Copeinca - NewsWeb

The Peruvian Consolidation Opportunity
Glitnir Securities Seafood Conference
27 May 2008
CFO Eduardo Castro-Mendivil
Disclaimer
This Presentation has been produced by Copeinca ASA (the “Company” or “Copeinca”) solely for use at the presentation at Glitnir Seafood
Conference 2008.
This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the
industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts,
sometimes identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”,
“targets”, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the
Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may
cause actual events to differ materially from any anticipated development. Neither The Company or any of their respective group of companies or
any such person’s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from
errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence
of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to
conform these forward-looking statements to our actual results.
An investment in the company involves risk, and several factors could cause the actual results, performance or achievements of the company to be
materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this
presentation, including, among others, risks or uncertainties associated with the company’s business, segments, development, growth management,
financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic
and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates
and other factors.
Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially
from those described in this presentation. the company does not intend, and does not assume any obligation, to update or correct the information
included in this presentation.
No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections,
estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained
herein, and, accordingly, none of the Company or any of their group companies or any such person’s officers or employees accepts any liability
whatsoever arising directly or indirectly from the use of this document.
By attending the quarterly presentation or upon reading the Presentation you acknowledge that you will be solely responsible for your own
assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for
forming your own view of the potential future performance of the Company’s business.
This Presentation is dated May 27th, 2007. Neither the delivery of this Presentation nor any further discussions of the Company with any of the
recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.
2
Overview
Overview
Peru
Growing economy
World #1 fishmeal producer
No new licenses issued
Stable political system
World #1 fishmeal exporter
ITQ opportunity
Copeinca
Pure-play fishmeal exposure
Focused business plan
Corporate governance
Mainly independent Board of
Directors
Track record of growth
Uniquely positioned for ITQ
Covering the whole fishmeal value chain
Raw materials
Anchovy fishing
Processing
Cook/press/dry
Products
Fishmeal
(proteins)
Yield: 22%
Fish oil
Yield: 3.5%
Distribution
Agents
Markets
Animal
consumption:
Representatives
Aquaculture
Brokers
Animal feed
Direct
5
Long Term Market Fundamentals
Peru export markets by value (2007)
Key drivers
“ The world needs more farmed fish”.- The
Economist
Increasing demand from aquaculture
(~8% per year)
– China main driver behind aquaculture
demand.
Sustainable management of biomass limits
supply.
Overall increasing demand for healthier food.
– Fishmeal main protein source for
aquaculture feed.
Others
23%
Taiwan
3%
Vietnam
4%
China
41%
Germany
14%
Japan
15%
Growing demand and fixed supply
Source: APOYO Consultoria / IFFO
The Economist 27 December 2007
6
Production Volumes and Exports
Share of 2007 world production (´000) tons
120%
Fishmeal
Fish Oil
Others
21%
100%
80%
44%
46%
Other
Chile
60%
40%
Scandinavia
0%
12%
Japan
15%
16%
0%
7%
28%
32%
2007
2007
20%
0%
Production
Copeinca export markets (2007)
Peru
China
43%
Belgium
4%
Chile
6%
Denmark
8%
Japan
8%
Germany
10%
7
ITQ
Expected change in quota allocation system
“Olympic” (Race)
quota system*
ITQ
(Individual Transferable Quota)
Anticipated
effects
The Ministry of
Production decides
the total quota for
the country.
Total quota distributed among vessel
owners.
Rationalization of
fleet, plants and
personnel.
Each vessel owner
must “race” to
maximise share of
total quota.
The fishing season
ends when the total
quota has been
achieved.
Expected to be in line with capacity at
the time of quota allocation.
– Chile.
– Australia.
– New Zealand.
– Iceland.
– Norway.
Significantly
improved utilization
of assets.
30-40% increase in
EBITDA.
An individual quota will be allocated to
each vessel.
Each vessel/company may catch the
allocated quota at its own discretion
(within the season).
9
ITQ (Individual Transferable Quota)
The Government decides
– Implementation to be decided by the Peruvian Ministry of
Production and Congress
Positive attitude toward ITQ transition
– If social impact is solved
– Given ¾ of the industry supports transition
Social impact to be assessed and addressed
– Technical studies performed
– Hearing with involved sectors to be executed
Expected to be implemented between 2008 and 2009.
