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Welcome to Lerøy Seafood Group's Fourth Quarter Presentation of 2024. My name is Henning Beltestad. I'm the CEO in Lerøy Seafood Group. And with me today, I have Sjur Malm, CFO. First of all, I will take you through the fourth quarter highlights. And then Sjur Malm will take you through the key financial highlights. And then I will come back and talk a little bit about outlook and what we work with going forward.

First of all, we start with this. Our goal is to create the world's most efficient and sustainable value chain for seafood. And our value chain is unique, both for redfish and also for Wild Catch all the way to end customer. A fully integrated value chain is our competitive advantage.

There is not many companies like Lerøy. Our customers are seeking sustainability and health, quality and traceability, stability and availability and convenience. Our value proposition is speed and cost efficiency, reliability and trust, product and category innovation, traceability and quality assurance and clear ESG commitments. So this is a good match for our customers. And we feel and we see that we are getting more and more customers that finds this value chain interesting and want to have a closer partnership with Lerøy as a customer and strategic partner for the future going forward.

And then highlights of this quarter. Prices for salmon and trout is well below last year. Excellent biological performance with net growth in tonnes up 41% year-on-year, improved biological performance starting to show in results. Strong improvement in biology and earnings in Scottish Sea Farms is really good to see, and record earnings in VAP, Sales & Distribution 12 months rolling basis. So -- and Wild Catch earnings is impacted by low quarters, but still there is increase in prices and has been doing a good job in the land industry in the segment even though it's challenging. The harvest guidance for 2025 is 211,000 tonnes, including our share of associate, which is Scottish Sea Farms. And the result of the year is NOK 799 million in fourth quarter.

We are reporting in 3 segments: Farming, Wild Catch, VAP, Sales & Distribution. And we start with the highlights from the Farming. Spot prices is about NOK 5 lower this quarter compared to fourth quarter 2023. We see clear improvements in biology starting to show in the harvest results, the highest net production in sea in history in 2024, record harvest volume in fourth quarter '24, reduced mortality and declining cost. And we see a positive biological development also into first quarter 2025 and encouraging for cost and volume development in 2025. And shielding technology showing good results, and I will come back to that later.

If we go into the different regions and we start with Lerøy Aurora in North of Norway. Strong biological development, record net growth in 2024, high survival rates, high license utilization into 2025. And on the downside is high share of harvest volume early in the quarter at lower prices, so the -- and also the harvest weights that's been lower compared to fourth quarter in 2023, which affected the price achievement in Lerøy Aurora. Quarter-on-quarter cost increase in low harvest weights and higher feed cost, and we expect lower cost in 2025 versus 2024, but quarter-on-quarter cost increase in first quarter on lower harvest volume for first quarter. Estimated harvest volume in total for 2025 is 50,000 tonnes.

Lerøy Midt. We have seen a strong biological performance. Also here, highest growth in any fourth quarter in history, high survival rates, high license utilization into 2025. And here, we see submerged technology put to the test, and there is clear evidence that the technology reduces number of treatments. Quarter-on-quarter decrease in cost on good biological development. Expect quarter-on-quarter cost increase in first quarter on lower harvest volume compared to fourth quarter. And the estimated harvest volume in full year 2025 is 75,000 tonnes. And the operational EBIT per kilo value chain is about NOK 20.

Lerøy Sjøtroll. Strong biological improvement. It's really good to see the development in this region, west of Norway. Here, we also see strong biological improvements, significant increase in growth rates, high survival rates, high license utilization into 2025. Biological improvements starting to show in result. Costs down quarter-on-quarter and expect lower cost quarter-on-quarter for first quarter '25 and also the rest of 2025. And we also -- in Lerøy Sjøtroll, it's -- a large share of the volume is trout. The realized trout price is NOK 2 higher than the salmon in fourth quarter. And the estimated harvest volume full year 2025 is 70,000 tonnes. And operational EBIT value chain in fourth quarter is close to NOK 11.

And then Scottish Sea Farms. It's really good to see the great development that Scottish Sea Farms is showing. We see a significant increase in harvest volume with good harvest weights in the quarter, record harvest volume of 40,000 tonnes in 2024, strong biological development with next generation of fish performing well in all regions and a significant increase in profitability. Volume in '25 impacted by reorganizing site structure. Long-term potential is significantly higher than the expectation for next year and also higher than 2024 volume. Estimated harvest volume in '25 is 32,000 tonnes, and we had an operational EBIT in the quarter of NOK 10.3 compared to minus NOK 10 in the fourth quarter '23. So a great improvement.

