Okay, we are getting close to 10 o'clock, so we will start our Q3 webcast. Just to start off with, if anybody has any questions during our presentation, please, write them in the Q&A chat, and we will address them at the end of the presentation. First of all, welcome to our Q&A presentation. My name is Christian Riber, and I am CEO of Norcod, alongside with my colleagues.
Hi, good morning. My name is Kia Zadegan, the CFO of Norcod, and I'm looking forward to presenting our financials to the attendees.
The agenda for today, we'll start with a short introduction of Norcod and our company in general. We will go through some of our Q3 highlights on a more company-based organization. After that, Kia will go through our Q3 financial. Also, Kia will present a short overview of how our fiscal year is compared to our production cycle. At the end, we'll address what we're looking forward to in the coming months. We'll end with a Q&A session. Norcod, when we started almost four years ago now creating Norcod, we set out a very firm business plan on how to achieve our first production cycle, and that's what we have achieved now.
Where we are today, we are the first company in the world to deliver fresh cod on a regular basis on an industrial scale. We started our first harvest here in August in Q3 with deliveries to the European and North American markets with good success. Also what we've done from the beginning, we've created our full value chain from fry to finished product. We've done it through partnerships and our own main operation in the sea operation. Today, we're operating just over 10,000 tons of farming licenses, and we are a GLOBALG.A.P.-certified cod producer. A short overview of where we are operating today along the Norwegian coast. We started out at Finnangerøya, close to Namsos, where we had our pilot project.
We set out the fish in January 2020, and that's the first site we just completed harvesting. From October, we started harvesting our main site for the first cycle down at Jamnungen in Frøya. We set out in the summer 2020, we set out 1.6 million fish, and that's the fish we're harvesting at the moment. From the pilot project, even though the main feeding method was by cannon and hand, we've still seen great biological results that we'll address later. We still have a clear expectation and can see the numbers from Jamnungen that implementing our feed barges both at Jamnungen and at Frosvika now, we are seeing even better biological results. We have great expectations for that.
As you can also see, we have our most northern site up at Meløy in Nordland, Frosvika. We set out 1.6 million fish this summer again, the same volume as Jamnungen, and everything has gone to plan. Next month, we're implementing our new feed barge, which will be operating with underwater feeding, which we have very high expectations to. It's very good for the feed because it's waterborne instead of airborne, and also it's very good because we will have less microplastics operating with water instead of air, so very high expectation for that.
We also expect to see a more stable production as we will be feeding the fish at 8-10 m depth, so we'll be less vulnerable to strong currents and hard weather. That's very positive. Last but not least, we have our two sites down at Frøya that we call Måsstraumen. That's the Skogstua and Poltjå. At the same time at Frosvika, we set out 800,000 fish this summer. Frosvika combined with Måsstraumen will be the volume we'll be harvesting in our second cycle. Many people have asked us, how does the cod farming site actually look like? We thought it was very convenient just to show a video from our site.
This is Jamnungen down at Frøya, where we are harvesting at the moment. We set out 1.6 million fish last summer. As you can see, it's a fantastic area. We've implemented our hybrid feed barge. We've had the newest pens and technology on that site, so our production will be as sustainable as possible. So far, as already mentioned, we've seen great biological and harvest results. That's how a Norcod farming site looks like. We have 200,000 fish per ring. Some of the highlights from Q3. What we're very proud to say during this quarter is that we've actually had proof of our concept.
We've taken fish from when the eggs hatch, the very small fry, to a full size that can be delivered to the market. We really showed that the cod farming is possible. We showed that the full cycle is very interesting both biology-wise, but even more also product-wise. As already mentioned, we've started our first commercial harvest. We'll be delivering our product to the markets throughout the whole of 2021, and we'll be ending our first cycle in March 2022. Even more interesting, we've achieved creating a new market for our farmed cod. It's a new product in the market. It's a new category. But the
How the product has been received and the customer reviews have been absolutely fantastic, so we're very positive and confident about the product and the market. On the biology side of things, we've seen the same thing as we've seen through our whole cycle here the first round. We've had good growth on the fish. We've had very good feed conversion rates. As mentioned in our report, we have a feed conversion ratio at 1.01, which is much better than we budgeted and expected. So that means that we're using 1.01 kilo of feed to get one kilo of Norcod. So an extremely good feed conversion ratio. Also, we're still seeing low mortality at all our sites. We've had no diseases, and we've had no cannibalism.
