Feed producers and product innovation

w w w . b i o m a r . c o m

W o r l d C l a s s F i s h F e e d

Feed Suppliers and Product Innovation Nordea Salmon Summit, November 2013

Torben Svejgard Group CEO BioMar

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BioMar key figures 2013

• Turnover up towards 9 billion DKK (2013 guidance)

• EBIT 330-370 m DKK (2013 guidance)

• Production volume approx. 1 million tons (2012)

• Approx. 1,000 employees (including JV’s)

• Production in Norway, Scotland, Denmark, France, Spain,

Greece, Chile, and Costa Rica

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Owned by industrial conglomerate Schouw & Co.

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135 years of history 125 years in packaging 25 years as conglomerate 5 core businesses today 2012 revenue DKK 12.5bn EBIT DKK 772m 2,900 employees in more than 20 countries Listed on Nasdaq OMX Copenhagen since 1954 BioMar 70% of revenue and 55% of EBIT

8.2bn

1.4bn

0.9bn

4.3bn

0.5bn

BIOMAR The World’s third largest

manufacturer of quality feed for industrialised fish farming

FIBERTEX PERSONAL CARE The World’s fifths largest producer of

spunbond for hygiene

FIBERTEX NONWOVENS Leading European manufacturer of

nonwovens for industrial applications

KRAMP (20%) The absolute largest supplier in Europe of accessories and

parts for farming

HYDRA-GRENE Leading in Denmark within

hydraulic components and solutions

2012

reve

nue

in D

KK

THE PORTFOLIO AT A GLANCE



Ambitions over the next 4 years

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Volume in tons

• Sales of approx. 1.7 m tons in 2017 • Approx. half through organic growth • The other half in new markets (acquisitions/JV’s/green fields)

• 5-6% EBIT margin • ROIC > 15%

‘Beyond the limits’ ‘Going for Profitable Global Growth’

‘Going for Global Growth’ BioMar group strategy:



Product Innovation

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Looking back

• Late 90’es to late 00’es: High focus on fishmeal and fish oil replacement

• Total industry R&D spend on this task: up towards 1 billion NOK +/- (?)

• Result: Norwegian salmon farming saves 3½ billion NOK in 2013 (not only related to fishmeal/oil replacement work, but also generally increased nutritional knowledge)

• Much higher fishmeal prices if no reduction in usage, so added value much higher

• Late 00’es: Increased focus on – and R&D resources allocated to – health and nutrition interaction

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1998 Knowledge 2013 Knowledge

Price in NOK for a typical Norwegian Salmon feed



Fish feed still early on learning curve

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Fish feed

Poultry feed Pig feed

Time

Knowledge / sophistication

Salmon/fish nutrition R&D probably more complex than for terrestrial animals

• Variation in water temperatures and thereby fish body temperatures • Fresh water and sea water stage



Future feed product innovation

• Of course still focus on feed performance • Extend raw material basket

• Increasingly new focuses, more sophisticated and specialised feed, e.g.

• Preventive health • Further focus on needs in different life stages of the fish • Feeds adjusted to biological environment and production technologies (e.g.

recirculation) • Feeds optimised to salmon market situation (growth versus costs) • Utilisation of new technologies increasing digestibility (enzymes)

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Days post challenge

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Cumu

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%)

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Control dietPrevious PlusPlus 3

SRS



Future feed product innovation

• Process technology innovation an essential discipline including the link between physical quality and nutrition

• Feed product innovation obviously to some/a large extend directed by new needs and challenges in salmon/fish farming

• Consequences for feed producers • Need for continued significant R&D costs increases (BioMar has almost

doubled R&D spend last 4 years) • More challenging production/logistics environment with considerably more raw

materials and more SKU’s

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A few examples from the BioMar world

• Bactocell (probiotics) for preventive health and thereby increased disease resistance, etc.

• ORBIT product range with specific attributes for recirculation systems

• “Performance 3” concept with varying protein/energy composition, but optimised towards potential performance based on relative raw material prices

• QUICK product range with special focus on growth

• Triploid feed

• Expect during 2014 a break-through with product addressing important cardiac health issues

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Usage of fish oil 2012

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Salmon 46 %

Other Aqua 28 %

Human Cons. 22 %

Other 4 %

Source: IFFO Estimates

Total fish oil market around 1 million tons



New DHA/EPA sources?

• More efficient use of fish waste and discards? – potential probably limited

• Fermented heterotrophic algae – price maybe 3-4 times higher than today

• Phototrophic algae utilising CO2 and sun – will take many years to develop

• GMO vegetable oils – 5-7 years from now until commercialisation/ availability. And consumer/industry acceptance?

• (Absolutely) no quick fix!

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In conclusion

• Feed product innovation instrumental to bring salmon farming to where we are today

• We still have a lot to do

• Further substantial increase in R&D investment needed

• Feed product innovation will also in the future be instrumental for developing our industry

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THANKS FOR YOUR ATTENTION!

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Feed producers and product innovation

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