Oct. 31, 4.23 p.m. G.M.T.
Austevoll hit by tough oceanic conditions
“The first season this year was challenging due to oceanic conditions, such as hot water and rough sea,” said Britt Katherine Drivenes, CFO of Austevoll. “The fleet was only able to catch 1.7 million tons before the season closed, under quota.”
Austevoll's pelagic segment involves an operation in Peru, one of the largest producers of fish meal and fish oil in the world, which includes 21 fishing vessels, located in four different sites
However, Drivenes stated the company was in this business for the long term, and “would just have to face that from time to time there will be short term impacts due to oceanic conditions.”
In Chile, Austevoll has 9.1 percent of Chilean mackerel quota, and a small quota for anchovy and sardine.
It has faced a challenging time since 2008, partly due to unregulated fishing going 200 miles from the cost of Chile, though in 2012 they were able to get an agreement for management of TAC for horse mackerel.
“Horse mackerel biomass is under recovery,” Drivenes said. “Sustainable regulation of the biomass will slowly build up the biomass again.”
Production was affected by a large earthquake in Chile in 2010 leading to an agreement with another fish company to enter a joint venture and produce raw material from both quotas.
“We expect the quota to slowly recover,” she said.
-- Andrew Cumner-Price
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Oct. 31, 3.52 p.m. G.M.T.
Struggling to break the salmon investment case
The salmon industry is already an attractive investment, and the sector is only just getting going, according to Stein Alexander Aukner, analyst at DNB Markets.
“I don’t have to make a super case to make it attractive, companies are already achieving NOK 10 per kilo and will continue to do so and consumer demand is good,” he said.
So far the salmon industry has “had a fantastic run” and still has a long way to go to reach its full potential, said Aukner.
"I’m struggling to find something that will break this investment case,” he said. While there will be problems of disease and biological challenges, these are issues the sector will have to deal with, but will be overcome.”
“I am still very positive towards companies in this sector,” he said.
According to Aukner, seafood investment is a matter of evolution not revolution. The market is already ten times the size it was in the early 1990s and people are happily consuming more salmon volumes at higher prices. “The future is looking bright,” he said.
“These companies have solid balance sheets, valuations, positive, healthy cash flows and expect high dividends.”
-- Dominic Welling
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Oct. 31, 3.40 p.m. G.M.T.
Smoked salmon products 'in need of innovations'
Henning Beltestad, CEO of Leroy, described his company, who showed a turnover of NOK 11 billion last year, as a “total supplier of seafood."
The company has come off its “best second quarter ever," and will present its third quarter results within two weeks.
Beltestad stated the company had a focus on sustainability, and a fully integrated value chain, “controlling everything from egg to what is given to the consumer.”
Last year, Leroy invested heavily in three smolt facilities, Leory Midt, with a capacity 22 million smolt, Lakesefjord with a capacity of 11 million smolt, and Leroy Sjotroll with a capacity of 23 million smolt.
“We are self-sufficient in smolt,” he said, adding as it had an operation in each Norwegian region, Leroy did not need to transport smolt between each region.
Beltestad said the strategy was to be to be in “all the major seafood markets.”
The company is seeing huge potential in smoked products which, however, are “in need of innovations,” according to Beltestad.
Beltestad mentioned investments in new factories in France, Denmark, Norway and Spain, which are all up and running at the moment.
He also expressed pride in Leroy Sjomathuset, Norway’s largest processing and distribution center for fresh pre-packed seafood with a capacity of 10,000 metric tons, as well as Norway’s biggest producer of sushi.
-- Andrew Cumner-Price
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Oct. 31, 3.15 p.m. G.M.T.
Feed seems to be the place to invest
Investors on the panel at the IntraFish Investment Forum seemed unanimous the feed side of fish farming had the most attractive opportunities for investors.
With new developing aquaculture species and a large amount of ongoing research into alternatives to fish oil and fishmeal, “there are great opportunities here,” said Mike Velings of Aqua-Spark.
“We are looking at other species than salmon and shrimp – they are not fitting for our focus,” he said. Instead, the investment company is looking at tilapia, Asian sea bass, sea weed, and also the feed segment of industry.
“Even though the main feed players are big companies, if you look at alternatives for fishmeal, fish oil there are great opportunities there and smaller players emerging. Everything that helps the farmers to do better is interesting.”