– If approved by the current Government
10
Consolidation
Copeinca positioning for ITQ
Overview of Copeinca capacity growth
Top 10 currently hold 71% of steel fleet
100%
90%
22,071
80%
70%
60%
50%
Exalmar
Hayduk
40%
Diamante
30%
20%
10%
0%
Copeinca
Hayduk
Austral
Tasa
1
December 2006
Vessels
Copeinca from 3
vessels in 1996
(971m3) to 64 vessels
May 2008 (22,071m3)
Austral
Copeinca
Tasa
May22008
Source: SGS
Under ITQ quotas will be awarded based on vessel capacity
12
Copeinca most active
Vessel Capacity Growth
(m3)
30,000
25,000
m3
20,000
15,000
10,000
2008
2007
2006
2005
2004
5,000
0
Source: Company estimates
13
Acquisition Track-record
Source: Company
14
Other acquisitions in the fishing sector
COMPANY
AMOUNT
(USD)
DESCRIPTION
Month / Year
180 M
Tasa acquires Sipesa
April
2006
100 M
CFG acquires Pesquera Alexandra
June
2007
20 M
Corporación Exalmar acquires Arrecife, Brisa, La Ensenada,
Parallón, La Isla, Península, El Pacífico & Pesquera Tres Marías
30 M
Citigroup acquires 22.7% of Pesquera Exalmar through the
subscription of new shares.
April
2007
5M
Tasa acquires vessels
April
2007
165 M
Pesquera Diamante acquires Pesquera Atlántico, Consorcio Malla &
72% of Pesquera Polar.
May
2007
26 M
CFG associates with investor, La Candelaria y Altoreal.
June
2007
85 M
Tasa acquires fishing vessels
June
2007
14 M
Tasa acquires Armadores Pesqueros.
12 M
Reorganization of Conservera Garrido in favour of Himalaya and
Titanium Investments.
September
2007
19 M
CFG acquires fishing vessels.
September
2007
17.5 M
Source: Company estimates
CFG acquires plant in Chimbote.
January
2007
August
2007
October
2007
70 M
Austral Group & Locksley Capital acquires part of Cormar.
November
2007
95 M
Exalmar acquires part of Cormar
November
2007
15
Over USD 1 B invested in the industry
Investments
(USD millions)
310
284
173
165
127
70
Source: Company estimates
16
New Industry Distribution
Plant Processing Capacity
Vessel Load Capacity
Company
Tasa
Copeinca
Austral
Diamante
Hayduk
Exalmar
Chinese Fishery Group
Pacifico Centro
Cantabria
Alejandria
Others
Wood Fleet
Total
m3
28 505
22 071
16 103
15 960
14 964
11 354
10 016
3 848
3 287
2 216
49 467
32 209
210 000
Percent
13,6%
10,5%
7,7%
7,6%
7,1%
5,4%
4,7%
1,8%
1,6%
1,1%
23,6%
15,3%
100,0%
Company
Tasa
Copeinca
Diamante
Chinese Fishery Group
Hayduk
Austral
Exalmar
Pacifico Centro
Cantabria
Katamarán
Others
Total
MT/h
1 814
1 288
743
726
716
692
510
386
152
110
1 767
8904
Percent
20,4%
14,5%
8,3%
8,2%
8,0%
7,8%
5,7%
4,3%
1,7%
1,2%
19,8%
100,0%
Source: SGS
17
Market
Fishmeal
• Limited supplies
Fishmeal prices 1999-2008
2001
2002
2003
2004
2005
2006
2007
US $MT
1050
850
650
450
FAQ 65-IFFO
w
15
w
44
20
08
w
21
20
07
w
50
20
07
20
06
4
w
27
w
20
06
33
20
06
20
05
w
10
40
w
w
20
05
17
20
04
20
04
w
46
23
w
20
03
52
w
w
20
03
29
20
02
06
w
w
materials due to strong demand in Asia, production of
20
02
26
36
w
20
02
18
28
46
w
4
w
14
w2
4
w
34
w
44
w
02
w
12
35
w
w
51
31
48
w
6
16
w
w
20
01
01
11
38
w
w
w
w
33
43
w
w
08
12
w
w
13
41
45
21
w
w
w
w
w
w
41
20
01
15
23
27
47
03
w
w
w
w
w
35
25
w
w
07
w
20
00
20
00
49
05
w
w
18
29
17
39
19
37
w
w
w
w
w
w
w
w
w
09
31
41
11
01
51
w
w
w
w
w
w
19
99
w
47
24
w
21
250
01
– Record high prices for agricultural commodities and raw
2000
1250
w
• Significant price increase in all protein sources
w
than average of 6.0 million MT for last ten years.