These were some of the main obstacles in the last round that made farm salmon difficult. It's also important to say that one of the reasons why is also we've now reached the sixth generation of the cod, and it's a completely different fish than earlier. It's very, very stable. We see good growth. It's a very, very strong and resistant fish, so very positive to work with. On the product side of things, we're very proud of our Norcod product. We can deliver it year-round in high and stable quality. What we're seeing from a production point of view when the fish is filleted, it's giving very high yields, even higher than our wild counterpart.
Because we haven't caught the fish by trawls or hooks or anything else, it's in a very beautiful whole fish when it's displayed in supermarkets and restaurants. There's no skin damages or bruising or anything. It's a perfect whole fish as well. What we are offering to our clients is that we are an extremely reliable and stable partner because we can very much control when we take out the fish, when we produce the fish, and when we deliver the fish. We are a very stable and reliable partner on volumes and deliveries. As we talked about earlier, we can offer and have now long-term contracts both with the supermarkets and high-end food service.
Very, very positive on the product side of things. Shortly on our joint venture with Havlandet down in Florø. We've created the company Havlandet Norcod together with Havlandet with a 50/50 ownership. Havlandet Marin Yngel has been working on cod and cod fry for the last 20 years. From our point of view, they've done a fantastic job, and they are experts in cod fry and the whole biology behind it. We're very, very happy to have that collaboration and security on our fry going forward. We are building a new fry facility down in Florø together with Havlandet Norcod, which started here in August 2021, and it's expected to be done in third quarter of 2022.
We very much look forward to that new fry facility that can give us an even stronger and better fry than today. For us, it's so important that we start out with the best possible fry because it gives us the best possible result. We will receive the first fry from this new facility in end of 2022. Even more interesting is that the new capacity in this fry facility will be about 24 million fry yearly, which is equivalent to about 80,000 tons of whole cod, full-grown cod. It gives us security and scalability for what we need for our future plans.
Thank you, Christian, for that introduction. I think this is the longest time Christian has seen me sit quietly since we've known each other. Just to go through some of the financials, obviously they were published this morning, so the detail is available online if anybody is interested in going through the details, but I'll go through some highlights for this presentation. During the quarter, we've had a revenue of around NOK 16 million, total NOK 28 million for the year. This is obviously a test phase for us. We started on purpose slowly with the harvesting just to iron out any issues that they may occur during the processing phase, during the transport phase.
New areas for the company as we weren't involved in the processing up to this point. We expect to harvest a total of around 2,500 tons this year. 350 tons were harvested during the third quarter. And a significant amount is coming in during Q4, and the remainder coming in Q1 2022. As far as the result is concerned, we're showing a loss of NOK 8 million for the quarter. A total of around NOK 10 million for the year. This is obviously the largest numbers for a small company, but I see them as insignificant. Mainly due to the slow start we've had, high startup costs for many of our processes.
We've had issues getting services from well boats, and the cost has been significant. The transport charges have been outrageous. I believe they're just increasing exponentially at the moment. But as our volumes increase, they have increased already, obviously, since Q3. We expect to achieve economies of scale going forward, and our results should be improving significantly during Q4, and obviously again going forward with the company. I've pointed out the biological assets. We have approximately NOK 230 million in value. That's over NOK 150 million more than the same time last year. This is a significant increase and it will continue in multiples over the next few years.
This is very, very positive obviously for the company and for the industry, I believe. This industry has a potential of being absolutely massive. Christian mentioned Havlandet. Havlandet is a major brick in our strategy going forwards. It provides us as the only cod company with a guaranteed fry supply going forwards. We've invested NOK 40 million in the company so far. We have contractually obliged ourselves to another NOK 25 million in Q4. The outcome of this is that we will have first access to every fry that is produced at the plant. Clearly, we'll be selling to other suppliers to other fish farming companies also. Norcod comes first. On the next slide, which hopefully is there.
Because there's been a lot of questions, obviously not on the site as yet, but otherwise, the 5,000 tons, the 9,000 tons, the 25,000 tons, how does this fit in? Well, our production cycle doesn't necessarily fit in exactly with our fiscal cycle. The financial cycle of the company is set by, you know, by the calendar basically from January to December. But our production cycle doesn't fall into that category necessarily, at least at the moment. Once we're much bigger and it's year-round production, then it becomes less and less significant. But just to point out, how it works on the slide, as you can see, the 5,000 tons that we expect during this cycle of the harvest will be spread over 2021- 2022.
To be exact, we're expecting around 2,500 tons of the production to come in the first quarter of 2022. The same happens with the next cycle. The second cycle, the 9,000 tons are split into two years, financial years again. All that's in the Q3 and Q4 of 2022, we expect 4,000 tons. Just to be specific, for the financial year around 6,500 tons for next year, for the financial year, but even though we expect 9,000 tons from the cycle. This obviously continues going forward. We're still on target to hit our 25,000 in 2025, with some expectations obviously coming in place. Everything as it stands there are no changes to our strategy and to our forecast.
