COP Q2 07

North Atlantic Seafood
Conference 2008
5 March 2008
CFO Eduardo Castro-Mendivil
Disclaimer
•
This Presentation has been produced by Copeinca ASA (the “Company” or “Copeinca”) solely for use at the presentation to the market held in
connection with the North Atlantic 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 March 5th 2008. 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
► Stable political system
World #1 fishmeal producer
► World #1 fishmeal exporter
Copeinca
Pure-play fishmeal exposure
► Focused business plan
► Corporate governance
► Mainly independent Board of
Directors
Track record of growth
► Uniquely positioned for ITQ
No new licenses issued
► ITQ opportunity
Strong growth and low inflation
Key country data
• Population
• Surface area
– 28.3 million
– 1.3% annual growth
– 1,285,220 km2
• Major industries
• Language
– Spanish (80.3%), Quechua (16.2%)
and other (3.5%)
– Mining
– Fishing
– Agriculture
Political situation
Economic indicators (South America)
• Alan García Perez (Social Democrat) elected in
June 2006 for five years
– Emphasis on social policies against poverty.
• Continuance of market economic policies
– No limitations on international investments
– Fishing industry open to international investors*
– Liberal competitive legislation
• The best macroeconomic environment in decades
– FTA with USA approved and ready for implementation in 2009
– Peruvian risk rating upgraded, just two notches away from
GDP (% change**)
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Panama
Peru
Uruguay
Venezuela
Inflation (% change**)
2007E
2008E
2007E
2008E
8.3
5.2
5.3
6.4
1.9
3.1
8.6
8.1
6.3
8.4
6.2
4.7
4.9
5.4
2.2
3.2
7.5
7.0
4.7
6.0
8.5
4.2
7.4
5.2
2.7
3.8
5.3
3.5
8.1
20.5
10.4
4.1
3.6
4.4
3.2
3.8
3.9
2.8
6.2
20.9
investment grade, from Ba3 to Ba2
Note: * all industries in Peru are open to international investors; ** year over year
Source: Apoyo Consultoria
5
ITQ
Expected change in quota allocation system
“Olympic” (Race)
quota system*
• The Ministry of
Production decides
the total quota for
the country.
• Each vessel owner
must “race” to
maximise share of
total quota.
• The fishing season
ends when the total
quota has been
achieved.
ITQ
(Individual Transferable Quota)
• Total quota distributed among vessel
owners.
• Expected to be in line with capacity at
the time of quota allocation.
– Chile.
– Australia.
– New Zealand.
– Iceland.
– Norway.
Anticipated
effects
• Rationalization of
fleet, plants and
personnel.
• 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).
*) In North, Centre North, Centre South of Peru. The South coast of Peru does not operate under this system
7
EBITDA may increase by 30-40% under ITQ
Estimated EBITDA improvement under ITQ
Index
+10-15
+10-15
+10
130-140
100
8
Copeinca positioning for ITQ
Overview of Copeinca capacity growth
Top 10 currently hold 70% of steel fleet
100%
90%
25000
21,935
20000
80%
15000
70%
60%
10000
5000
50%
Exalmar
Hayduk
40%
Diamante
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
30%
Copeinca
Hayduk
20%
Austral
10%
Austral
Copeinca
Tasa
Tasa
0%
1 2006
December
2 2008
March
Source: SGS
Vessels
Copeinca from 3
vessels in 1996
(971m3) to 65 vessels
Feb 2008 (21,935m3)
Under ITQ quotas will be awarded based on vessel capacity
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
Market
Long Term Market Fundamentals
Key drivers
• “ The world needs more farmed fish”
- The Economist, 27 December 2007
• 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.
Peru export markets by value (2006)
Others
21%
China
38%
Canada
3%
Chile
4%
Taiwan
4%
Japan
15%
Germany
15%
– Fishmeal main protein source for
aquaculture feed.
► Growing demand and fixed supply should sustain prices
Source: APOYO Consultoria / IFFO
12
Long-term outlook optimistic due to limited supply
Annual Peruvian anchovy catch (million tons)
Average
= 7,6
Average
= 6,1
Future supply expected to be limited
Source: Produce, Apoyo Consultría, Copeinca
13
Fishmeal
Fishmeal prices 1999-2008
• Limited supply
1500
– Peruvian anchovy catch estimated at 6 million
1999
2002
2003
2004
2005
2006
2007
US $MT
1050
1050
850
650
450
900
38
18
28
51
08
31
41
11
21
43
01
23
33
03
13
35
45
15
25
47
05
17
27
37
49
07
29
39
09
19
48
w
6
w
16
w
26
w
36
w
46
w
4
w
14
w
24
w
34
w
44
w
02
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
w
41
21
31
01
51
w
w
w
w
w
w
11
250
w
US$ FOB/MT
• After having a delay in demand in China mainly
2001
1250
1200
MT for 2008 (same as in 2007)
• Price recovery as expected
2000
1450
1350
750
600
450
300
150
1010 / MT
w
07
20
08
9
w
w
34
20
07
w
36
20
07
w
11
20
06
38
w
20
06
w
13
20
05
41
w
20
05
w
16
20
04
w
43
20
04
w
18
20
03
45
w
FAQ 65-IFFO
• Current trading levels (Q1 ´08) FOB USD 900 –
• Rising protein prices make fishmeal
20
03
w
20
20
02
47
w
20
01
20
02
22
20
01
w
49
20
00
w
24
w
w
w
51
20
00
19
99
01
w
19
99
to FOB Peru USD 800-950/MT.
