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R&D - a Crucial Element in Fish Feed

R&D - a Crucial Element in Fish Feed. New York Investment Forum, May 2014 Torben Svejgard Group CEO BioMar. BioMar key figures 2013. Turnover 1.6 billion USD* EBIT 7 3 m USD* ROIC 20% Production volume approx. 1 million tons Approx. 1,000 employees (including JV’s)

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R&D - a Crucial Element in Fish Feed

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  1. R&D - a Crucial Element in Fish Feed New York Investment Forum, May 2014 Torben Svejgard Group CEO BioMar

  2. BioMar key figures 2013 • Turnover 1.6 billion USD* • EBIT 73 m USD* • ROIC 20% • Production volume approx. 1 million tons • Approx. 1,000 employees (including JV’s) • Production in Norway, Scotland, Denmark, France, Spain, Greece, Chile, and Costa Rica (and planned for Turkey late 2015) • * May 2014 exchange rate

  3. Owned by listedindustrial conglomerate Schouw & Co. THE PORTFOLIO AT A GLANCE $1,600m 135 years of history 125 years in packaging 25 years as conglomerate 5 core businesses today Consolidated revenue $2.1bn Consolidated EBIT $126m 2,100 employees in more than 20 countries Listed on Nasdaq OMX Copenhagen since 1954 BioMar 75% of consolidated revenue and 58% of EBIT 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 $287m 2013 revenue FIBERTEX NONWOVENS Leading European manufacturer of nonwovens for industrial applications $172m HYDRA-GRENE Leading in Denmark within hydraulic components and solutions $89m $845m KRAMP (20%) The absolute largest supplier in Europe of accessories and parts for farming FY2013 amountsconverted at USD/DKK 5.42 Kramp (20% owned) not in consolidatedfigures

  4. Total Shareholder Return • Indexed share price performance adjusted for share splits etc. • Any cash dividends are reinvested in the stock (no transaction costs assumed) • Danish companies are denominated in DKK, US companies in USD, i.e. the data show no exchange rate effect • Percentages show the annual return whereas the y-axis show the total increase over the period • Last date is 3 April 2014 • Source: Datastream • Maersk and Berkshire have multiple share classes, and Maersk B shares and Berkshire Hathaway A shares are used

  5. From 2013: A period of 1¼ years Schouw & Co. 64,3% Total Shareholder Return Historicalsharepricedevelopent with dividends reinvested Mærsk 45,8% Berkshire 30,3% GE 22,7%

  6. From 2009: A period of 5¼ years Schouw & Co. 29,4% Total Shareholder Return Historicalsharepricedevelopent with dividends reinvested Mærsk 20,0% Berkshire 13,4% GE 13,4%

  7. From 2004: A period of 10¼ years Schouw & Co. 18,3% Total Shareholder Return Historicalsharepricedevelopent with dividends reinvested Berkshire 8,1% Mærsk 5,9% GE 1,7%

  8. From 1994: A period of 20¼ years Schouw & Co. 14,5% Total Shareholder Return Historicalsharepricedevelopent with dividends reinvested Berkshire 12,8% Mærsk 9,6% GE 8,4% Generalforsamling 2014

  9. R&D in fish feed- needed or just a buzzword?

  10. Just a pile of pellets – how difficult can that be??!! Well………………

  11. An example - looking back on fishmeal replacement • Late 90’es to late 00’es: High focus on fishmeal replacement in salmon industry • Total feed industry R&D spend on this task: up towards 175 million USD +/- (?) • Result: Global salmon farming industry saves 1.3 billion USD annually (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 • Same relative savings in bass & bream and (European) portion trout, etc. – and being transferred to other species, e.g. shrimp

  12. Fish feed still early on learning curve Knowledge / sophistication Pig feed Poultry feed Fish feed Time • Fish nutrition R&D probably more complex than for terrestrial animals • Variation in water temperatures and thereby fish body temperatures

  13. Future feed R&D work • Still focus on feed performance – optimising and extending raw material basket • Process technology innovation an essential discipline including the link between physical quality and nutrition Prioritisation depends much on the development stage of the market! • Increased focus on health and feed nutrition interaction SRS

  14. Conclusions and implications for feed industry • A lot of feed R&D work conducted, but we still have a lot to do • Further substantial increase in feed R&D investment needed • Consequences for feed suppliers • Need for continued significant R&D costs increases (BioMar has almost doubled R&D spend last 4 years) • Critical size essential for a feed supplier to be able to afford needed R&D investments

  15. THANKS FOR YOUR ATTENTION!

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