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Nourishing the future Cristián García-Huidobro CFO Multiexport Foods.

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Presentation on theme: "Nourishing the future Cristián García-Huidobro CFO Multiexport Foods."— Presentation transcript:

1 Nourishing the future Cristián García-Huidobro CFO Multiexport Foods

2 2 II. Multiexport Foods Overview Agenda I.Chilean Industry CompetitivenessI.Chilean Industry Competitiveness

3 Nourishing the future Chile, historically has been one of the most competitive producers in the world’s salmon industry…

4 4 Chilean salmon industry enjoyed two decades of healthy growth... Chilean Competitiveness Period Source: Multiexport Foods X XI

5 5 Source: Multiexport Foods Current situation Chilean Competitiveness Period EBIT per Kg (WFE) – ATLANTIC SALMON

6 6 Everything went well until the ISA virus hit the industry, cutting production by half…

7 7 Industry did not pay attention to strong sanitary alarms, Cáligus (sea lice) went out of control and by 2007 the first sanitary crisis hit the foundations of the industry Source: Multiexport Foods Chilean Competitiveness The ISA Crisis ( )

8 8 Source: Multiexport Foods Chilean Competitiveness The ISA Crisis ( ) EBIT per Kg (WFE) – ATLANTIC SALMON

9 9  Current model not 600 Th Tons WFE  Government awareness: Employment and regional development  Action required: Redefine production model Regulation / Enforcement required Neighborhood system - fallowing period Monitor ISA virus and Sea Lice levels Adopt Sanitary best practices Smolt quality control ISA Crisis Aftermath: Action Required

10 10 Chilean Competitiveness Post ISA ( ) Source: Multiexport Foods Good production performance + high market prices  Historic high margins

11 11 Source: Multiexport Foods EBIT per Kg (WFE) – ATLANTIC SALMON Chilean Competitiveness Post ISA ( )

12 12 Chilean Competitiveness Post ISA ( ) Production decreased by 40%  Cáligus decreased  sanitary problems almost disappeared Low supply  historic high prices & margins 4.5 Kg/smolt, Ex-cage 3.0 US$/Kg WFE New and aggressive growth period (US$2,0bn investment)

13 13 But the industry grew too much and too fast… making the same mistakes done in the past…

14 14 Source: Multiexport Foods Too good to be true…the new production level reached by the Chilean industry showed its old structural design problems. Chilean Competitiveness Post ISA ( )

15 15 Source: Multiexport Foods EBIT per Kg (WFE) – ATLANTIC SALMON Chilean Competitiveness Post ISA ( )

16 16 Production grew 70% for two consecutive years  Market price dropped 45%  Sea lice out of control (again) Fast Sanitary deterioration  3 isolated ISA virus cases Ex-cage cost increased US$ /Kg WFE : a)Sanitary deterioration : 60% b)Over regulation : 25% c)Industry inflation : 15% Industry suffered strong losses…(US$ 1bn) and stock prices dropped by 50-60% Chilean Competitiveness Post ISA ( ) What went wrong?

17 17 Chilean industry has been working hard with the government to make further improvements on existing regulation General consensus, among a large majority of industry players, about the following issues to be changed : 1.Remove over regulation 2.Improve biomass distribution throughout the maritime space: a)Improve Neighborhood System: Sea current model, fewer and larger, calendars 3.Dynamic Carrying Capacity depending on biological and environmental performance Towards a more Competitive & Sustainable industry

18 18 In the meantime, industry has made significant improvements: 1.Caligus Control: a.New products b.Area Coordination c.Strict treatment trigger 2.Stocking Decision: a.Stocking planning and individual site selection defined at board meeting level b.More information available for risk management c.Government approval of neighborhood stocking plans d.New regulation: Stocking adjustments by previous cycle performance Towards a more Competitive & Sustainable industry