Halvor Meyer Horten, senior associate at Bain Capital, agreed, saying sectors such as feed and companies “that solve the biggest challenges” are the most attractive.
“This could be health, finding sustainable raw materials, and feed is an interesting space,” he said.
“There are not many assets out there. If you go outside of salmon, the industry is less developed and more fragmented, so there are lots of opportunities."
Sectors such as equipment and the services sector are also appealing, said Sebastian Eiseler of Oaktree Capital Management.
“We have looked at various sectors adjacent to salmon farming,” he said. “The service sector, well boats for example, could present opportunities.”
-- Dominic Welling
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Oct. 31, 3.00 p.m. G.M.T.
Investors: Positive outlook for aquaculture
Sebastian Eiseler of Oaktree Capital Management said he saw a positive future for the aquaculture industry in the next 10 to 15 years.
“The industry and adjacent industries will see some solid healthy growth rates,” he said.
Halvor Meyer Horten, senior associate at Bain Capital, agreed.
“We’ll continue to see strong growth in salmon, and companies will continue to grow and become more professional. I also think other species will be catching up, going through the same growth salmon has.”
Aqua Spark’s Mike Veilings was succinct with his answer: “Growth, better fish health, alternatives to fish oil,” he said.
-- Andrew Cumner-Price
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Oct. 31, 2.45 p.m. G.M.T.
Mitsubishi/Cermaq deal: Surprising... but not that surprising
When asked for his reaction to Mitsubishi acquiring Cermaq, Sebastian Eiseler of Oaktree Capital Management, said he was taken by surprise, but added it should not have come as a shock that Japanese conglomerate Mitsubishi would want to strengthen its strategic foothold in the aquaculture sector.
Bain Capital Management’s Halvor Meyer Horten and Mike Veilings of Aqua Spark echoed his statements.
-- Andrew Cumner-Price
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Oct. 31, 2.35 p.m. G.M.T.
How high is the risk of investing in aquaculture?
Investing in aquaculture may be high risk but with the right expertise and help it is perfectly doable, according to Mike Velings, managing partner at Aqua-Spark.
“It is very risky – aquaculture is a difficult industry, it is very knowledge-intensive. There is different knowledge for everything, there are multiple species, and multiple segments,” he said.
“It is not easy to get it right but with right expertise and help, it is perfectly doable.”
Velings is looking for those companies a little further down the line than complete start-ups, which while risky should be able to mitigate risk very well over time.
“A lot of people want to get in,” said Velings. “Everybody is risk adverse but not afraid of risk as long as it is calculated.”
Sebastian Eiseler, from Oaktree Capital Management, said how much risk investors can tolerate is a function of both return and size.
“We’ve come across small scale projects such as an onshore salmon farming project in Switzerland, which sounds interesting but the strategy is just very high risk so we stay away from that.
“Also we stay away from the pharmaceutical side of fish farming. They tend to spend a lot on R&D and don’t know how product will turn out in the end. There are potentially huge returns but too risky.”
Halvor Meyer Horten, senior associate at Bain Capital, which recently acquired Ewos, said the company was more comfortable about taking risks whereby Bain was in control.
“We like to take risk when we can change something in a company, develop things, if it is something we have no control over, such as farming, that when we get nervous.”
“Although we have invested in farming, it is a situation where we thought we could turn it around and improve the company,” he said.
-- Dominic Welling
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Oct. 31, 2.30 p.m. G.M.T.
More public ownership expected in seafood
Only the larger farming companies are really big enough to go public at the moment, according to Sebastian Eiseler, VP at Oaktree Capital Management, but “I definitely expect more public ownership in the sector in the medium to long term.”
-- Dominic Welling
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Oct. 31, 2.15 p.m. G.M.T.
Fish farming entering 'new era of stability'
“There are a lot of lessons to be learned with what we have done with other companies, despite the differences,” said Halvor Meyer Horten, senior associate at Bain Capital.
“We’re not afraid of cyclical industries. When you invest in them you just need a sense of where you are in the cycle.”
“This industry has grown in size tremendously, and the public attention it has received in the last 5 years has been significant,” Aqua Spark’s Mike Veilings said.
“The consensus in the market is that this industry is entering a new era of stability.”
-- Andrew Cumner-Price
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Oct. 31, 2.00 p.m. G.M.T.