The next slide. Looking ahead, as we've gone through already a little bit, but just to emphasize it, we're still on our 5,000 targets. I personally believe we'll exceed it, but rather be a bit cautious at the moment. Everybody understands now, it will spill into the beginning of 2022 and will not all come in in 2021. In addition, we have invested quite a lot of money in, as you can probably see from looking at our balance sheets, in vessels and barges and equipment. Also very important to point out that we are very focused on sustainability, green technology, and fish welfare. Our new vessels are hybrid battery driven. The feed barges are very efficient.
Less noise for the fish. As Christian mentioned, the feeding through the water so it's less damaging also for the environment and so on. As well as investing in money really into technology, we're also investing into making it sustainable. Because we believe that is also the future both for us and for Norway and basically for the world really. We have increase in harvest volumes, obviously for this quarter. Specifically we're talking about, the fish are still at sea, the fish are still healthy, the fish are still being fed. The 350 that we harvested in Q3 is not representative of what's coming. I can't emphasize it enough, just so that everybody understands.
We do expect the volumes to come in, and they already still obviously have come in during October and we have plans for November and December and so on. What is interesting is that we need to point out for the future of the company, not just for the quarters now and Q4. The second cycle is already at sea, is already being fed, and is already being grown at Frosvika and other locations. Not just that, but also our third cycle is already in production. The eggs have hatched. They're being moved to the hatcheries, and they will be growing to be set out to sea at some point late spring, the summer next year. We have already the next three cycles in place, or the next two cycles.
The first cycle is obviously happening now. Finally, this is really Christian's area, but I'm grateful that he lets me to talk about it, so the further market development. Q3 has been significant in proving our product to the market. The feedback has been incredible. For me, I'm a finance person, so I don't usually get that involved, but the feedback we've had from the customers and the end consumers, not just the customers that we sell to, has been significant. They're demanding our product specifically. They want Norcod. They're not asking for cod. They're not asking for the bacalao or cabillaud or anything else. They're specifically asking for Norcod.
We're going to use this advantage that we have been developed for us and by us at the market to increase our market share and to expand our markets within the EU, because specifically at the moment it's been very much Spain, but obviously to Europe, but also to the USA and Asia. From what I understand, we're getting very, very positive responses from Asia, and they have some very interesting plans for our fish. This should and will, absolutely will, have a very significant positive pressure on our prices that we will achieve for our products in the market.
Just to wrap up, the market piece, which was very personal to me, there was a feedback from one of our customers online for everybody to see, and the question was what do you think of the product? The answer was that it's perfect. That's as far as I'm concerned, there's no more I can say about our product than it's perfect. Back to you, Christian.
Great, Kia. Thank you very much. This was the end of our presentation for now. We are going into a Q&A session now. Just to round off the market bit, what we're seeing and a lot of the feedback we're getting from a lot of the retailers and high-end food service is that what they've seen happen on salmon is that because salmon has been available in a steady volume year-round, you know, in a stable quality, high quality, that's created a huge salmon market. They have the red fish market settled now. What a lot of the retailers and high-end food service are looking for is a whitefish product to go along with the salmon.
A lot of our clients are seeing Norcod as that product because we can give them week-in, week-out delivery year-round. We can do them long-term fixed contracts at fixed prices so they can do their promotion, they can have their stability. What we're getting a feedback is that the market potential is enormous. That's very positive. If there's any question, we see here a Martin Kaland. He's asking if it's possible to share the prices that you achieved in Q3. We can tell that our premium product, our main product, the HOG fish delivered has been sold in excess of NOK 15 per kilo. That's a guiding price we can give on our fish.
Already now, when we have bigger volumes coming to the market, as we've had Norcod longer in the market and people have gained this preference for Norcod, we are already now seeing higher prices. That's very positive. We have Knut-Ivar Bakken from SpareBank 1 Markets. What type of products did you sell in the quarter? Have you been able to sell off cuts in Q3? To answer your questions, our main product we have been selling is HOG, so a whole fish without guts. We've done some fillet trials to warm up our fillet market when we have more volumes available.
Right now we have such a big demand on HOG at interesting prices that we haven't further developed our fillet business yet. What we can say on our further processed products is that we have again a very good demand especially from North America. That's something being worked on. Regarding offcuts, we've successfully taken out the liver of our fish. The liver of the farmed cod is an extremely good product. It's blister free. There's no parasites in the liver. It's a very good piece of liver. It's about 50% of our intestines of the cut, so that's a big percentage. We are selling that successfully at good prices.
