Icelandic Salmon AS (ISLAX) Earnings Call Transcript & Summary

I'm pretty sure the population of Westfjords has gone up just by the arriving of the planes today. So -- but yes, I'm very pleased to stand here in front of you all. My name is Hjörtur Methusalemsson, spelling wrong myself. But -- and I'm the project manager in business development in Arnarlax. And I will have the honor to be leading this event here today. But yes, we are now live on the stream. I unfortunately can't see them, but I sure hope they see me. So how this would be set up, we will hold the presentations. And after all presentations, we will have the opportunity to ask some questions. We will then have a small coffee break around 2:30, and that would be after the [indiscernible] presentations and we will continue after that. But we should all be finished before 4:30. But yes, we are all gathered here together today to go some details about the company and the salmon farming industry in Iceland, the impact of it and the future possibilities. So I would like to welcome to the stage the man who will open the first ever Capital Market of Icelandic Salmon, Leif-Inge Nordhammer, our Chairman of the Board. Please welcome.

Thank you. It's always an honor to be the first one. It's a privilege for me to welcome you all to the Icelandic Salmon Capital Market Day here in [indiscernible] or in the [indiscernible]. People attending here today are shareholders of Icelandic Salmon, it's analysts, it's officials, its employees from the company and also members from the Board of Icelandic Salmon. My name is Leif-Inge Nordhammer. I have been in the aquaculture business for about 35 years, being the CEO of SalMar for 18 years. I'm a board member in SalMar and also then, as already mentioned, Chairman of Icelandic Salmon. I'm sure we will have a couple of days with a good introduction of the company, Icelandic Salmon, about Iceland as a farming region and the future outlook for farming in Iceland. And I guess some of you already have been visiting one of our sites. And later today, and tomorrow morning, we will visit a sea side of our company. Everything has a beginning and a new [ saga ] started when Matthías Garðarsson moved back from Norway to Bildudalur. Matthías was born and grown up in Bildudalur and together with son [ Kristian ], he founded Arnarlax in 2009 together with some other local people in Bildudalur. At that time, about 160 people were living in Bildudalur. Today, it's 280. And mostly thanks to the Salmon activity. And I think also is a good example what this business can mean for remote areas, and we see that everywhere where salmon farming is allowed to develop and grow. It takes time to grow or develop integrated salmon business. The picture up to the left is not a floating toilet, but it's [ electric ] power unit installed at Haganes site in 2014. And Arnarlax got its first license in 2012, a 3,000 ton license in [ Arnarfjörður ] at the Haganes site, which are going to visit later on. They bought a freshwater facility in 2013, Gileyri, which you have seen today. And the first smolts came into the sea [ pre-2014 ] at a number of 500,000 fish. And the first Harvest from Haganes was in 2016. So we are a very young company. SalMar made the first investment in Arnarlax in 2015 and became a minority owner. Other milestones through the years is the merger with Fjardalax in 2016 and also a new license of 10,000 tonnes the same year. Another 10,700-ton license were issued in 2017, and there was a capital increase in the company of NOK 200 million in 2018 and SalMar became the majority shareholder in Arnarlax in 2019. The company listed on the Oslo Euronext Growth in 2020 and changed name to Icelandic Salmon and tomorrow, we will ring the bell and mark the listing of the First North [ stock exchange ] in Iceland. [indiscernible] is becoming a substantial share of the total export of goods from Iceland and salmon farming has been the main driver behind this. This year, it might be 6% of the total export of the goods. Half of it take place in Bildudalur ladies and gentlemen, [ with ] the population of 280 people. Our value creation, I would say, is well above the average. And aquaculture share of the total value was seafood going out from Iceland was around 40% or an estimated to be of 40% this year and maybe increase up to 16%, 17% next year. And aquacultural Iceland, I would say, benefits from a strong fishing heritage with highly developed local seafood industry in particular, with regards to seafood processing equipment. It takes -- we see the potential for growth in the company. And we saw the opportunities on Iceland as a farming regions, although there were some new challenges. Like, for example, temperature, it's very low in the winter time, very little growth, almost nothing in the coldest months, but we think that also helps for the quality of the salmon. Building an integrated growing company with new people under a new framework, sometimes, you are hit by some mistakes or wrong decisions. We have been through that also. But where we as a company stand today, in my opinion, I would say, so far, we have managed to develop a company with our competent people that understand what farming is about and with our good management and leadership. We are working continuously with the company [ culture ] through the Arnarlax Academy, which many of you know as the SalMar School, and build up good competence in good farming practices and corporate culture is essential for success. We believe we have a good basis for future growth. As a company, we want to grow, we have owners that want to see that happen and also owners that will contribute in the growth going forward, but to succeed, we need predictability. Our regulatory framework, but also take care of the fish welfare and allow Iceland to take out its farming potential. And I would say that it's an obligation to help to feed a growing population in the world with sustainable and healthy food. So let's go to work. Thank you for your attention.