Investors: Early days, but potential for long-term growth
Halvor Meyer Horten, senior associate at Bain Capital, said the potential for long-term growth, due to an increasing demand for protein and fish being a natural source of it, was a major driver in Bain getting involved in the seafood sector.
“It’s still early days. It’s a fairly immature industry in many ways, and it’s a sector where we can take a long term perspective," he said.
Aqua Spark Managing Partner Mike Velings echoed his statement, adding on top of that, the company started to realize early there is very little investment early in the investment cycle.
“The challenges mentioned such as feed constitute great opportunities,” he said.
When asked how he assessed the risks of small scale projects, Velings said Aqua Spark tries to find species where risks are less of a problem and the industry is less of a risk.
“Salmon is hard for us, for salmon farming, to a degree for a lot of technology it is too early. This may change, but at the moment it is too early for us,” he said.
However, Oaktree Capital Management’s VP Sebastien Eiseler, said he believed there was significant value growth in the salmon farming sector.
“However, I do think where we stand at the moment, our current investment is less risky. The returns on capital we can achieve with these boats are equally attractive as being invested in salmon farming,” he said.
-- Andrew Cumner-Price
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Oct. 31, 1.45 p.m. G.M.T.
Nutreco shareholders will see 770% return with SHV deal
Shareholders who have been invested in Nutreco since the start in 1997, will receive a 770 percent return on their investment with the SHV deal, announced earlier this month.
On Oct. 20, privately held Dutch trading giant SHV submitted a conditional offer of €40 ($50) per share for feed producer Nutreco, valuing the company at €2.68 billion ($3.4 billion).
The offer would deliver long-term shareholders a return of of 770 percent on their investment if they had been invested since Nutreco was listed in 1997, said Knut Nesse, CEO of Nutreco.
Speaking at the IntraFish Investment Forum, Nesse, said; “It is important for us that SHV fully supports our long-term growth strategy. This is in the best interest for all stakeholders, that is our strong belief.”
SHV is a large and diverse company with revenues of €17.6 billion ($22 billion) in 2013.
The family company has fingers in a lot of pies such as energy, cash and carry, transport, engineering and also has a private equity arm. But it has never been invested in fish feed or nutrition before.
“It has nothing to do with feed, so why invest in Nutreco?” said Nesse. “They like to invest in businesses they believe in – it is strategic diversification.
“Fundamentally SHV believes in feeding the future, and this is the mission of Nutreco.”
Nesse said Nutreco’s strategy would remain the same despite the deal and the company would focus on existing commitments with regards to both suppliers and customers as well as developing new solutions.
“SHV has a track record of being a long term owner, so Skretting will have a truly long-term ownership structure.”
In 2013, Nutreco reported revenues of €5.2 ($6.5) billion and an EBITDA of €256 million ($320.2 million). Of this, €2 billion ($2.5 billion) of revenues and €131 million ($163.9 million) of EBITDA came from the fish feed division.
Around 10 percent of group operating profits are generated by Norway and full year 2014 EBITDA is set to be at least equal to last year, said Nesse.
-- Dominic Welling
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Oct. 31, 1.00 p.m. G.M.T.
Stingray: All (laser) science, no fiction in battle against sea lice
“These days there is more resistance to traditional solutions to health issues with fish,” Stingray Marine Solutions CEO John Breivik said. “We are technologists.”
Breivik called its optical delouse, The Stingray System, a “game changer,” born from the need to solve the sea lice problem from a technological approach.
The Stingray System uses a laser unit that detects sea lice in the pens, and shoots a very precise laser beam which kills sea lice.
“You probably think I’m crazy,” Breivik joked.
The system has two main components, the buoy which floats on the pen, and the laser unit.
“As the fish is swimming around in the pens, we have can position our selves horizontally or vertically, and we can rotate, making it possible for us to position ourselves where we need to be when the fish goes swimming by.
"We can delouse 24/7, a continuous and preventative method taking place in the pen. This looks a little bit like science fiction, but this is hardcore science and entrepreneurship," Breivik said.
Every sea louse shot is also caught on the documentation camera, pictures from which can be printed off or emailed.
“If we miss, the salmon is like a disco ball or mirror, and the laser will deflect off the salmon. We have had millions of shots and have not reported one incident with eye or skin injury.”
The Stingray decides in 7 milliseconds to shoot the fish.