1999
1450
19
99
– World supply estimated at 5.0 million MT for 2008, lower
US$ FOB/MT
similar to 2007.
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
19
99
– Peruvian supply estimated at 1.3 million MT for 2008,
SD 68-IFFO
bio-fuels and devaluation of USD.
– Significant purchases in Q1 from both Asia and Europe
• Current trading levels FOB Peru USD 1,020 – 1,140 / MT
for old and new Peruvian production. It is estimated
Source: IFFO reports, as of 14 May 2008
that 250,000 MT have been sold for the upcoming AprilJune 2008 season.
Prices continue to recover
19
Fish oil
Fish oil prices 2000-2008
2500
– Aquaculture declining in 2008
– Health and pharmaceutical products
(Omega 3) increasing
• Higher bio energy consumption
2003
2004
2005
2006
2007
1400
2100
1750
1500
US$/MT
1600
1200
1100
600
1000
100
200
0
w
01
20
00
w
16
20
00
w
3
20
00 1
w
200 4 6
1
w
200 0 9
1
w
200 24
1
w
39
20
02
w
0
20
02 2
w
200 1 7
2
w
200 3 2
2
w
47
20
03
w
10
20
03
w
200 2 5
3
w
200 4 0
4
w
200 03
4
w
18
20
04
w
33
20
04
w
200 4 8
5
w
200 1 0
5
w
200 25
5
w
40
20
06
w
03
20
06
w
200 1 8
6
w
200 3 3
6
w
200 48
7
w
11
20
07
w
2
20
07 6
w
200 4 1
8
w
04
2000
US$ FOB Peru/ MT
• Mixed demand
2002
1250
800
1000
600
750
400
500
200
250
0
0
20
00
20 w
00 01
20 w
00 17
20 w
00 33
20 w
01 49
20 w
01 13
20 w
01 29
20 w
02 45
20 w
02 09
20 w
02 25
20 w
03 41
20 w
03 05
20 w
03 21
20 w
04 37
20 w
04 01
20 w
04 17
20 w
04 33
20 w
05 49
20 w
05 12
20 w
05 28
20 w
06 44
20 w
06 08
20 w
06 24
20 w
07 40
20 w
07 04
20 w
07 20
20 w
07 36
20 w
08 52
w
16
• Limited supply
2001
– Record high levels for rape seed, soy
bean and palm oil
FOB FISHOIL
CIF SOYBEAN OIL
CIF PALMOIL
CIF RAPEOIL
• Current trading levels: FOB Peru USD 1,800/MT – 2,500 MT*
(subject to premium for EPA / DHA profile)
Source: IFFO reports, as of May 14th, 2008
* Export quality. Copeinca exports approx. 75% of its production
20
US$ CIF Rótterdam/ MT
• Fish oil exceeding fishmeal price
1600
FOB PERU FISH OIL PRICES
From January 2000 to April 2008
2000
2600
2250
Financials
Acquisitions yielding results
Copeinca finished second in the second fishing season 2007
Production Ranking
– Total Own Fleet Catch: 235,841 MT (11.03% of total catch)
Company
(%)
19.22%
16.53%
11.86%
6.87%
6.55%
39.0%
100.0%
Tasa
Copeinca*
Hayduk
Austral
Exalmar
Others
Total
Copeinca´s participation 16.5% (2nd place)
– Above 14 percent previously anticipated
Production
– 78,384 MT of fishmeal produced.
Fleet Ranking
– 12,982 MT of fish oil produced.