Thank you very much, Leif-Inge for this. Can I hear another round of applause for him? Thank you. Next on stage is here, come to talk about the outlook for the Iceland as a farming region. So let's welcome [indiscernible], Director General from the Ministry of Food, Agriculture and Fisheries. Please welcome to the stage.

Good afternoon ladies and gentlemen, it's a pleasure to be here to go through this simple presentation of the outlook for Iceland as a farming region. The intention is to go through this in a relatively organized manner. I'll start by introducing a few items that we feel are cross-sectoral through the traditional farming land based and offshore. I'll spend the bulk of my time speaking about the thing that's most relevant here, yes, the traditional farming also the [indiscernible] since there is actually quite a history on that already. And then I'll spend a few words on land-based and offshore. This Capital Markets Day comes at a very interesting time as with respect to this subject. Since 2 years ago, we, in the ministry have undergone a policy procedure trying to come up with exactly what I'm supposed to talk to you about here today. And interestingly enough, we have a final draft of that policy that's supposed to be published next week. And we are having a conference of the most relevant stakeholders tomorrow to introduce that. So I'll tiptoe around that a bit without giving you too much information, but you should be aware that this will be published probably around this time next week, so you can dive into the details and see what we are actually thinking. I could tell you everything, but I'd probably have to kill you following that, and I'd rather not. These are the [ fundaments ] for what we've been doing, we have created a holistic policy called Food Policy for Iceland, where we try to set the stage for the whole industry of food production in Iceland and set down the basic lines with our sustainability 1, 2 and 3. We -- in the beginning of the work according to our analysis, that the legal framework, the institutional setup, the surveillance, et cetera, was not up to par, and we had lost the industry along the way and didn't follow the growth of that. So we had the National Audit create a report, which they issued then this year in January -- end of January. While the National Audit looked in the rear view mirror and tried to position ourselves today. We got Boston Consulting Group to analyze for us on the future prospects. And in the meantime, little old ourselves, we spent our time in the ministry trying to analyze more technical details such as diseases, disease prevention, [ SKPs ] possible preventions for that, et cetera. So the technical foundation would also be there when the big strokes have been drawn. And as I said, now we are at the moment of introducing this and I'll give you a small peek into what we're thinking. Boston consulting, through what [ this ] picture, the first set of columns is where we were at 2021, as we were shown earlier, and that's a huge growth that has happened in the past 10 years. Boston then says, we have several ways to proceed. We can grow slowly, and we can reach already issued licenses, which would, even only that take us at 100,000 tonnes and that's plant-based and traditional and going from an export value of [ 45 to 140 ] or we could tenfold what we're doing now if we do things correctly. The premises for each scenario depends on this picture, which I think is quite good from Boston Consulting and this is focused on what government can do to enable private practice to operate. And that is lay effective governance as a foundation for what comes next and then creating an environment that allows the private sector to invest and to grow with insight the parameters of sustainable development. So what we are trying to do with the policy we are publishing next week is to fulfill these 2 parts, the government can do and create a foundation for companies actually to come here, invest, develop, try new technologies and create an industry that's sustainable. We managed to do that quite well when it comes to fisheries, we've managed this quite well when it comes to energy. We are a nation of very few people under 400,000, very rich of natural resources. So we actually have the unique opportunity to do things correctly, look far ahead and create an environment that actually works. So if we want to achieve something rare, we need to get these things right. Up until now, the National Audit tells us we haven't. We have a very fragmented institutional setup, we have unclear regulations and rules, and we need to get our -- together if we're going to achieve these things. So first things first, we need to set up a realistic way forward. And the first thing is to ensure that the baseline is secured. So what we have done is to secure funding for the Marine Research Institute here in Iceland to conduct proper monitoring and proper surveillance of our resources so that we can know whether we're heading towards a sustainable industry or whether we're heading