Breivik believes going into 2015, optical delousing will surpass traditional methods. “In combination with “green methods” we can solve the sea lice problem,” he said.
-- Andrew Cumner-Price
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Oct. 31, 12.45 p.m. G.M.T.
Production data must be used more effectively
Companies need to get control of their aquaculture businesses, which they can do with a new app, according to Diogo Thomaz, CEO of Aquanetix.
With the Aquanetix application, businesses can improve farm operations, track productivity and collect real data in real time, he said.
"You can make it happen with a smart application on your mobile device," said Thomaz.
"You need real time aquaculture management. There are recurring issues, such as feed wasted, reports delayed, data lost, and it is hard to measure staff productivity, this application can help with that."
Aquaculture is growing, and becoming more and more relevant yet despite this there is a lot of inefficiency in aquaculture, said Thomaz.
"Insufficient and poorly used data leads to waste. Production data needs to be used as business intelligence to drive growth."
Thomaz said his company was currently looking for finance partners to help the company grow.
-- Dominic Welling
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Oct. 31, 12.30 p.m. G.M.T.
Ocean Harvest's cost effective 'bio-active Ocean Feed'
Patrick Martin, CEO of Ocean Harvest Technology, discussed the science behind Ocean Feed, the company's feed which utilizes “key elements of bio-active ingredients, including a patented formulation of 10 specific species of macro-algae to replace chemicals and synthetics,” which aims to combat health problems with fish.
According to Martin, Ocean Feed increases omega 3 in fish by 30 percent. “Ocean Feed salmon improves health in salmon and leads to a 2 percent gain in weight.
Ocean Feed shrimp also show higher weight gain, improved feed conversion ratio, and lower infection and mortality rates” Martin also discussed Ocean Support, an immune system stimulator which reduces effects of lice.
“Ocean support contains active PGEII blocking compound and neuro toxic compounds,” he said. “It regulates genes that make blood flow to the wound where the lice sits and affects other physiological responses and lice behavior.
“The mucus layer is stimulated, making it harder for lice to attach.” Ocean support results show sea lice reduced by 80 percent after 35 days, he said.
A total of seven formulas for Ocean Feed are now being commercialized globally.
Ocean Feed is currently at about 2,000 metric tons per month production, but Ocean Harvest hope to increase to 10,000 metric per month by 2018.
“The opening of the factory in Vietnam has allowed us to bring the products around the world, and we have relationships in China, Australia, Norway and the UK.”
Martin finished by claiming Ocean Feed was “another choice, one that is highly cost effective and beneficial to the animal and does no harm to the environment.”
-- Andrew Cumner-Price
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Oct. 31, 12:07 p.m. G.M.T.
ASC needs to grow in emerging markets
Despite growing momentum, the Aquaculture Stewardship Council (ASC) needs to grow its presence in emerging markets, according to Chris Ninnes, CEO of ASC.
The latest figures, up to Oct. 27, showed that 1,333 products in 40 plus countries are now ASC-certified. This adds up to 104 certified farms, said Ninnes.
In terms of farms, pangasius takes the lead with 50 farms certified or in the process of gaining the sustainability stamp, followed by salmon with 38, tilapia with 30, and shrimp with 21.
Ninnes said 558,000 products were engaged with ASC.
"These numbers are increasing on daily basis. We have our principle markets but the challenge is we need a presence in many more emerging markets," he said.
Here are the numbers as they stand:
-- Dominic Welling
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Oct. 31, 12.00 p.m. G.M.T.
Bakkafrost: Q3 was strong -- but we must improve efficiency
Bakkafrost’s CEO Regin Jacobsen claimed Q3 was a strong quarter for the Faroese salmon farmer, the in the region.
Profit after tax was the highest it had ever been in any quarter for the company, with Jacobsen saying the difference was between this time last year was the contracts with supermarkets being at a higher level.
Jacobsen stressed Bakkafrost was no longer as dependent on the European market. In the quarter, 35 percent of its produce went to Europe, 21 percent to the United States, 20 percent to Asia and 24 percent to eastern Europe.
And the company’s long-term strategy was to secure long-term contracts with supermarkets.
Jacobsen predicted in 2015 there would be a 3 percent increase in production.
For the future, Jacobsen said Bakkafrost would set sights on improving its efficiency.
“We’re now in the process of shutting down seven factories and building one new world class factory.