Company
Tasa
Copeinca**
Hayduk
Austral
Diamante
Otros
Total
m3
Capacity (%)
27,831
13.25%
21,935
10.45%
14,964
7.13%
16,103
7.67%
16,014
7.63%
113,153
53.88%
210,000
100.00%
Real Catch
(%)
12.24%
11.03%
7.37%
6.18%
5.88%
57.29%
100.00%
Succesfull fishing season after acquisitions
Source: SGS
First fishing season results
Window Nº 1
Total quota granted
Total catch
COP own fleet (11%)
COP third party (3.25%)
COP total participation
Average daily catch
Average daily catch 2007
Fishmeal Production
FAQ
SD
Fish Oil Production* (4.75% yield)
Source: SGS
2,000,000
1,913,400
209,000
63,000
14.25
120,000
100,000
MT
MT
MT
MT
%
MT
MT
32,831 MT
26,197 MT
13,078 MT
Q1 2008 Financials
Revenue increase of USD 47 M (+223%)
–
Revenues and EBITDA
USD 68.1 M vs. USD 21.1 M in Q1 07
70 000
EBITDA increase of USD 5.6 M (+124%)
60 000
– USD 10.1 M vs. USD 4.5 M in Q1 07
Key performance indicators
–
COP Sales USD 45.3 M - Gross Margin 21%
–
Acquired Inventories* Sales USD 15.6 M –
Gross Margin 5 %
– 74,351 MT sold in Q1 08 vs. 19,355 MT in Q1 07
–
54,922 MT from COP (74% of volume)
–
18,648 MT from targets (26% of volume)
U S D Th ousands
– EBITDA / Sales 15 %
50 000
40 000
30 000
20 000
10 000
0
Inventories
– 21,980 MT in Q1 2008 vs. 2,935 MT in Q1 2007
* Inventories acquired
–
18,314 MT from COP
–
3,666 MT from acquired inventories
Q1 2007
Q1 2008
Revenues
21 138
68 052
EBITDA
4 551
10 126
24
P&L
USD Million
Q1 2008
Q1 2007
21.1
31 Dec
2007
129.1
31 Dec
2006
89.9
Revenues
68.1
Operating profit
(1.4)
2.8
12.1
21.4
Profit before tax
11.3
1.1
5.7
15.9
Net profit
8.5
0.9
5.4
10.0
EBITDA
10.1
4.6
28.6
35.7
21,980
2,935
Ending Inventory (MT)
SALES
Copeinca
54,922 (74% of volume)
Targets
18,648 (26% of volume)
25
Balance Sheet
Assets (USD million)
Equity and Liabilities (USD million)
1000
1000
900
800
77
Current assets
200
700
600
600
500
Cash and cash
equivalents
400
300
Other Liabilities
800
53
700
900
713
200
42
50
100
174
0
Q1 2007
Q1 2008
Bank Debt
400
300
Non-current
assets
247
500
200
46
79
100
141
396
Shareholders
Equity
0
Q1 2007
Q1 2008
Good combination of debt and equity; resources have been invested in fixed assets
26
Outlook
Closing remarks
Copeinca - a sizeable player in the
world market
– Copeinca represents 16% of Peruvian
fishmeal production, the second largest
fishmeal player in Peru
– Copeinca represents 5% of worldwide
fishmeal industry
Copeinca is ready to continue being an
active consolidator
– All acquired companies fully merged
– Operations fully integrated
28
Q&A
Q&A
29
2008 Assumptions
Annual biomass
Expected total catch of 6M MT in 2008 (North & South)
Total quota participation 16%
– 11.5% own fleet,
– 4.5% RM third parties
Total south participation 8%
Yields
– SD/FAQ: 50%/50%
– Fishmeal 22%
– Fish oil 3.5%
Production
– Fishmeal 190,000-200,000 MT
– Fish oil 30,000 MT
30
Largest Shareholders
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As of 22 May 2008
31
Key Management
Samuel Dyer (31) – Chief Executive Officer
– Degree in Business Administration and MSc in Finance
from the University of Miami, Florida USA.
– Extensive experience within the Peruvian fishing
industry.
– Has held several positions within the Company since
joining in 1997.
– General Manager of Copeinca since 2002.