the wrong way. This is the foundation for growth, this is also the foundation for pulling the hand break, if that's needed. So in the next 4 years, the total number of people focused solely on aquaculture in the Marine Research Institute will go from [ 8 to 21 ], and we have a detailed time plan for actions within that. [ NOK 200 Million ] extra a year to the Marine Research Institute. This is what they'll be doing, they'll be looking at carrying capacity of fjords, which is basically implementing and researching on the basis of EU's water directive and making sure that the water column and the ecosystems of the fjords we're operating in are within limits. They will be reviewing and doing the risk assessment that we know, which is basically preventing while salmon to be genetically affected. Monitoring rivers, strengthening the management of wild Salmon and monitoring sea lice and how they are actually reproducing and distributing here in Iceland as opposed to other places that we know. So we have a step plan here. We are installing monitors in more rivers than we have now. Again, on the basis of trying to hamper the dilution of the wild salmon. And not only have we gotten NOK 200 million for the Marine Research Institute, we've also gotten that number for the food and veterinary agency, which is the body in charge of monitoring and surveilling the operations and issuing licenses. And there as well, we are increasing the number of people from 8 to 20 and we are setting a system that is supposed to take care of all aspects of the trade, trying to make sure that not only is the surveillance done correctly, but we smooth out wrinkles that have been apparent in issuing licenses and being reactive to the needs of the companies. So by doing this, I think we are trying to achieve what has been called for both by the general public, the National Audit and the companies themselves to set up a system that works with respect to human resources. Having said that, finding 24 people in Iceland with expert knowledge on aquaculture might be a challenging task. So if you're interested in that sector, I encourage you to apply. Now traditional farming. These are the 4 areas, I think you would be most interested in taking a look at on a day like this, taxes has been specifically popular topic in our neighboring countries for the past years. And we have adjusted our methodology to some extent from what we have now. We are not going into a complicated system as in Norway. In my dubious past, I actually operated as the CEO of Fisheries Iceland, so I had to deal with a similar system to the aquaculture taxing system from that side of the table, having in my previous life, actually set it up from the government side. We decided it's too complicated, we are all for simplicity. So what we are doing in changing the tax system is to stretch the possibility to follow the companies. We will simply follow market prices and will follow the price. The highest price, the Icelandic tax system accounts for now is [ ISK 800 ]. I guess we're selling at [ ISK 1,100, ISK 1,200 ] now, not if I'm correct. So we would be able to get to that point. But also in bad years, we would go down further than we do now. Simple enough and no major revolutions to what we have. We are also going to calculate this on a monthly basis and apply the tax quarterly. What we are doing in addition is to implement a system of financial incentives to encourage investment in technologies that will aim for sustainability. We are basically setting the policy or building the policy on the pillars of the environment. So we will incentivize investment that leads to us maintaining what the water directive tells us with respect to the water column and the ecosystems. We do not want to affect that. That's market number one. Number two, animal welfare, so lice and mortality are the 2 other pillars that we're looking into. We're incentivizing that. Number three, SKPs. So what we will be setting up in the tax system is an incentive plan to encourage investment into these for areas to try to underline the importance of these factors when it comes to salmon farming. Where there is a carrot there also needs to be a stick, so what we are looking at is that we will, in 2028 or by 2028, have evaluate how operations are going. And we will, at that point in time, take further decisions on whether to have a mandatory change of equipment or technique applied to the industry. What we look at now are these factors, largest most, sterile salmon, closed pens, but the worst way to develop new technologies is by government intervening. So we're also leaving open the possibilities for industry or whomever to come up with better ideas than these so those will be incentivized as well if people can sell us the snake oil there, trying to get us to swallow. So we are encouraging these things to achieve goals environmental goals, and that's what driving this policy. If we get those right, we're good. If we get those wrong, we're not so good. No change in the environmental fund, that's a subtext we