26
0
strongly in Q4 from FOB Peru USD 735-900/MT
19
99
due to pig diseases, the market reactivated
SD 68-IFFO
Source: IFFO reports
• As of February 25, 2008
• Current trading levels FOB USD 900 – 1,010 / MT
an attractive alternative
14
Fish oil
Fish oil prices 2000-2008
• Limited supply
2500
• Higher than expected growth in
2250
2003
2004
2005
2006
2007
1400
2100
1600
1750
1200
600
1000
04
11
26
48
33
18
03
25
40
10
48
33
03
18
40
25
10
32
47
17
02
39
24
46
09
41
w
8
7
w
200
w
7
200
200
w
7
200
w
w
6
200
w
6
6
200
6
w
200
w
5
200
200
w
w
5
200
w
4
5
200
4
w
200
w
4
200
200
w
w
4
200
w
3
3
200
3
w
200
w
2
200
200
w
2
200
w
w
w
w
w
1
2
1
1
2
200
200
200
200
200
31
16
w
w
w
w
0
0
0
0
200
200
200
200
01
100
1500
1250
800
1000
600
750
400
500
– Steady demand for bio energy
200
250
• Record high levels for rape
seed, soy bean and palm oil
0
20
00
20 w
00 01
20 w
00 16
20 w
00 31
20 w
01 46
20 w
01 09
20 w
01 24
20 w
02 39
20 w
02 02
20 w
02 17
20 w
02 32
20 w
03 47
20 w
03 10
20 w
03 25
20 w
04 40
20 w
04 03
20 w
04 18
20 w
04 33
20 w
05 48
20 w
05 10
20 w
05 25
20 w
06 40
20 w
06 03
20 w
06 18
20 w
06 33
20 w
07 48
20 w
07 11
20 w
07 26
20 w
08 41
w
04
0
FOB FISHOIL
CIF SOYBEAN OIL
CIF PALMOIL
CIF RAPEOIL
Source: IFFO reports
• Current trading levels (Q1 ´08): FOB
USD 2,000-2,500/MT*
• As of February 25, 2008
• Current trading levels: FOB USD 2,000-2,500/MT*
• Fish oil prices = 2x fishmeal prices
Export quality. Copeinca exports approx. 75% of its production.
Depending on EPA /DHA profile.
15
US$ CIF Rótterdam/ MT
pharmaceutical products (Omega 3)
2002
1100
US$ FOB Peru/ MT
– Increasing demand for health and
2001
US$/MT
2000
demand
1600
FOB PERU FISH OIL PRICES
From January 2000 to February 2008
2000
2600
Consolidation
Old Industry Distribution (2006)
Vessel Load Capacity
Company
m3
Grupo SIPESA
Austral
Hayduk
Copeinca
Diamante
TASA
Polar-Malla-Kantabria
Exalmar
Pacifico Centro
Alexandra
Others
Wood Fleet
Total
16 769
14 884
10 854
8 697
6 902
6 700
6 643
5 157
4 664
4 250
83 333
41 147
210 000
Percent
8,0%
7,1%
5,0%
4,1%
3,3%
3,2%
3,2%
2,5%
2,2%
2,0%
39,7%
19,6%
100,0%
Source: SGS as of Dec 2006
17
Acquisition Track-record
Acquired Company
Rationale
Newton
Plant in Chimbote, the with the largest
fish landings
Fleet
3 vessels
Production
1 plant (56
MT/h)
(971m3)
1 plant (185
MT/h)
Fish Protein
Largest plant in Peru
Ribar
Excellent fleet with refrigeration capacity
San Fermin
Complementary plant location in center
Peru (Chancay), situated next to Pacific
Fishing (synergies)
4 vessels (657
San Lorenzo
Excellent fleet
2 vessels (621 m3)
Pacific Fishing
Complementary plant location in center
Peru (Chancay)
6 vessels (2,338m3)
Piangesa
Large plants in Chimbote and Chicama,
Huarmey, the latter situated next to
Copeinca
(2,249m3)
Copeinca Dec’ 06
Copeinca Jan’ 08
9 vessels (4,192m3)
6 vessels
1 plant (80
MT/h)
m3)
37 vessels (11,150
1 plant (60
MT/h)
3 plants (355
MT/h)
m3)
65 vessels (21,935
m3)
5 plants (552
MT/h)
12 plants
(1,288 MT/h)
Copeinca has doubled in size since listing on the Oslo Stock Exchange Jan 2007
18
Other acquisitions in the fishing sector
COMPANY
AMOUNT
(USD)
DESCRIPTION
Month (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
165 M
Pesquera Diamante acquires Pesquera Atlántico, Consorcio Malla &
72% of Pesquera Polar.