Pablo Trapunsky (41) – Deputy Chief Executive Officer
– B.Sc. in Mechanics Engineering with a focus on
Systems of Production, Materials and Robotics from the
Technion, Israel Institute of Technology.
– 13 years of experience with multinational companies
both in Peru and abroad within the fishmeal sector.
– Joined Copeinca in January 2004.
Giuliana Cavassa (36) – Legal Manager
– Attorney at law graduated from Pontificia Universidad
Católica del Perú, with post graduated studies in Civil
Law at Universidad de Salamanca, Spain.
– 11 years of experience as a lawyer in private and public
sectors.
– Spent last 4 years in the public sector as a consultant
for the Ministry of Production with the Fishery Viceminister.
– Joined Copeinca in July 2006.
Eduardo Castro Mendivil (46) – Chief Financial Officer
– MBA in business administration from University of
Texas at Austin.
– Extensive experience from various positions within
finance, including with some listed companies.
– Joined Copeinca in April 2006.
•
Mercedes Tang (42) – Chief Sales Officer
– Industrial Engineer with an MSc degree in Agricultural
Management from the University of Reading, UK.
– 12 years of managerial experience in the trading,
manufacturing, administration and finances with
multinational and domestic companies.
– Joined Copeinca in March 2004.
•
Cesar Piedra (29) – Deputy Financial Officer
– B.Sc. in Business Administration from Universidad de
Lima, Peru
– 2 years as trader in Standard Chartered Bank and
Citibank on the Treasury Desk
– 1 year experience as Head of Treasury at
Transportadora de Gas del Peru, working on the
leading energy/gas project in Peru (Camisea)
– Joined Copeinca in June 2004
32
Corporate Structure
Legal structure
Copeinca ASA
Norwegian holding
company
Board of directors 2008
Chairman (independent):
– Christian Selmer
Deputy Chairman:
– Samuel E. Dyer Ampudia
Copeinca S.L.
(ETVE)
Copeinca S.A.
Source: Company
Spanish intermediary company
– Sales and trading
operations
Peruvian company
– Harvesting fleet
– Processing plants
Independent
– Mimi K. Berdal
– Synne Syrrist
Shareholder representatives
– Piero M. Dyer Coriat
– Ivan Orlic Ticeran
– Sheila Dyer Coriat
33
Cash Flow
USD Million
Q1 2008
Q1 2007
65.0
19.1
Equity Issue
-
92.7
-
CF from investment
(2.0)
(41.7)
(340.2)
(33.8)
(48.9)
(21.4)
418.0
14.3
14.1
48.7
52.0
0.8
Cash of targets
-
-
2.9
0.3
Adjustment traslation
(7.5)
-
(9.1)
-
Cash opening balance
46.9
1.1
1.1
-
Cash closing balance
53.5
49.8
46.9
CF from operations
CF from financing
Net change in cash
31 Dec
2007
(25.8)
31 Dec
2006
20.3
-
1.1
34
Company milestones
Key milestones
1994 Company founded, acquisition of plant at Bayovar bay.
Plant capacity (ton/h)
Fleet capacity (m3)
70
1995 Commencement of production operations.
600
1996 First three vessels acquired.
1997 Frozen food business initiated (later divested).
1998 Increase of capacity at Bayovar.
50
1999 El Niño event in 1998 facilitated escalation of acquisitions.
of Bayovar capacity and acquisition of Supe and Chicama Increased vessel
2000 Increase
capacity.
2001 Chicama operational and increased vessel capacity.
100
1100
50
900
2002 Samuel Dyer appointed CEO – organizational development.
110
2003 Plant capacity and fleet increase.
1700
80
2004 Plant capacity and fleet increase.
2005 Credit Suisse loan finances acquisition of Del Mar (Paita, Huarmey) and Casma plants,
increase in vessel capacity.
700
92
3800
2350
2006 Sister company acquires Jadran. Copeinca ready for listing on the Oslo Stock
Exchange.
2007 Copeinca lists on the Oslo Stock Exchange. Consolidation year:
Purchase of Newton, San Fermin & Sucsidiaries, PFB, FP, PR & Piangesa
552
1,288
8800
2350
22,071
35