don't need to spend time on that only changes distribution of the funds to recipients. The fundamental thing that we think everything here depends on is, however, that we need to be able to incentivize and hit operators individually. We need to be sure that we're not applying collective punishments but individual punishment, individual rewards, not collective rewards. Area management. Firstly, I forgot that one. This is how Iceland looks today. The blue spots marking open [indiscernible], the light blue spots closed areas. This is done now through regulation, the suggestion is to put that into legislation, and that is simply to make it more sticky in terms of changing it. You would need to go through parliament to change that. But to individual responsibility we are trying to learn from the mistakes of others. If you go to the Faroe Islands, they had a huge crash in, well, 10 years ago, where you had a number of operators playing parts in all of the areas here in the Faroe Islands. They had multiple bankruptcies and a huge hit on the Faroese economy. What the Faroese did was simplify the model. There is an individual company responsible for individual areas, and therefore, you don't seek the lowest common denominator when applying technologies to your sites in that area. We see a report in the report Norwegian National Audit, but the same problems are, in fact, in effect in Norway in areas where you have multiple operators in small areas. And you can take every one of the factors that I had, and you will always have the same area, the one in the red box in Norway, where performance is lower than in all other areas and the National Audit in Norway points to this factor. What are we doing? We are now making the exact same mistakes as our French and neighbors in the Faroese and Norway. This is the operations in Westfjords and each color represents a separate entity. So what we are saying now is that in 2028, there will only be one operator in each of these areas. This will be an area that would be an area, so on and so forth. The only area where we will allow more than one operator is up in Ísafjörður, where you have the mix of colors out there, and that will be 2 areas. That is to be able to apply individual rewards and punishment. That is to be able to allow more flexibility for the operators within these areas. And I think this is the basis for everything we can do with incentives and actually sticks as well. What we will do until '28 is to allow the companies to have freedom to negotiate amongst themselves and hopefully get to a conclusion on a commercial basis of how to split the spoils between them and hopefully, 2028 will come in this area as it will with the implementation of technologies and rules and it will go as well because industry will have [ solved this ]. We have a set of management measures that are in place now. We have carrying capacity, which is the -- basically the organic load that can be applied to the [ shipment ]. As it is now, it's collective because there is more than one partly operating in each area. If we achieve the first thing, it becomes an individual matter. So you can be the master of your own destiny here. The Marine Research Institute will monitor this, and if you do good, if you treat your area well, there is all hope of increase, if this deteriorates you go the other way. Same applies to risk assessment, but we have a harder issue of getting that into an individual qualification. We have the Westfjords and we have the Eastfjords that have separate risk assessments. These relate to the mix of farmed Salmon with wild Salmon. But based on performance, this can increase or decrease. And only [indiscernible] City, 2 days ago. The Marine Research Institute revoked their recommendation for risk and management assessment for the next 2 years because of incidents that have happened with respect to escapes and they are reviewing this on the basis of new information of farm salmon being caught in salmon rivers. So these are dynamic instruments that actually reflect the performance of industry. In addition to that, we are setting up a traffic light system, which is something that is well known in Norway. And by splitting these areas we have talked about earlier, we believe we can on an individual basis, set up a traffic light system that includes mortality as an animal welfare indicator, sea lice, which is well known and then SKPs. We have the privilege here in Iceland to be able to DNA analysis all SKPs that are found. So we believe we have the equipment to actually react in this manner. So to summarize, this is what we are trying to do to keep up our end of the bargain. Now it's up to the industry to delivered to it. And then we hope for a bright future with growth in this part of the industry. But the low case can also be lower if you actually fail to operate in a manner that you need to. So we're not setting goals of growth or a decrease, we're setting goals of maintaining a sustainable industry and that's a collective operation that we need to try to join to do well and 2028 