Good morning and welcome to the presentation of the Q4 2020 for Baccarat's financial numbers. First, we will have a look at the summary of the 4th quarter, Then we will go through market and sales, some segment information. Then Hakan Jakobsen, CFO, will take us through financial and DSG. And then finally, I will look at the outlook for the company and the sector as a whole. In the Q4, Baccarfrost harvested in the Faroe Islands 15,957 tons of salmon compared with 17,930 tons last year.
In Scotland, we harvested 9,305 tons compared with 7,925 tons. The feed sale in the quarter were 30,885 tons compared with 28,398 tons the quarter the year before. The raw material sourcing were 71,887 tonne compared with 35,180 tonne. So in general, there was in defeat and increase of operations and in the farming slight reduction. The FEED itself was slightly up as well.
The revenues were DKK 1,183,000,000 compared with DKK 1,605,000,000 in the Q4 2019. The operational EBIT were DKK 89,000,000 compared with DKK415,000,000 the year before. The cash flow from operations amounted to minus €107,000,000 compared with minus €150,000,000 Bakaros had positive operational EBIT for the Faroe segments, but negative for the Scottish segments. The Board of Directors will propose a dividend of DKK 3.65 per share for 2020 at the Annual General Meeting that's upcoming. If you go to the summary of the quarter, The operational EBIT for the full year was NOK 621,000,000 compared with NOK 1,300,000,000 25 for the full year 2019.
For the quarter, €89,000,000 compared with €415,000,000 If you look at the margin, for the full year, the margin is 13.2% compared 29%. And if you look at the farming operation, The margin came down from 25% to 12.69% for the full year. And when we do the combined Faroes operation in Farming and WAP, the margin came down from 27% to 16.65% for the full year. If you look at the quarterly margins in the Faroe Islands from 28 to 13 or 12.92, that is Norwegian kroner per kilo. And in Scotland from NOK 309 down to minus NOK8.41 Norwegian kroner per kilo.
The VAP contributed purely with a margin on 1705 compared with NOK 11.72 per kilo. The FAF segment had a margin of 13.4% compared with 17.1% 1 year earlier. If you go to the market and sales, We see that in the Q4, in general, there is a huge increase of sales to Europe. For the company as a whole, the increase is from 59% the year before to 74% this quarter. And if you look at the Faroeys operation, the sales goes from 49% of the revenues up to 59% to the Western European market.
North America is normally also strong market for us. The combined sales in The Q4 for the Group was 14%, for the Faroe Islands 20% compared with 23% the year before, slightly down. Asia had the biggest drop from the on the Faroe's operation from 22% to 8%. And for the combined sales from 15% down to 5%, so that's a huge drop and the quarter. For the full year, we see also a big drop from 21% to 7% or for the Faroe's operation from 23% to 12%.
There is Increased sale in Eastern Europe again for the Faroeys operation 12% of the sales in the quarter compared with 12% the year before as well, so it's steady. Year to date or for the full year it was 8% compared with 9% year before, more or less on the same level. If you look at the fresh sales purely, we see that the majority of the sales is to Western Europe, but more or less this is from Faroe Islands and 32% is to North America. So those two markets are very important for the fresh sales from Faroes. From Scotland, we see that the majority of the fresh sales is to Western Europe and that is EU and UK combined.
We see also increased BAP proportion of the sales in the 4th quarter, 43% compared with 24% the year before. And for the full year, 47% of the VAP of 47% of the volume was sold through VAP, so value added products. On the next page, we have an overview on the global markets, the summer price. We see that in the Q4 summer price stayed quite low. Actually, the starting point in the Q4 2020 was more or less the same as the starting point the year before, but there was a very big difference in the development.
There were more or less no Christmas sales or at least in the prices this year. Last year, we saw a huge increase in prices, but not this year. So on average, the price dropped NOK 14 per kilo in the quarter compared with the year before, NOK 58.28 the year before down to 44.23 in this quarter. Quarter on quarter, we see also a drop on 4 point 2,000,000 from the 3rd quarter into the 4th quarter. So the prices were low.
But as we see on the graph below, there was a huge increase in the harvest, 11% more salmon sold in the 4th quarter 2020 compared with the year before. So that's a huge volume increase in a difficult market. On the next page, there's an overview on the origin of the salmon in the quarter. We see a big increase both from from Norway and Chile, which are the main suppliers. A global increase on 11%.
Europe has an increase of 9%. Americas grew 16%, where of the majority of that is of course from Chile. I can say about the average weight of the fish that Norway had an average weight of 4.3 or 4.27 which is more or less the same as the year before. The feed sales in Norway increased 16% in the quarter. In Scotland, the average weight was 4.4, which is from up from 4.3 last year.