"We will also invest in increased feed capacity and increased farming capacity," he said.
-- Andrew Cumner-Price
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Oct. 31, 11.43 a.m. G.M.T.
Q3 a 'dreadful quarter for Cermaq'
The third quarter was a dreadful quarter for Cermaq, CEO Jon Hindar said. “It was kind of a perfect storm for Cermaq,” he said.
The salmon producer reported a loss of NOK 39 million (€4.6 million/$5.9 million) in the third quarter of 2014, compared with a positive EBIT of NOK 113 million (€13.5 million/$17.1 million) in the corresponding quarter of 2013.
Volumes sold in third quarter were 34,000 metric tons – 6,000 metric tons below estimates -- mainly due to effects of Russian import embargo and market timing.
The expected sales volume for 2014 is 151,000 metric tons.
But despite this, the company will continue to grow, it has already acquired two new licenses in Norway, and there are “more to come.”
Hindar said he is “much more hopeful for what is going to happen next year.”
In particular the upcoming coho season is looking “fantastic,” he said. “Costs are low, there are good volumes, it is probably the strongest it has been for sometime.”
He is also estimated sales in 2015 of 158,000 metric tons, which represent 5 percent organic volume growth in 2015 compared to 2014.
“The growth is mostly in Norway from the new green licenses. Limited increased global harvest indicates strong markets during the fourth quarter 2014 and 2015, stronger demand than supply.”
-- Dominic Welling
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Oct. 31, 11.30 a.m. G.M.T.
Cermaq - A roller coaster with a happy ending
The last 18 months have been a roller coaster for Cermaq, CEO Jon Hindar said, but there has been a happy ending with the Mitsubishi takeover.
“There is never a dull moment in this industry, and it is always hard to predict what will happen.”
Over the past 18 months, Cermaq almost acquired Peruvian fishmeal firm Copeinca, but this was then scuppered by Marine Harvest, who offered to acquire Cermaq if it dropped the idea.
Subsequently, the deal with Marine Harvest did not happen either, but all’s well that ends well, as Japanese giant Mitsubishi offered to take over Cermaq in September – a deal which has already been accepted by 92 percent of shareholders.
“I regret not being able to buy Copeinca, but it is what it is,” said Hindar. “We had to re-group try to make better farmer out of Cermaq and concentrate on what we were good at.”
The deal with Mitsubishi will add significant value to Cermaq, said Hindar. The company is “big in aquaculture and seafood” and also has some processing plants in Thailand and Vietnam which are of interest to the Cermaq.
But most importantly the Mitsubishi deal will help Cermaq strengthen its sales and distribution networks, an area which has always been a challenge, said Hindar, as the Japanese conglomerate already has an extensive sales network for salmon and seafood especially in Asia.
Mitsubishi will also add trading and processing volumes in Asia of 50,000 metric tons of salmon per year with its facilities.
“We will be able to develop the commercial part of the business through Mitsubishi’s sales networks and processing plants. But also Mitsubishi’s ability to sell more than one type of seafood, it is always easier to enter markets if you come with a package.
“I have high hopes that the downstream side of business will be substantially strengthened by Mitusbishi. Cermaq will be an even stronger player in the industry.
“It is a happy ending not only for shareholders but also our employees.”
-- Dominic Welling
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Oct. 31, 10.52 a.m. G.M.T.
Mitsubishi deal: A 'stamp of quality' for salmon
For the future, Marine Harvest CEO Aarskog said he could see more acquisitions taking place in the salmon industry.
Hindar said being owned by Mitsubishi granted access to processing facilities in Asia they hadn’t had before. “It is a stamp of quality that a large multinational has gotten involved in this industry,” he added.
Last year's near acquisition of Cermaq by Marine Harvest was also brought up, with the question asked as to whether anything like that could happen between the two producers in the future.
“I think the letter I received from Mitsubishi saying it wanted our company to prosper in Mitsubishi for the next 200 years answers your question,” Hindar said.
-- Andrew Cumner-Price
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Oct. 31, 10.45 a.m. G.M.T.
Sea lice -- the No. 1 problem of salmon
When discussing the future of the industry, biological problems such as sea lice were brought up, during the day's first panel on lessons learned form the salmon industry.
“Sea lice need to come under control,” Paine and Partner's John Binde -- former CEO of Norway Royal Salmon, said.