Something we're looking into is, of course, can we further use more of the intestines for collagen or protein productions going forward. Also there are Asian markets that are interested in our cut stomachs. That's something we can develop for the future.
Okay. Shall I answer some of these other questions? Christian, you choose one.
Yes, please. Anash from Interfish is asking, when do you expect.
Yeah.
A positive EBIT result?
Yes. Anash, positive EBIT result. The first Q3 results were obviously not positive in the EBIT sense, mainly because that Finnangerøya was our pilot site and the cost per kilo of that site was significantly higher than what we expect to get out of, for example, Jamnungen that we're harvesting now. The expectation is that we shall have for the quarter, not necessarily for the year, but I would believe would be also for the year, the positive result already in Q4 and definitely in Q1 going forward. That should answer that one. Anash.
We have also here again from Knut-Ivar from SpareBank, he's asking if we can comment on the expected working capital development and CapEx in Q4, in Q2 2022, sorry.
2022. Well, working capital, as far as cash flow is concerned, we're completely okay, at least for the foreseeable future, for the next two quarters. I expect a slight squeeze on the cash flow, as we go in between harvests. Let's say the second half of 2022. We will be dealing with that in due course. That's a period of, let's say, 2-3 months that we may have some squeeze on cash flow, but otherwise we should be just fine.
Great. Then Knut-Ivar Bakken again from SpareBank 1 Markets, he's asking if we can elaborate on the issues with lower growth due to high temperatures during the summer. It's kind of what we saw also on the first batch on the pilot, which was set out in January. Already by summer 2020, we kind of saw a slowdown in the growth, but nothing significant during the summertime. We've seen two very warm summers. When the temperature gets close to 15 degrees or even above, then the fish, it's kind of slowing down their eating. Again, it's nothing significant because we're still doing the rest of the year in colder water. The fish is going very well. It's only when the temperatures are highest at the sea.
What we're expecting, especially now from our Svartvik location up north, but also, when we're implementing underwater feeding at new sites, we're expecting to see less of an issue because 8-10 meters deeper down, there's a more controlled temperature. That should to take care of that summer slowdown. That was the question for the moment. Here we go. There's a Martin who's asking, do you see a further demand for farmed cod already given the latest restrictions on wild caught cod? Good question. There's no doubt. We said when we started out that our expectation for wild caught cod in the future is that it will be a stagnant availability of wild. We are still of the same opinion.
What we're seeing for 2022 already is that the North Atlantic quota in the Barents Sea and along the north coast of Norway has been cut down by 20%, which is a significant cut. It's already being discussed now by the scientists that potentially another 20% cut could come up in 2023, but that's only expectation. For 2022, it's confirmed that it's been a 20% cut. We've seen a 13% cut in Iceland. We've seen a significant cut on the Pacific cod as well. Also just one example in the Baltic Sea down where there's a lot of fresh cod coming out of Denmark as well, we've seen an 80% cut on the wild caught cod.
There is less fish available in the market. There's even less of fresh fish available in the market. I think in general, there's an expectation that the Atlantic cod market in general will be very strong going into 2022. Again, our volume here in first and second cycle, 5,000 tons, 9,000 tons, it's a drop in the ocean in the full cod market. That's why, as we planned from the beginning, we are marketing and we are selling our Norcod as a high-end meat product. It's a product on its own. It's not a substitution for wild caught cod. It's an additional product that we expect to see in the counters, and that's the feedback that we've seen from our clients so far.
They're still buying wild caught cod, especially when we won't have availability in some month. But when our product is available, that's their preference.
Okay. I can take a stab at the last question that Knut-Ivar Bakken asks. You mentioned higher transport costs, but it appears all input costs are increasing. How is this affecting your cost expectations? The answer to your question is, well, I mean, I don't know, I don't have a crystal ball, but yes, all costs have increased. There seems to be some inflation going on everywhere that nobody's talking about. So it affects our feed costs, it affects our transport costs, and it affects all the in-between costs that we have. But okay, percentage-wise, it's relatively small, certainly on the feed side. But we expect that to increase.
I'm hoping as a CFO that any increase in costs that we incur going forward will be matched by a more significant increase in our sales prices for the product because if there is inflation, there should also be inflation of the end product. We're only talking very small percentages at the moment overall. 1% or 2% perhaps higher costs, no more than that.
Super. Thanks, Kia. As we can see, there's no further questions. We'll say thank you very much to everybody for showing interest in Norcod and participating in our webcast.
Yes. Thank you very much.