The feed quantity is 10% also up in the quarter. The Faroe Islands, the average weight is 5.4 compared with 5.8 the year before. And the feed sales in Faroes was also 10% up. In Chile, the average weight was 5.3 big fish in Chile compared with 4.7 year before. And feed sales in Chile was 9% down compared with the year before.
If you go to the markets, There is much more fish sold in the quarter, a record high volume in the single quarter, 10% up. But there's a big variation, especially China is taking the dip. EU combined with UK grew 13%. The U. S.
Market grew 10%, Greater China dropped 39% and Latin America grew 20%. If you look at the full year, we see similar development, but China is dropping significantly. So the Chinese market contracted from 134,000 tonnes in 2019 to 102,000 tonnes in 2020. Everyone knows that the main reason in 2020 is the COVID-nineteen development and That has been very difficult. We saw the first wave hitting us in the first and second quarter and the second wave in the 3rd and fourth quarter.
It seems to be a more optimistic scenario in 2021 where we see good opportunities for the vaccine to make a significant game changer in 2021 compared with last year. So we see that the people are also Optimistic when there is a reward of the situation that they are going out to eat. And we expect that with a lot of new customers in the market, this will be a positive scenario for the summer market. When we look at the supply picture in the global supply picture in Salmon, we see a stable Growth around 8% during 2021 from Europe, around 8% in the Q1, slightly up in the second and then down again in the 3rd 4th. So more or less stable scenario in Europe.
In Americas, it's completely different. We are coming from an increase of 15% in the 4th quarter, dropping down to a level of for minus 5% in the 1st and second quarter and then further down to minus 12%, around 12% in the 3rd Q4. Combined, this means that the harvest volume In the second half of the year will be more or less no growth. There are some inventories around. We believe that majority of those will be sold in the first half of the year.
And therefore, we foresee
a big
gap on the supply side later in the year. Going to the segments. Our harvested volumes in the Faroe Islands dropped 11% from 17,930 tons down to 15,957. This is 41% from the north area, 44% from the West and 16% from the South. In the North, the fish came from And Kvaernerso Nord at around 5.6, 5.7 kilos in average.
In West, The fish came from Gotowoek, an average weight of around 5.1. And the south from Froba, an average weight of 6.6 kilo, very big fish from the south. The cost of the Faroes operation came slightly down to around DKK 20 per kilo whole fish at Penn site, Danish kroner versus 18.33 in the Q4 2019. In Scotland, volumes increased from 7,925 to 9,305, fifty-fifty from the north and south region. The average weight around 3.7.
The largest fish in the south was from East Harbert, 4.5 kilos. In the north, The largest fish was from West Strom with an average weight of 4.8 kilos hog. The cost of the farming in Scotland was flat from the 3rd quarter to the 4th, slightly down from last year. This year, it came out at 4.5 pound sterling per kilo fish. So the overall average weight in Faroes was 5.4 and in Scotland 3.7.
We transferred the €5,500,000 smalt in the 4th quarter compared with €5,000,000 the year before. And in Scotland, euros 3,900,000 compared with €5,700,000 The average weight of Smalls and Faroes increased up to 3.43 gram compared with 196 gram the year before. So a significant increase of small weights in Faroes. This development will continue in 2021 and also in 2022 where we hope to reach 500 grams. In Scotland, there is no lift of small weights yet, But this is expected gradually to come, hopefully from next year and then of course further increase later.
96 gram this year or in this quarter. The average temperature in the water was slightly up in the 4th quarter, 8.9 degrees Celsius. The farming revenues amounted to €609,000,000 and the operational EBIT from the farming the pure farming margin was €63,000,000 compared with €338,000,000 so a 10% margin compared with €36,000,000 the year before. Of course, the big driver here is the summer price, which came in all time low. I believe the price has not been at this level since 2015.
So that is the main driver both in Faroe Islands and in Scotland. Compared to Faroe Islands, Scotland has a lower operational EBIT and margin, mainly due to higher costs and the lower productivity, which we hope to change over the coming years. On the next page, there is an overview of operational EBIT per kilo, which came down from 25.49 to 5.66 in this quarter. So a drop on NOK19.84 per kilo in Faroe Islands. And in Scotland from 309 down to minus 8.41.
And the spread of The EBIT in Faroes is north at 8.81, west at 2.43, south at 6.51 and in Scotland minus 8.41. One of the drivers for the increased cost is also transportation, especially intercontinental transport cost. This development has however been slightly positive over the last quarter and we expect this drop off cost to continue during 2021. If you go to the value added operation, the volumes increased from 4,200 19 tons up to 6,790. 2020 was the year so far with highest activity in WAP.