May
26 M
CFG associates with investor, La Candelaria y Altoreal.
June
14 M
Tasa acquires Armadores Pesqueros.
12 M
Reorganization of Conservera Garrido in favour of Himalaya and
Titanium Investments.
17.5 M
CFG acquires plant in Chimbote.
135 M
Austevoll Seafood & Locksley Capital acquires Corporación del Mar.
January
August
September
October
November
19
New Industry Distribution
Plant Processing Capacity
Vessel Load Capacity
Company
Tasa/Epesca
Copeinca
Austral / Dordogne
Diamante / Malla Polar
Hayduk / Garrido
Exalmar
Chinese Fishery Group
Pacifico Centro
Cantabria
Alejandria
Others
Wood Fleet
Total
m3
27 831
21 935
16 103
16 014
14 964
11 222
10 016
3 848
3 287
1 866
50 705
32 209
210 000
Percent
13,5%
10,4%
7,7%
7,6%
7,1%
5,3%
4,7%
1,8%
1,6%
0,9%
24,2%
15,3%
100,0%
Company
Tasa / Epesca
Copeinca
Diamante
Chinese Fishery Group
Hayduk / Garrido
Austral / Dordogne
Exalmar
Pacifico Centro
Cantabria
Katamarán
Others
Total
MT/h
Percent
1 814
1 288
843
726
716
692
510
386
152
110
1 822
8904
20,4%
14,5%
9,5%
8,2%
8,0%
7,8%
5,7%
4,3%
1,7%
1,2%
20,5%
100,0%
Source: SGS
20
Geographical Coverage Strengthened
Through Acquisitions
Current plants
Bayovar
120 MT/h FAQ
50 MT/h SD
Chicama
179 MT/h FAQ
80 MT/h SD
Chimbote
Relocation
Plant in Ilo (South) is
ready for full scale
operations on March
2008.
Second plant in the
south to be ready for
operations in Jan 09
222 MT/h FAQ
185 MT/h SD
January 2007
Casma
80 MT/h SD
Huarmey
92 MT/h FAQ
50 MT/h SD
Chancay
60 MT/h FAQ
80 MT/h SD
Ilo (Q1 ´08)
90 MT/h FAQ
21
Mergers Program Delivered
Proposed date
Company to be merged
Delivered
San Lorenzo
Compañia Pesquera Ribar
Pesca Peru Huarmey
Pacific Fishing Business (PFB)
Corporacion Fish Protein
March 2008
San Fermin
Pesquera Industrial El Angel S.A.
(PIANGESA)
Timely mergers will allow for planned synergies
22
Financial
Information
Second Fishing Season Results
• Copeinca finished second in the second fishing season.
Production Ranking
Company
Tasa
Copeinca*
Hayduk
Austral
Exalmar
Others
Total
– Total Own Fleet Catch: 235,841 MT (11.03% of total catch)
• Copeinca´s participation 16.5% (2nd place)
– Above 14 percent previously anticipated
• Production
– 78,384 MT of fishmeal produced.
– 12,982 MT of fish oil produced.