19 19 Towards a more Competitive & Sustainable industry

20 20 II. Multiexport Foods Overview Agenda I.Chilean Industry Competitiveness

21 21 MMUSD 400 Turnover (2014E) $ MULTIFOO:CL Listed since 2007 Santiago Stock Exchange TON 60,000 Tons 2014E (WFE) 2,100 Employees Sales By Country (2013)  One of the Leading Companies in the Chilean Salmon Industry Top 3 in Chile and Top 10 in the world Multiexport Foods S.A. at a glance Sales Mix (2013) Harvest Mix (2014E)

22 22 Multiexport Foods 25 years of growth 2008: ISA Crisis 2010: Capital Follow- on (USD 89MM) 1988: Salmon farming in Chiloé Island 1991: USA Sales Office 2000: Acquisition of Chisal S.A. 2001: Acquisition of Piscicultura del Rio Bueno S.A. 2002: Smoked processing plant 2007: IPO (USD 97MM) A NNUAL SALES (M ILLION USD ) 2013: JV MITSUI

23 23 Multiexport Pacific Farms S.A. Joint-Venture between leading partners On January 2013 Multiexport Foods & Mitsui & Co. (USA) Inc, announced the joint initialization of a company specialized in the production and commercialization of Coho Salmon and Trout destined for Asian markets, with particular focus on China and Japan. MITSUI acquired 30% of the JV company shares in USD 36 million Nourishing the future

24 24 Multiexport Foods: Present in every stage Maximum Value Added Minimum Cost Value Chain

25 25 Farming facilities equipped with modern amenities to accommodate our professionals in remote areas

26 26 Multiexport Foods: Farming Division (Fresh & Sea Water) Fresh Water State of the art technology 5 Locations 15 MM Smolts 7 river/lake concessions Sea Water 99 Concessions 30 concessions in operation 23/62 neighborhoods

27 27 Our company is recognized worldwide for the quality of its processing plants

28 28 Multiexport Foods: Processing & Sales Processing: Among top 3 largest Chilean processing plants 75,000 Tons WFE capacity (62 units/minute) Largest Smokehouse in Chile (built in 2002) Designed by top quality Japanese smoker (Oji Salmon) Capacity: 7,500 tons WFE Sales: Competitive Sales Mix Largest Chilean Smoked Salmon Exporter Sales Office in USA Experienced Sales Team

29 29 Multiexport Foods Atlantic Salmon Ebit USD/Kg WFE Q1-2014, first financial recovery signs…

30 30 Multiexport Foods productive performance 2013 harvests mainly from XI region (>90%) while industry harvested 60% from XI region XI region highly deteriorated sanitary situation during S High Sea Lice Count High Mortality due to SRS 3 isolated ISA cases (Camanchaca, Los Fiordos, Multiexport) Strong impact during 2013: Low Harvest Weight and High Unitary Cost Site Sanitary Condition Good Bad

31 31 Back to Basics: Farming focus and implementation of a new farming organizational model Analytic, informed and coordinated stocking decision No stocking growth until the performance improves Smolt size increase: >120 gr Operational Efficiency, Cash generation and Debt reduction Multiexport Foods today…

32 32 Industry Benchmark - Financial Obligations 8,82

33 33 Multiexport Foods Stock (*) IPSA Index : average of top 40 Chilean companies listed in Santiago Stock Exchange Traded in Santiago Stock Exchange Since July 2007 Free Float 35% Shareholder Composition (Apr-14) -17,9% -73,9% -75,9% Px: 43,1 Px: 35,0 Px: 118,9 MULTIEXPORT FOODS INVERMAR AUSTRALIS -13,8% Px: 353,6AQUACHILE -19,2% Px: 3.773IPSA*

34 34 Investment Opportunity Nourishing the future Strong Growth Potential Experienced Management Convenient Consolidation Vehicle Specie diversification with focus on Atlantic Salmon Solid Commercial Base

35 Nourishing the future Thank You

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