And the margin increased from 15% in the Q4 2019 to 28% in this quarter. The revenue increased from NOK249,000,000 to NOK287,000,000 and the operational EBIT from NOK37,000,000 to NOK80,000,000 And per kilo, there is an increase from 11.72 to 17.05 on the volumes that went through this segment. The percentage of volumes that went through this segment increased from 24% up to 43% in this quarter. If you look at fish milled, oil and feed, the EBITDA drops from NOK58,000,000 to 48,000,000 kroner. That is a big increase of inventories on around 17,000 tons, which is due to the situation with certification of Blue I think.
The EBITDA margin dropped from 17% to 13% and the external fish meal sold dropped significantly from 4,100 down to 1500 tons and the sourcing of raw material was good, 71,800 compared with 35,000 the year before. So all in all, for the full year, we were slightly above the sourcing volume compared with the year before. The raw materials for fish feed are mainly fish meal and oil, which are important for the cost of our operations as feed is half of the farming cost. In the Q4, we see a slight increase on fish meal price and a drop of fish oil price, which means that we expect more or less stable development in the first quarter on prices. And now Hakne will take us through the financial and the ESG numbers.
Thank you, Rein. The operational operating revenue in this This quarter was significantly lower than the same quarter last year and amounted to 1,000,000,001 SEK183,000,000 down from SEK1,605,000,000 in the same quarter last year. Operational EBIT dropped from SEK450,000,000 in Q4 last year to SEK 89,000,000 in this quarter. Fair value adjustments were minus $22,000,000 The main reason is changes in the harvest profile of the biomass at sea. Revenue tax was reduced to minus SEK 2,000,000 And this clearly also shows the effect of the downside protection that's built into the revenue tax scheme here in the Faroes where tax rates can Can vary from 5% if the salmon price is high to 0.5% if the salmon price is low.
So that's the reason why the revenue tax is lower. Taxes in This quarter were minus SEK78 1,000,000 and the profit after tax minus SEK 38 SEK 1,000,000 down from SEK 220,000,000 in the same quarter last year. And if we We see and move on to the next slide here. We can see that there is this year 2020 has been Very different from the years before. If we look at the operational EBIT, it has been falling throughout the quarters.
At clear consequence of the COVID pandemic. So we end up with our combined Our total operational EBIT of NOK 622,000,000 in 2020 and adjusted earnings per share of 6.20. If we look at the balance sheet, Intangible assets were roughly SEK 4,500,000,000 by the end of this quarter. Property, plant and equipment increased with SEK440,000,000 and amounted to SEK4.2 by the end of this quarter. Biological assets up SEK215,000,000 amount to SEK 2,170,000,000 and inventory increased Significantly from NOK549,000,000 by the end of 2019, an increase with NOK 227,000,000 to NOK766,000,000 by the end of Q4.
I will come back to inventories in a moment. Receivables dropped from SEK626,000,000 to SEK 490,000,000 And the cash equivalent were significantly lower than in Q4, 2019 and amount to SEK467,000,000 in this quarter. However, it's important to bear in mind that by the end of the Q4 last year, we had Recently issued new shares, the repair issue that we did in December. So that's part of the explanation why we had a significantly higher number in Q4 2019. Equity ratio by the end of this quarter was 66%.
And back to the inventories. As mentioned, inventory increased by NOK 227,000,000 during 2020 NOK 227,000,000. And in the 4th quarter alone, the increase is NOK 100 and SEK 62,000,000 And then majority of that comes from the fishmeal, oil and feed segment, which has increased inventories by €150,000,000 during 2020 and SEK 122,000,000 in this quarter alone. The VIP segment has also increased inventories in The full year 2020 by SEK 65,000,000 and in the 4th quarter alone by SEK 42,000,000. And it's perhaps worth noting that volumes are one of the drivers in both segments.
We have increased volumes in inventory. And also worth noting that the average cost price of our inventories has decreased during Q4 as well as during 2020. A short glimpse at the cash flow. Cash flow in this quarter was minus SEK 107,000,000 compared to minus SEK150 1,000,000 in the same quarter last year. And cash flow from investments significantly lower than in Q4 last year and now amounted to minus SEK 343,000,000 Again, this has to do the large number last in Q4 2019 has to do with the acquisition of the Scottish Shaman Company.