Then we have the farming volumes and the guiding in the different regions. For 2025, we have a guiding of 50,000 tonnes in Lerøy Aurora; Lerøy Midt, 75,000 tonnes; and Lerøy Sjøtroll, 70,000 tonnes, which -- our best estimate is 195,000 tonnes for 2025. And -- but our target for the full year is 200,000 tonnes. And we believe that this is still possible to achieve this goal. And then it will be 50,000 tonnes in Lerøy Aurora, 80,000 tonnes in Lerøy Midt and 70,000 tonnes in Lerøy Sjøtroll. And there might be upside in Lerøy Sjøtroll.

For Wild Catch highlights this quarter, significant quota reduction impacts this quarter, catch volumes for the trawling fleet, raw material price and volumes in the land industry. And full year 2024, we had an operational EBIT of NOK 130 million in '24. The situation going into 2025 cod quota is down 32%. 25% stems from overall industry quota reduction, and 7% is due to the reallocation from the trawler fleet to the coastal fleet under new regulations. And the quota is down 2% in 2025.

And we see extremely high prices and price development through the year, and it's record high prices for both cod, haddock and saithe. Of course, more challenging for the land industry, but the main focus in the land industry is to have improvement in all factories. And we know quota is going up and down. And when quota is coming up again, we believe that the industry will see much better figures and better figures also in total. But for 2025, we will have a year similar to the one that we had in 2024.

The Wild Catch volumes fourth quarter, so about 10,000 tonnes compared to 12,500 tonnes in fourth quarter last year and full year 65,000 tonnes compared to 75,000 tonnes in '23. Sales and processing operations in 14 countries, 20 years with development in the markets, close to the customers. It's like I mentioned in the start, being close to the customer, developing together with the customer and understanding the needs of our customers is the essential thing in this segment, and that is where we are today.

Yes. I'm sorry. A small technical problem. And this quarter, it's been a good quarter for this segment and also overall for 2024 with an EBIT of NOK 888 million. And we see a great development. We also see that the EBIT margin is going in the right direction. So it's a record high profitability, continued operational improvements for industrial activities, positive development in emerging markets, strong positioning with strategic customers globally is extremely important, and expectations for continued positive profitability trend in 2025.

And I'm really satisfied with what we are doing in all the major markets where we have this industrial operations. And I'm really glad to see the development is going in the right direction and that all the efforts that we are doing every day in this market is showing results.

Then Sjur will take you through the key financial highlights.

Yes. Thank you, Henning. So as Henning will talk us through afterwards, we set some quite hairy goals back in 2022, and we are moving well towards them. We have done a lot of CapEx, and there's been a lot of hard work and efforts from all our employees, and it's pleasing to see that we are moving towards these targets. And this quarter, we are also starting to see it in the results.

So the last -- for 2024, we have the highest net growth in any year in our farming operation. That is very positive and an indication we are moving in the right direction. Also in 2024, we have the highest ever operational result in our downstream segment, which is very positive. And within the whitefish segment, we have lower quotas, which obviously is challenging, but we believe that we are handling the situation quite well. And in 2024 and even more in 2025, we are probably close to the trough when it comes to quarter levels. So this sums up to these numbers.

So if you look then on key value drivers, margin in the red fish part of the business, salmon and trout. We know spot prices are down, but we can see the impact on volume. So this quarter, not only did we exit the year with full inventory of fish at sea. We also harvested a 20% higher volume compared to last year, a clear indication of strong biological improvement. With lower prices, I would say margin development is quite healthy. We've done a good work -- job both upstream and downstream, and we see the margins are down from NOK 16.4 to NOK 14.

In whitefish business, we see volumes down with the mentioned lower quotas, but it's not the only value driver moving. We also see prices, saithe, haddock, cod, up 50% to 150%, which helps us in the trawling business. And we also know that bunker cost is down NOK 28 million compared to the same quarter last year, which gives a small positive contribution.