(%)
19.22%
16.53%
11.86%
6.87%
6.55%
39.0%
100.0%
Fleet Ranking
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%
Succesful fishing season after acquisitions
Source: SGS
Q4 2007 Highlights
• Main market (China) reactivates as expected
– Long-term market fundamentals unchanged
• Consolidation strategy delivered
– Copeinca doubled in size in 2007
– Strong position for ITQ
• Mergers program delivered (Q1 ´08)
– Consolidation of acquisitions according to plan
• Renegotiation of USD 185 M Loan Agreement
– Finalized with Credit Suisse in (Q1 08)
• New Organizational Structure
25
Q4 2007 Financials
• Revenue increase of USD 22.3 M
Revenues and EBITDA
60 000
– USD 48.7 M vs. USD 26.4 M in Q4 06
• EBITDA decrease of USD 4.7 M
50 000
• Key performance indicators
– EBITDA / Sales 20%
•
COP Sales USD 22.9 M Gross Margin 37 %
•
Targets* Sales USD 23.2 M Gross Margin 17 %
USD Thousands
– USD 9.8M vs. USD 14.5 M in Q4 06
40 000
30 000
20 000
10 000
– 56,175 MT sold in Q4 07 vs. 24,195 MT in Q4 06
•
28,313 MT from COP
•
27,862 MT from Targets
0
Q4 2006
Q4 2007
Revenues
26 428
48 774
EBITDA
14 542
9 866
* Inventories acquired
26
2007 Financials (unaudited)
• Revenue increase of USD 38.2M
Revenues and EBITDA
140 000
– USD 128.1M vs. USD 89.9M in 2006
120 000
– USD 27.2M vs. USD 35.7M in 2006
100 000
• Key performance indicators
– EBITDA / Sales 21%
•
COP Sales USD 79.2 Gross Margin 41%
USD Thousands
• EBITDA decrease of USD 8.5M
80 000
60 000
40 000
•
Targets* Sales USD 42.1 Gross Margin 19%
20 000
– 135,000 MT sold in 2007 vs. 94,000 MT in 2006
•
85,000 MT from COP
•
50,000 MT from Targets
0
2006
2007
Revenues
89 888
128 100
EBITDA
35 678
27 228
* Inventories acquired
27
Balance Sheet
Assets (USD million)
Equity and Liabilities (USD million)
1 000
1 000
900
Non-current
assets
800
900
Shareholders
equity
800
700
700
600
600
355
500
656
400
Cash and cash
equivalents
500
Bank Debt
400
242
300
300
200
100
0
146
47
124
41
Q3 2006
200
Current assets
100
0
Q4 2007
47
96
45
230
Q4 2006
Q4 2007
Other Liabilities
► Good combination of debt and equity; resources have been invested in fixed assets
28
Outlook
Outlook
• Expected total catch of 6 million tons in 2008 (same as 2007)
• South plant ready for full scale operations on March 2008
• Important process optimization and cost savings through
synergies
– All operating companies to be merged within Q1 2008
– Savings after Q2 2008.
• A fishmeal player to be reckoned with
– Copeinca represents 16.5% of Peruvian fishmeal production, the second largest
fishmeal player in Peru
– Copeinca represents 5% of worldwide fishmeal industry
• In attractive market opportunities Copeinca will continue
being an active consolidator
30
2008 Assumptions*
• Annual biomass
– Quota 5.25 million MT
– South catch 0.75 million MT
• Total quota participation 16 – 16.5 %
– 11.5%* own fleet,
– 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
* As previously communicated 29 February 2007
31
Q&A
Q&A
32
Additional Information
Copeinca
Production Volumes and Exports
Copeinca export markets (2006)
Share of 2005 world volumes (´000) tons
Fish oil
Fishmeal
100%
5,877
4,370
27%
80
43%
965
36%
14%
40
9%
20
34%
0
11%
15%
30%
25%
19%
46%
Production
30%
Export
China
35%
6%
16%
60
Others
23%
718
Production
39%
Export
Other
Chile
Scandinavia
Peru
Chile
7%
Taiwan
8%
Japan
13%
Germany
16%
34
Largest Shareholders
Investor
Dyer Coriat Holding
ANDEAN FISCHING L.L.C
INVESTORS BANK & TRUST COMPANY
Dyer Ampudia Osterlin Luis
SIS SEGAINTERSETTLE AG
ORKLA ASA
DEUTSCHE BANK AG LONDON PRIME BROKERAGE
STATE STREET BANK AN A/C CLIENT OMNIBUS I
SOUTH WINDS AS
STATE STREET BANK AN A/C CLIENT OMNIBUS D
GOLDMAN SACHS & CO-SECURITY CLEARANCE
THE NORTHERN TRUST C USL TREATY ACCOUNT
VITAL FORSIKRING ASA
BANK OF NEW YORK, BR TREATY ACCOUNT
MORGAN STANLEY & CO
DNB NOR SMB VPF
DERIS SA
DNB NOR NORGE (IV) VPF
MP PENSJON
Dyer Fernandez Luis Williams
Top 20
OTHERS
TOTAL
Shares
%
19,098,000 32.65%
6,200,000 10.60%
3,292,006
5.63%
3,181,220
5.44%
2,883,184
4.93%
2,727,300
4.66%
2,123,271
3.63%
1,730,100
2.96%
1,489,750
2.55%
916,827
1.57%
816,525
1.40%
733,791
1.25%
688,628
1.18%
651,484
1.11%
627,479
1.07%
510,739
0.87%
500,000
0.85%
386,375
0.66%
383,850
0.66%
332,630
0.57%
49,273,159 84.23%
9,226,841 15.77%
58,500,000 100.00%
As of 26 February 2008
35
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
36