And the same goes for the cash flow from financing, which was Also unusually high in Q4 2019 amounting to SEK2.6 billion then. And in this quarter cash flow from financing was SEK 471,000,000. Cash by the end of the period also looks to have dropped significantly from SEK 1,300,000,000 to SEK 4.60 SEK 7,000,000 and that's also part of the same explanation with acquisition of the Scottish Schallmann Company and The increased issuing the new shares that we did in December last year. We left the 3rd quarter with a net interest bearing debt of SEK 1,257,000,000. And during the 4th quarter, we Have made net investments amounting to SEK 343,000,000 and paid taxes amounted to SEK189,000,000.
Working capital has increased by SEK 118,000,000 and operating activities has brought down the net interest bearing debt by SEK 154,000,000. So that leaves us by the end of the Q4 of 2020 with a net interest bearing debt of SEK 1,753,000,000. Our bank facilities are unchanged. So we still have EUR 4.63 €1,000,000 in total in bank facilities. And we have undrawn facilities amounting to 1,000,000 EUR677,000,000 And in addition to that, we have access to an accordion option of EUR 150 €1,000,000 A short update on ESG in this quarter in relation to our healthy living plan and the 5 pillars that we have in healthy plan of the business, salmon, communities, people and environment.
In the Q4, we were Pleased to be announced as one of the top 3 producer of sustainable protein by the Colorfair 2020 Protein Producer Index. And we're one of only 3 companies on that list to be ranked as low risk for investors. We also had a huge celebration internally here in Baccafrost when we were Well, when we got our last farming site in the Faroes, ASE certified, so that we 100 percent AC certification in the Faroes. And in our healthy communities, we have continued Contributing to local communities. And so far in 2020, we have contributed with around SEK3,500,000.
Of course during the pandemic, The health of our employees has been very much in focus. So we decided to also give all of our employees in the Faroes access to free influenza vaccines in this quarter. And in regards to our healthy environment, We are pleased to see that our biogas plant, FERKA, is now ramping up the production. And during the Q4, we have delivered 1.4 Megawatt Hours of Electricity to the national grid and 0.9 Megawatt hours of district heating, which is delivered to the citizens of Thor's hand. The energy production, the green energy production of FERCA in the Q4 corresponds to 355,000 liters of fuel oil, which is now saved.
And a quick math in my head that would correspond to approximately 100 tonne of saved CO2. So that's very pleasing to see that we are increasing the activity in the biogas plant. And I will leave it over to you, Rein.
And our next Healthy Living report will be shared shortly when we call into the Annual General Meeting. The market in 2020 had a global harvest increase in the Q4 of 10 point 8%. In January alone, I saw that in Norway, 25% more volume was harvested. We expect a 4% global harvest increase in the Q4. And During the year, for the whole year, for the full year, we expect 2% to 3% global harvest increase.
There are some inventories that will be sold. So that means that the supply increase is more likely to be around 5% to 6%. That will especially be in the first half of the year. So all in all, we expect a tight market, especially in the second half of the year. The biggest driver and game changer will of course when restrictions will be lifted and the people will be allowed to go back to some kind of a new normal.
In the Faroe Islands, we expect to harvest Around 66,000 tonnes in this year, which is around 4,000 tonne higher than previously guided. And in Scotland, we expect to harvest around 40,000 tons, which is around 4,000 tons around 4,000 tons lower than previously guided. In the Faroe Islands, we see Very big impact on the big smalls and some of the fish that we have released over the last 3 months that was were not released
at the
previous quarterly presentation will already be harvested before the end of this year. So this is a new world that is coming. Some of the fish staying less than 12 months in the sea. We expect to release around 14,500,000 this year and at an average weight of around 400 gram. In Scotland, we expect to transfer around 11,000,000 smalt this year.
On the contracts, We have signed around 28% of the total volume for the year at the contracts. And that price is more or less in line with previous contracts. Our strategy is to allocate around 40% of expected harvested volumes at commitments and contracts at any time. We expect FEED sales to be around 120,000 tonnes this year. We expect slightly lower volumes in fish meal and oil than last year.
On the business development, our focus is on developing the sustainable growth program. And we are in that extent, we are going to have the Capital Market Day. We have postponed this slightly, so we hope to see a lot of people here in the Faroes and we think it's more likely that would happen when we have delayed it into the 14th 15th September instead of June as previously guided. And at that event, we are going to go through the next 5 year investment plan and growth program both in Faroe Islands and Scotland. For the period 2020 to 2022, we have previously guided €1,800,000,000 investments in the Faroe Islands And we have also guided our investment level of around DKK 350,000,000 to DKK 400,000,000 per year in Scotland.