In sum, these effects gives us operational EBIT of around NOK 800 million compared to NOK 765 million last year. But I must also highlight, as shown in Note 2, the bridge between EBIT and operational EBIT this year, we have adjusted for litigation costs related to the competition case with EU. We also see that return on capital employed is a little bit lower than last year, which is due to higher capital employed.

And looking into where we are employing more capital, here is the balance sheet. We've done efforts, particularly in the Farming segment, investing in submerged technology, investing in better smolt quality, and we see tangible fixed assets are increased. Salmon prices and trout prices were low for most of Q4 but increased a lot towards the end of the year, and that gave an increase in receivables. And there are key components in the working capital development, which I will highlight in one slide.

In sum, our net interest-bearing debt is up compared to last year. I'll explain the differences in a second. But our clear view is that we have a very strong balance sheet, investment-grade rated with equity ratio of 50%.

So looking at the changes in net interest-bearing debt on an annual level. Working capital is a key figure. It has increased substantially in 2024. The main driver for that is the fact that we have built -- had an excellent production in sea. We have filled our inventory and licenses in sea to full level, moving from 98,000 tonnes to 110,000 tonnes. And this is building close to NOK 1 billion in working capital. Then there is the effect on receivables, which lifts working capital. End of 2024, we are fully utilizing the licenses we have today. So everything else equal, there is no more biomass to build up to a higher level in '25. So that should impact the no capital growth from biomass growth.

CapEx, I'll highlight where we have invested in the next slides. We paid a dividend last year of NOK 2.5 per share, and we -- the Board is suggesting to do the same this year. Net finance is up, and there's also one effect on payable tax and some changes on implementation effects. There, I will refer to our notes, which I hope and believe explain those effects quite clearly. These are related to changes and choices we have made with the implementation of a resource tax in Norway. We are reversing some of those effects this year. And also, we have chosen to, on a prioritization effect, increase tax with NOK 600 million this year, which will reduce with the same level next year. So on corporate tax, we expect very low levels in 2025 due to prioritization effect. And we believe that, that choice will make it possible for us to subtract the value of biomass also any resource tax.

This is our CapEx. As highlighted, we have invested quite substantially in our value chain, most notably in new technology in Farming. It's pleasing for us to report during 2024 that these investments are bearing fruits when it comes to increase in production at sea. And it's pleasing to see harvest volume this quarter being up, and that poses well into 2025. For 2025, we will continue to invest in submerged technology. We'll also invest somewhat in lice lasers in Lerøy Aurora. We will continue to work on improving smolt quality, and we will continue to develop the downstream segment and the value-added and Wild Catch segment.

This slide relates to what are the ripple effects of our activity in Norway and obviously relates also to the discussion on resource tax and to which degree this industry has ripple effects. And this slide clearly shows that Lerøy has huge ripple effects from our activity. On the map, you can see where we have operation. You can also see where we buy goods and services from suppliers. And in 2023, we bought for NOK 20 billion from over 5,000 suppliers in 250 municipalities. We have 4,000 employees and indirectly related jobs of 6,000, bringing the total to 10,000. And you can see the value creation is estimated to around NOK 15 billion. Taxes from the company and employees estimated at around NOK 2 billion in 2023. And we will update this with the figures for '24 as soon as they are ready.

Then, Henning, I give the word back to you.

Thank you, Sjur Malm. Then we are ready for -- wow, I got the electrical shock again. Then I will take you through the outlook going forward. And I think it's -- a lot of positive things is happening in Lerøy at the moment, and we'll try to take you through the different steps and the initiatives that we're doing to improve the value chain.

First of all, having goals is important. We need to know where we want to go. First of all, we need to know where we are. And in 2022, we set these goals of NOK 50 billion in turnover within 2030, being #1 in salmon farming through the value chain. And of course, it's not an easy goal to achieve. We have good competitors, but we believe with our fantastic value chain, there is that -- it is possible to achieve this goal.

And then we have, for VAP, Sales & Distribution, hairy goal of NOK 1.25 billion result. And that's up from close to NOK 900 million 2024. So we have a great job to do in 2025, but we believe that it's possible to go in this direction and to achieve the goal. So if all employees in this segment really do their utmost every day, I think this can be possible, and I and the rest will support you as good as possible.