is only 5 years away so let's focus. Now land based, that is a very hot topic now. It's, of course, a part of traditional farming in terms of smolts. But it's also a separate industry that's on its way to grow, both here in Iceland, but as well abroad. We have, in our work come across 3 major issues, I guess, the licensing system is quite slow. It should be more streamlined than the one we know from traditional farming since this is a municipality-driven thing that has been done over the years. In other industries, you have an added layer which is access to water and electricity, and you have an additional layer, which then comes to us, which is animal welfare and health. So #1, we are in dialogue with other ministries and institutions on trying to streamline the licensing operation. I do hope that we'll see a light at the end of that tunnel soon. We are, as I showed you earlier, trying to strengthen the surveillance operations there with respect to animal health and welfare by setting up a separate unit on that issue. And we are creating a separate set of rules around that issue of animal health and welfare since there are different parameters in play there than in the open ocean. So hopefully, government can also help here. With respect to offshore farming, we are only looking as far as 2028. We want to create and will create a framework whereby individual operators can in collaboration with the Marine Research Institute, contact [ pre ] investigations of areas that are of interest. We will set the system up where that can lead to a trial period, technological trial period for a limited number of years, and we will then, in 2028 evaluate how far we want to go with it and set our licensing scheme. And I would assume that most of the issues that are in play in traditional farming will be in play there as well. So incentive-driven, industry-driven within a framework of government approach would be applied. One thing that needs to be taken into account there, and I encourage people to look at that is that the issues of carrying capacity, which shouldn't be a big one there, but more importantly, risk assessment needs to be taken into place there. And we don't know at this point in time how that will affect the potential growth of that industry, but that remains to be seen. So I just, I'll finish in the words of late President Ronald Reagan with what he considers to be the 10 scariest words of the English language, "I'm from the government. I'm here to help".

Thank you very much, [indiscernible], for this future outlook for the Iceland as a farming region. And there's a lot of things there and a lot to analyze. So we -- yes, we look into the future bright. Well, next thing is that probably me and many others in the room here knows that salmon farming is something that is just plug and play. So the next person on the stage will give us an overview of what is important when building an industry. So please welcome Runar Sivertsen, the Chief Strategy Officer from SalMar.

Yes. Hi, everybody. It's a pleasure for me to be here. As said, my name is Runar Sivertsen. I started in SalMar back in 2010, I've been in the company now for 13 years. Had the pleasure of following a tremendous development we need in the industry, not only in Norway but also in Scotland and here in Iceland since 2015. And we are really excited of the development so far and for all the opportunities that are to come. One of the reasons why we are so excited is the fantastic potential on Iceland. And we see a lot of similarities to how we built an industry in Norway. In Iceland, we have favorable biological conditions with long fjords that create shelter while wind waves and currents give the salmon access to oxygen-rich seawater. We also have a huge coastline that is over 6,500 kilometers. In the Westfjords alone, we have 2,000 kilometers of coastline. If you compare that, as we have been talking about earlier to the Faroe's, they have a coastline of 1,150 kilometers. With that coastline in Faroe's, they produced 99,000 tonnes in 2022, while the total industry of Iceland produced 45,000 tonnes, less than half of the Faroe's. That alone says something about the huge potential we collectively have here on Iceland. And last but not least, we have the coastal culture and people that is used to live off and with the opportunities that the ocean brings. Something that is crucial when you want to continue to build a sustainable industry, that you have a local community that breeds and also feels that they can be a part and develop this industry and together with you create something that you yourself didn't even think possible. If you look at Frøya, for example, where SalMar started back in 1991, there is a population there on 5,400 people. Of that, we have a workforce on 2,300 people and of those 2,300, 1,800 is now employed in the industry or in connections with the industry. A fantastic history that is just one picture of the many coastal communities along the coast of Norway that has had the same development. But great potential is not enough