“It’s the No. 1 problem in the industry now.”
Cermaq's Jon Hindar agreed, adding the treatment of sea lice also leads to health problems with the fish.
“In Chile we must control sea lice and get rid of the SRS,” he urged.
Alf-Helge Aarskog, CEO of Marine Harvest, believed working together was the way to combat the problem.
“Fish health is about coordination. Maybe in five years we’ll be looking better,” he said.
Hindar also stated not enough research and development was put into fish health, saying the problems were “overwhelming."
When posed the question of what species could farmers diversify into, Binde mentioned bass was a possibility, but that it was wisest to stick with salmon for now.
“There are enough challenges in the salmon industry, I don’t see a lot of big players in the industry diversifying there.”
-- Andrew Cumner-Price
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Oct. 31, 10.41 a.m. G.M.T.
Influx of fish from Chile to Russia lower than expected
“We’re used to fluctuating market access with Russia. The reactions I think have been good if we look at the industry as a whole,” Cermaq's Jon Hindar said.
“The Norwegian Seafood Council has done well to create demand elsewhere. I think we did not see that much fish coming from Chile into Russia as people expected. The Russians aren’t willing to pay with cash up front, and Chileans aren’t willing to accept credit.”
-- Andrew Cumner-Price
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Oct. 31, 10.35 a.m. G.M.T.
Salmon is now a commodity
Jon Hindar, CEO at Cermaq, stated today’s salmon industry is more robust than in the past and supply had increased more previously though, which would go towards stopping escalating salmon prices from making salmon a luxury product.
“The volume coming out of Chile this year will be higher than people predicted, so that will have an effect in North America. We don’t see a similar decline in demand as to what there was a few years ago.”
“Demand has proven over the years to show such a strength and it is now a commodity, it’s available all over the world,” John Binde, operating director at Paine and Partners, added.
-- Andrew Cumner-Price
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Oct. 31, 10.32 a.m. G.M.T.
Feed is just the start for vertical integration
Following the company's recent move into fish feed, Marine Harvest's CEO Alf-Helge Aarskog, said this is a key area where salmon producers can differentiate themselves. It is also about cost savings.
"Feed is the largest cost component in salmon farming, and is an area where you can differentiate yourself from other producers. In many ways, salmon is what it eats. Fish feed is interesting when it comes to to fish health, growth and feed conversation rate.
"What you want is a feed conversion rate as low as possible, and if it improves the product you’re eating then I think it’s a good idea," he said.
Jon Hindar, CEO of Cermaq, said while Aarskog's arguments were valid, moving into feed would be a "huge logistics operation."
When Drew Cherry, editorial director at IntraFish Media, asked the panel what is next in terms of the way to go in terms of vertical integration, John Binde, operating director at Paine and Partners and formerly CEO of Norway Royal Salmon, said there were many opportunities.
"There are still so many things that we will see in the coming years that has not started. There are are whole sub sectors such as service companies and equipment companies, and there are a lot of opportunities there," he said.
-- Dominic Welling
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Oct. 31, 10.08 a.m. G.M.T.
The ‘Prada’ of seafood -- VAP is where the value is for shareholders
Alf-Helge Aarskog, CEO of Marine Harvest, believes value added processing is where the future is for salmon producers and investors.
“VAP is where the value is for shareholders,” he said. Marine Harvest is focusing on developing long-term contracts and growing its presence in Asia.
In emerging markets such as Asia, the key is to create a successful brand and develop the “Prada of seafood.”
“We are looking at development in Asia to grow volume we need good products, we need to go into branding, and traceability. We need to create a good story, to build a brand,” he said.
According to Aarskog, it is better to grow as a brand in Asia, where they trust quality, and it is not about private labels such as in Europe.
-- Dominic Welling
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Oct. 31, 9.52 a.m. G.M.T.
Fish farming a risk management game
"Can we produce food in the ocean – the fact is we’re not very successful," said Alf-Helge Aarskog, CEO of Marine Harvest. Currently only 2 percent of food production comes from the ocean.
"But the question is should we?" he asked.
In his speech, Aarskog outlined the pros and cons to farming salmon, “the way we think needs to change, there needs to be a blue revolution.
“But there is a lot more to do in developing and promoting new products,” he added.