And then in reduction in total emission, we have a goal of 46%. And we have a farm volume goal of 200,000 tonnes, which is up close to 30,000 tonnes compared to last year. So also a big hairy goal, but we believe that, that also is achievable even though after 2 months, we cannot say that this is achieved. But -- so there is a yellow light, but we believe with hard work that we can achieve this goal also.

And then when it comes to circular economy and sustainability, which is an extremely important area for us in the whole value chain, we have set a high ambition for this, which is based on the Paris Agreement, based on baseline 2019. I think we are on the track to achieve this goal. But to take it further, we really need that everyone in the value chain, all 6,000 people in Lerøy, have this on top of mind and work with the sustainability in everything that we do every day. And the main focus area is sustainable fish feed, airborne transport and alternative fuel.

And one example of a good -- what should I say, a great initiative that is done for the feed, which is one of the areas where we can have the highest improvement, we last month communicated that we started using protein from byproducts of European chicken in our fish feed. And this will be implemented this spring. And it's a cost competitive and readily available feed, positive nutrition effect replacing soy and truly screened and tested before use. And this will give us a reduction of total emission in Lerøy of 5% to 10%. So this is showing some initiatives that we are doing to reduce the total emission. So that's a good story and a good example of how we can work with the improvement within sustainability.

And VAP, Sales & Distribution, a record high earnings and a promising outlook. It seems like we want to go up, up. And we invested a lot in the last 15 years in this segment. We have way to go to have the optimal capacity utilization. We have a good fundament now. We have a good structure. We have a good way of working and implementing Lerøy Way in all the whole segment. And this will take us towards the goal of NOK 1.25 billion goal in 2025. But as I said, it's hard work.

And in the long-term actions, we have consequence products in our own value chain. The value of the fish today is extremely high, both on whitefish and on salmon, and we need to use the whole fish and take -- you take out the value of everything of the fish. Sustainable logistics, increased flexibility and price achievement, we need to be good in the work. You know how we price the products and how we work as a value chain together and then implementing Lerøy Way, which is an extremely important program for us if we want to take out the potential of all our sites in these segments.

And yes, if we look at the goal for Farming, the volume, almost 30,000-tonne increase this year. It's a high target, but we believe it's possible. And how should we achieve this? It's true operational efficiency. And how do we work with it? We work within many areas. It's only -- it's not only one initiative. It's a long value chain. It takes 3 years to farm salmon. And -- but this shows where we can see effects or results on harvested fish of the different initiatives like genetics, roe, smolt, shielding technology and Lerøy Way within the Farming segment. And we see that second half of 2024, we have seen great improvements, but still it's going forward that we will see the largest improvements.

If we look at the biological performance in the Farming segment '24. We see a net growth rate of increase by 11% compared to the last 5 years net growth. Mortality is down 27% and lice treatment is down 15%. So a significant improvement in biology and fish health.

And we also -- if we go into Lerøy Sjøtroll, which has the greatest improvements in last year. We see a net growth of 12%, mortality down 39% and lice treatment down 23%. So it's really good to see the improvement in Lerøy Sjøtroll. And then we have shielding technology, which is -- we invested a lot into this. We see that the lice treatment, shielded versus not shielded, is down by 85%. So a great achievement in new technology, and we will further invest in this going forward.

And this shows where we are. We already are at 34% of number of fish shielded in end of '24. And our plan is 40% of number of fish expected shielded at end of '25 and 30% of both salmon and trout expected from shielding technology in '25. And 50% of salmon in Lerøy Midt and Lerøy Sjøtroll is shielded end of '25. And -- yes. And 40% of salmon, number of fish, is expected shielded end of 2025 and 30% share of total harvest volume from shielding technology in '25. So a good development here.

So a short outlook at the end to summarize. Farming, positive biological development gradually to impact results. Contract share for salmon in '25, currently around 16%, including downgrades. High standing biomass going into '25 will impact seasonality in harvest volume. Expect to see significant improvement from roe, genetics and smolt quality, new farming technology, process improvement, implementing Lerøy Way. For the Wild Catch, a challenging quarter situation. Quotas for '25 is, for cod, down 32%; haddock, down 2%; and saithe north, unchanged; and saithe south, plus 40%. VAP, Sales & Distribution, expect improved profitability in '25 compared to '24, increased demand for integrated sustainable value chain, improved market share in some key markets, utilizing the potential of our value chain.

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