We will come much more into that on the Capital Market Day. However, I have some updates On this presentation about the land based farming, which I call it, this is larger malls. We have already in Glyburadeller and Northofte signed contracts and have actually starting building process of these 2 hatcheries, which will in Liberadeler have a capacity of 1900 tons, which could be for example 3,800,000 small cells at 500 gram and the north of there 2,800 tons which will be around €5,300,000 is €500,000 So the strong side is now in full operation. It's Ton unrelated apartments, building of 3 20 meters by 80, so it's a huge construction, now in full operation. And we see very good development of the large malt.
As mentioned earlier, some of them are harvested within 10 to 11 months. In Applecross, we expect this operation to be in full operation in 2023, delivering 2,800 tons, which in the beginning as we are scaling up in Scotland, We hope to reach 11,000,000 smalt at this site at 250 gram and then at a later point, we will go up to 500 gram. So we will come back to that much more in detail at the Capital Market Day. In Scotland, we have appointed Ian Laister as new Managing Director as of 1st March. And the Board of Directors in Baccarforest will take over or will step in there.
In Scotland, we will Roll out fresh approach program where we will focus very much on simplification, people and systems. We will focus on strengthening our operations with best practice, focus on cost control. We will also focus on growth. Of course, the sustainable growth program will be rolled out over the next 4 years. So that will be much more about that in on the Capital Market Day.
So that's all from me now. If there are any questions, I am pleased to take these. Yes, please go ahead.
Good morning. Rejens Karlveld from Pareto. Just a Quick question on the volume potential beyond 2021. I think you have previously guided something like 16,000,000 smolts At 500 grams in 2022, is it not and this is in the ferroil, is it natural to assume that this is Probably will come a bit later given what you said about these small facilities in the end here and that 2023 maybe is more, Let's say, likely year for that highest multi release number and that 2022 would be more like 2021.
We have not yet seen The full effects of the Strand facility, so there will be an ongoing increase of the small size as mentioned in 2021, 2022. This year we hope to reach 400 gram and next year we hope to reach 100 gram. And that means that the production time in the sea will be reduced. We have so that means that in 2022, the size will be larger and we will see the full effect of the smalls and that will have an impact on both on 2022 and 2023. So there will be a gradual increase of volumes over the next coming years.
And we have earlier mentioned a goal of or 76,000 tons in 2020. 2020. 2020. 2020. 2020 3.
So we are I think we are still on track to reach the goal that we put out in 2019 on our Capital Market Day. So those plans are still I think quite good.
Okay, thanks. And then of course short one on the price achievements in Q4. Is it natural to assume that, that has been more in line with the Norwegian spot price, at least compared to the margin you have and what you said about cost? That seems like a fair assumption.
Yes. I believe that BAKER FRUST also with high proportion of intercontinental transport cost. So our margin has reduced or our premium has reduced significantly on that account. Thanks. Very good.
That was yes, please go ahead.
Hi, good morning. Lars from Carnegie in Oslo. Could you maybe say something about The split of volumes over 2021, maybe especially with regard to the fact that biomass I see is up 5%, 6% or so, if I remember correctly.
It will be back end loaded. So that means that we will have significantly higher share of the volume in the second half of the year. I think just from the top of my head that we are In the Faroe Islands, we have something like 40 expected around 40 1,000 to 43,000 tonne in the second half of the year.
Okay, thank you. That's very helpful.
Yes, there is another one. Please go ahead.
Yeah, good morning. This is Martin Karlan from ABG Sundal Collier. You mentioned that you also see risk of biological challenges in Scotland in the second half Of the year until you see effect of the larger smalt. But do you continue to expect a significant cost improvement in Scotland In 2021 compared to 2020? Or is that now more uncertain given the challenges you now have seen in the second half
Of 2020.
Yes. We see that The risk is higher in the second half of the year and in the first half of the year. That has apparently been so for a very long time. 2020 was extraordinary difficult year. You remember the flooding and the big rain and the bad weather situation by the end of August.
So we are now taking some precaution to avoid some of the risk and to minimize some of the risks that we have seen this year. So we are at least more focused on them. We have also implemented more freshwater bath capacity, which will be very much focused on this incidence, especially with the gill health of the fish. So we expect that this risk will come slightly down. The full protection or The bigger protection will be with a large or small that will come in some years, which will be a game changer to our business in Scotland.
But with the precaution that we take now, with the measures that we take, we expect to take the risk down compared with last year. Okay. Any other question?
Christian Nordby from Kepler Cheuvreux. I have a question regarding contract share. And you say that you have around, I think, 28% was it for 2021, is that pretty evenly distributed between Scotland and the Faroes? Or is it Very Faroe tilted or and how has been how has the negotiations been so far?
That is more or less even split between Paris and Scotland. And that's mainly rolling over of existing contracts.
Thank
you. Any other question? No. Thank you very much.