Salmon farming saw strong global harvest growth between 1996 and 2005, with a CAGR of 9.6 percent, but “biological carrying capacity diminishes growth,” he said. This growth is expected to taper off to a CAGR of 2.9 percent between 2014 and 2020.
The problem is fish farming inherently brings risks, said Aarskog, in particular with disease, but there are different problems, across the global industry.
Having good biology of salmon farming is more important for the financial future of the company than full utilization of capacity, said Aarskog.
"There is a need for growth, but you have got to get control of the biological challenges first. There are issues and those we need to solve, in particular with different diseases in the different regions," he said.
"But not all the regions will go down at the same time. This is why we focus on geographic diversification, and will try to be number one in all regions,” said Aarskog.
In terms of growing in Norway, the Marine Harvest CEO believes the problem with sea lice needs to be solved first.
Aarskog is expecting limited supply growth in the coming periods and futures salmon prices to be around NOK 40 for rest of Q4 and above NOK 40 for 2015.
Overall the company has a strong focus on containing biological costs and a continued focus on consolidation initiatives in Norway and Chile.
"First of all we need to ensure we have really, really good operations," he said. “It is not all about volume but quality of operations.”
“We have changed our production strategy in Chile and have ample spare capacity,” he said.
The company is expecting to produce around 66,000 metric tons in Chile in 2014, down from 90,000 metric tons in 2007.
-- Dominic Welling
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Oct. 31, 9.45 a.m. G.M.T.
Few economies manage the transition from middle income to rich country
DNB's Oystein Dorum took to the stage to discuss the global economic outlook.
“Growth,” he said, “equals more food, and the richer the country, the more calories and more expensive calories it eats.”
In a broad outlook at the economy, he said there was modest growth, but stated growth in the advanced half of the world was on the decline.
“2010 was a good year for growth, but various factors lead to a decline going into 2013. We’ve been expecting an upturn but have been continuously disappointed.”
However, he said growth rates in the emerging half of the world were higher.
“The world is getting more globalized, and we’re trading more and more with each other.” Dorum said many advanced countries hadn’t yet gotten back to where they were before the financial crisis, economically.
However, he mentioned underlying growth was relatively healthy, something he said was not mentioned in papers.
“Globalization will continue,” he said, “but trade was hit severely by the great recession of 08/09.”
He warned one of the risks faced in the future was the "middle income trap. Very few economies manage the transition from a middle income country to a high income country.”
He closed by discussing the Russia-Ukriane situation, saying it was most likely the reason for the lack of investment in Europe.
Dorum predicted Russia’s GDP to decline next year, saying sanctions against Russia would prevent them from developing sectors of its economy.
-- Andrew Cumner-Price
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Oct. 31, 9.00 a.m. G.M.T.
Many more investments to come
IntraFish's Pal Korneliussen started the day, discussing the seafood’s industry’s prospects.
“Demand for protein is soaring, and the health benefits for seafood are now widely recognized. Good fishery management and sustainability is now common place, and seen in all big companies,” he said.
Korneliussen stated aquaculture was the fastest growing food industry in the world, with volume produced doubling in the last decade.
Subsequently the focus today would be on salmon farming, he said. He finished by mentioning that we had seen some huge transactions recently, but predicted there would be a lot more to come.
-- Andrew Cumner-Price
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Oct. 31, 8.00 a.m. G.M.T
Seafood and the investment community head to London
Seafood leaders and the investment community are at Grosvenor House in London this Friday to explore opportunities for investment in the global seafood industry.
The IntraFish Investor Forum returns once again to one of the world's largest financial capitals, bringing together seafood industry leaders and investment heavy-weights to discuss the sector's most pressing issues.
This year, in the midst of even more deals and M&As than ever before, the industry has a lot of potential investors wanting to hear more about the prospect of investing money into aquaculture, fisheries and seafood.
The keynote speaker for the eighth investor forum will be Oystein Dorum, chief economist of DnB, Norway's largest lender.
Feed producer Nutreco, which earlier this month announced Dutch trading giant SHV is all set to submit a conditional offer of €2.68 billion ($3.4 billion) for 100 percent of its shares, will take the stage to discuss its business outlook.
In addition, the audience will hear individual company presentations from Marine Harvest, Cermaq, Leroy, Austevoll, Bakkafrost and AquaSpark.
Check back here for coverage from all the different speakers and panel discussions.
-- IntraFish Media
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