alone. What we have learned is as previous speaker has always also been touching upon is it has to be on the salmon's terms. We need to find the best sites to ensure optimal currents to have a good temperature regime and by that ensuring optimal farming zones and meaning that you have a small of a footprint as possible with your production, not only our production now, but also your ambition for the production going forward. And there's a huge untapped potential here in Iceland, both in respect of coastal and offshore farming. The technology and the areas are there. From the government, there is no 2 things as we have been touching upon that regulates the growth. We have a carrying capacity of [ 144,500 ] tonnes, and we have the risk assessments to [indiscernible] wild salmon currently up to 106,500 tons. Within this framework alone, we see a huge potential for further sustainable growth within the industry. For Arnarlax, we see a growth potential from 16,000 tonnes to more than 30,000 tonnes within our existing setup and with limited new CapEx usage. In addition, there's a possibility to increase that number even further to 50,000 tonnes. If the regulatory framework is in place and that also entitles new licenses in both Ísafjörður and Arnarfjörður. As the ministry also said now, they are working on a new framework for the industry. They have done a very thorough job and looked at the regulations, escape assessment, [ video ] security, seabeds and also as mentioned, the regulatory frameworks and conditions in both Norway and in the Faroe's. In addition, the Boston Consulting Group was hired to see the farming potential on Iceland. The report underlines overviews of a significant growth potential. And in the base case, they see 146,000 tonnes from traditional farming in 2032 giving Iceland a potential to be in fourth position in the world only behind Chile, Norway and the U.K., I should say, Norway, Chile and U.K., if you have the production numbers, right? In addition, they see a total potential of 245,000 tonnes if you include offshore and land based. If something, we feel that 34,000 tonnes in offshore potential could be somewhat conservative. It's all about, as I said, developing the technology, developing the industry and taking step by step. You need to build factory capacity, farming capacity, harvesting and processing capacity, you need to have the employees in all of these places to make sure that you have a critical mass of volumes, and that will also open up the potential of offshore farming. In SalMar, we have proven offshore farming through [ Ocean Farm 1 ], which is now in the third production cycle. And with that, we have great biological results. Of course, it's huge investments, our Ocean Farm 1 is [ 1.5 billion ] alone. In addition, you would need both capacity and harvest capacity, but those investments also significant something more than just investments. It's also opened up brand new areas to farming, which isn't available for us at the moment. So the investments need to come, but the potential is also very large. But doing things on the salmon's terms and investing in a strong robust value chain is not enough alone. We also need to invest in the people and in the local communities. They are the heart and the back backbone of driving the industry forward, a great workplace with a sustainable industry, also demand that we invest in local communities so that there are good and meaningful activities not only via work, but also for you and the rest of your family, the rest of the day. To give something back and ensuring viable and vital coastal communities, not only on the fjords of -- coast of Norway, but also on Iceland is an important part of the social contract, a building industry here in the Westfjords and on Iceland. So to summarize, to summarize the key factors, we have the biological conditions, we have the people, and with the regulatory framework that enables further sustainable growth. We will have the farming volumes needed for a further strong development of the Icelandic Salmon industry. There's a massive potential in front of us and Arnarlax and Iceland is uniquely positioned to take it. And the first threshold should be to reach that 146,000-ton mark, as previously mentioned because with bigger production comes more Icelandic volume into the market every day. In addition to more volumes, it dictates more sustainable investments through the entire value chain. If we are to grow, we need to increase our smolt capacity, we need to increase our harvesting and processing capacity, and we also need to ensure sustainable transportation routes from Iceland and into the market. And these investments, again, will open for a big number of new jobs, seeing that value-added production if you take into account numbers from Norway generates 3 to 4x higher employment rate than pure farming and harvesting operations. So for us, when we see more volume, we see the same growth and journey that we have had in Norway. We have seen what that has brought which now is salmon farming is the