000 88 000 59 700 85 100 43 %

April 59 300 65 700 62 700 62 300 87 400 67 400 89 800 33 %

May 76 200 87 100 89 300 101 700 102 600 95 300 110 200 16 %

June 97 500 120 300 117 800 122 100 130 200 130 300 146 900 13 %

July 130 000 159 200 153 800 167 300 181 900 196 500 193 400 -2 %

August 147 800 175 400 184 400 205 400 218 400 218 200 204 500 -6 %

September 157 000 172 500 178 500 212 600 203 000 218 100 208 700 -4 %

October 147 900 159 100 161 400 178 600 194 300 198 500 195 400 -2 %

Total 991 200 1 122 600 1 135 400 1 237 800 1 393 500 1 337 200 1 434 400 7 %

November 113 100 135 800 132 400 150 900 151 300 155 400

December 96 300 111 200 97 500 120 300 118 900 131 800

Year total 1 200 600 1 369 600 1 365 300 1 509 000 1 663 700 1 624 400Source: Fishfeed Producers Organisation (FPF/FHL). 18.11.2014

The statistics include sale of dry feed to farms and smolt plants in Norway for all species of fish. Kontali Analyse AS

has estimated the share that is used for salmon production in fish farms.

SALE OF DRY FEED IN TONNES

Norway; Relative Feeding

Atlantic Salmon

Seawater Temperatures

Seawater Temperatures

The Sealice Combat….

Number of feeding days per month - 30

Number of feeding days lost per «treatment» - 4-5

Percentage of sites treated / month - 7-8 %

Do the Math !!

MAB Capacity vs. Biomass

MAB Capacity vs. Biomass

Green Licenses

Cat. B

Green Licenses

Cat. A + C

6 % Temporary

Increase MAB

Est. 20 % of industry

buy & report

implementation of

5 %

Green Increase

Removal

Temporary

Increase

Biomass Status per end October

Atlantic Salmon - Norway

Estimated stock per 31.10.2014 Estimated stock per 31.10.2013 Number Avg. W Biomass

12 G S0 50 a 6,0 300 11 G S0 80 a 5,0 400

13 G S1 43 700 a 4,6 202 500 12 G S1 52 000 a 4,6 239 300 -16 % 1 % -15 %

S0 110 200 a 3,1 337 800 S0 102 200 a 2,9 296 700 8 % 6 % 14 %

14 G S1 148 100 a 1,1 167 000 13 G S1 143 600 a 1,1 158 400 3 % 2 % 5 %

S0 119 700 a 0,2 25 800 S0 113 600 a 0,2 23 100 5 % 6 % 12 %

Total stock (r.w .) 733 400 Total stock (r.w .) 717 900 2 %

Biomass - Atlantic Salmon - Norway Change in %

Seawater Temperatures

Bathing conditions – Outer Bergen harbour area

Week 46 – 2013:

10,4° CBathing conditions – Outer Bergen harbour area

Week 46 – 2014:

11,2° C

Can this indicate that were heading for a new warm winter ?

Answering Your Questions

Global Production Issues

Chile

2012 – 2014E + 210-215 000 tonn (+ 10 %)

Which regions are behind this growth ?

Chile: + 200 000 tonn

Norway: + 15 000 «

Faroe Islands: + 11 000 «

Scotland: + 5 000 «

North-America: - 25 000 «

Others: + 6 000 «

«Turnover on Biomass» - Chile

For generations second year in sea

Harvest of 13G in 2014/

Biomass 13G primo 2014

Development - Loss per Generation

Atlantic Salmon - Chile

Answering Your Questions

Market & Price Issues

Market growth during 2014

Considerable……

Chg. Volume(wfe) Chg in %

Q1 - 14 18 500 + 4 % 3 % 4 % -14 % 16 % 10 %

Q2 - 14 71 000 + 15 % 14 % 6 % -2 % 32 % 27 %

Q3 - 14 56 500 + 11 % 12 % 10 % 5 % 3 % 14 %

Q4 - 14 32 500 + 5 % 5 % 12 % -22 % -9 % 13 %

Q1 - 15 16 500 + 3,5 %

Q2 - 15 -8 000 -1,5 %

OTHERSGLOBAL MARKET GROWTH EU USA RUSSIA JAPAN

A man that goes by a new name in Chile..

Saint

Putin

Chilean Exports to Russia

Frozen whole Atlantic salmon

Increasing amounts of money involved…(Export revenues – All salmonids - Chile -> Russia)

June: 1600 tonnes exported

USD 5,99 / kilo

fx. July ~ 35

RUB 210 / kilo

September: 10 900 tonnes exported

USD 5,92 / kilo (- 1 %)

fx. October ~ 40

RUB 240 (+ 14 %)

Weak RUBLE

Purchasing Power ? - Solvency ?

Norwegian Export Distribution - Salmon

Effect from Russian Import Ban

Russia – Market Shares Atlantic Salmon

Development through Q2- Q4

* Domestic supply + Est. re-export from 3rd countries

Norwegian Export Distribution - Trout

Effect from Russian Import Ban

Norwegian EU-exports: + 11 %

….to France: - 9 %

Is the French Market really that weak?

-9 %

-5 %

Price development - 2014

Nasdaq Salmon Index (3-6)(weighted by real size split & weekly harvest)

Currency Development

A strong driver behind increased prices..EUR / NOK

USD / NOK

Scenario 50+ in 2015What happens with Supply and Market,

in order to see 50+ in a quarter

Is this a

possible

scenario ?

Yes….

Scenario 50+ in 2015Supply

- No warm winter in Norway

- Sealice resistance (Salmosan) - Chile – Yield down, feeding down and loss-rate up

- Production issues with sealice, PD and AGD persists….

Market / Demand

- Oil price increase, and RUB / USD to 40 or lower

- World relation to Russia stabilizes - 3rd country «trade-flow valves» - still open….

- No «3rd» EU-ressecion

- European Bird Flu situation escalates

Scenario 30- in 2015What happens with Supply and Market,

in order to see 30+ in a quarter

Is this a

possible

scenario ?

Perhaps..?

Scenario 30- in 2015Supply

- Warm winter in Norway

- Biomass being held back (till end March in Norway) -> High sealice levels + early

occurance of AGD from Agder to Trøndelag leads to excess harvesting Aug – Oct

- Turnover on biomass 14G - Chile -> «3x» or higher – Chile supply ‘15 ends at 580’

Market / Demand

- RUB / USD at 45 or higher – Demand for salmon is notably affected by high

- NOK / EUR back to 8,00 or lower, and NOK / USD at 6,10 or lower

- Payment issues Russia – Shipments from Chile and Fare Islands to Russia stop…

- Resssecion-like development in the EU market – Slows down demand

Cost development

Increased price may be needed…. (to keep margins unchanged…)

Major drivers:

- Currency for imported goods/services

- Cost of feed ingredients

- Cost of A) Combating fish health issues

B) Fulfilling to ever-stricter regulations

Fishmeal – Peru - Anchoveta – El Niño…

2015E

Qouta not fully

fished

Per date: Imarpe recommends 0-catch…

High juvenile share in trial-fisheries

El Niño effect

also into 2015..

Spring-quota

may also be

notably

reduced….

Peru - Anchoveta – El Niño…

Source: Weekly Newsletter OIL WORLD, ISTA, Hamburg, Germany

Fishmeal-price Peru, FAQ, fob

600

800

1000

1200

1400

1600

1800

2000

2200

2400

US

D/T

on

n

2014

2013

Week 45: 2 200 USD/Tonne

Week 45: 1 300 USD/Tonne

Source: Weekly Newsletter OIL WORLD, ISTA, Hamburg, Germany

Fishoil-price Peru, fob

1000

1200

1400

1600

1800

2000

2200

2400

2600

2800

US

D/T

on

n

2014

2013

Week 45: 2 300 USD/Tonne

Week 45: 1 850 USD/Tonne

combined with….

Feed price 2015

…..up by NOK 1,50 / kilo ??

Double effect on Feed price in Norway…

Final Comments….Short - Medium – Long term outlook…

Production constraints -> Into a larger degree lead to:

Supply growth not being able to keep pace with demand growth

Implications:

For the producer:

- Far less downside risk – Market wise

- Increased revenue potential – Finding & Adressing -best-paying markets

For the processor/distributor:

- Fiercer competition for raw material

- Between - and from new geographical markets

- From more – and new Product–segments / Utilizations

Thank you

&

Merry Christmas !!!

www.kontali.com