second largest export industry in Norway. And of course, we feel that the potential here in Iceland is also really, really high. Another important fact is that with more value-added production here in Iceland, we also see access to major retail contracts and with that opportunity to compete in global markets. That will also unlock more regular shipments, both air and by boat and by that, also unlocking the potential of creating an even further developing a premium brand, both for the Icelandic Salmon but hopefully also for Iceland, a win-win opportunity where we see the export of salmon can contribute and promote Iceland while reinforcing the unique Icelandic qualities of the salmon. In addition, increased volumes, increased investments, increased jobs creating, growth in the local communities and even stronger position for the Icelandic Salmon creates the need of industry locomotives. And SalMar is very committed to aid Arnarlax into further strengthen its position as such of locomotive. And as we have seen in Norway, industry locomotives operating across the value chain will enable and open the door to smaller players and take down the overall barrier of entry to the industry. New comers can focus on any step of the value chain and sell services to each other and to the industry locomotives, creating vast ripple effects, not only within the industry, both in the local communities and in the country as a whole. So to summarize, in Norway, we have built a fantastic sustainable industry over 50 years. The main development over the last 30 years. The export value for Norwegian Salmon was NOK 5 billion in 1990. In 2022, the same number was NOK 106 billion. This was made possible by biological conditions, sustainable farming, huge investment and a regulatory framework that has seen the potential and enabled growth. It has been an incredible journey in Norway, and we strongly feel that Iceland has embarked on this journey and their continued success will come. There's a growth potential, as we have talked about, within the Icelandic industry that will enable critical massive volume, creating more investments in the total value chain, more value-added production and a stronger Icelandic brand. Again, seen from Norway, we are very confident that this will create more jobs, more people in smaller communities and a vast amount of ripple effect across the industry. The local communities the university on R&D sector and in the country as a whole, as we have seen in Norway. There is oceans of opportunity out there and we feel that we are only in the beginning. So it's very, very hard not to be very, very excited about this opportunity. We feel that Arnarlax is in [ full ] position to take part of this journey and we really much are looking forward to the road ahead. Thank you so much for the attention.

Thank you for this insight, Runar. It's definitely not enough to just have salmon, water and [ feet ], you have to have a lot more than that. So it's very good, very good of you. During the next presentation, we will have 2 strong speakers from Western [indiscernible] they have a very strong connections to the Westfjords and they have done a very important job in building this industry like helping this industry develop in these rural areas. So I would please welcome [ Guðrún Anna Finnbogadóttir ] and [indiscernible].

Hello. My name is Guðrún Anna Finnbogadóttir, and I'm the team leader of Westfjords Regional Development Office, and I'm placed here in Patreksfjörður. We are the economic development agency for [ western ] region of Iceland. It works closely with municipalities, research institutes, universities, companies and entrepreneurs in its various projects with focus on [indiscernible] and data, consulting, marketing, environment and culture. The growth in salmon farming in Westfjords is remarkable from almost nothing in 2010 to currently around 30,000 tonnes. During that period, a lot of changes have taken place, and we have been working enthusiastically to motivate the government to follow up with legislation, infrastructure, monitoring and control in Westfjords. There are adjustments needed in a rural society like Westfjords with a new fast-growing international business in our blue field, the fjords. The histogram shows the percentage of the total export value in Iceland. The fish industry is currently around 12%. But when we compare it with fish farming the last 4 years, 2023 is only the first 8 months. Fish farming has become almost 5% of total export value. It's -- we should mention that salmon export has become better than export of Bacalao here in Iceland. The histogram shows the pay slips to employees in the fish farming in Westfjords, and the graph shows the total salary. The green line shows the salary in the southern part of Westfjords, the yellow is the north area around [indiscernible], and the blue in the east part of Westfjords. The salary in the Southern Westfjords was around [ ISK 1,200 million ] in 2021 and has been growing since. But growth can be seen in the northern part, where the salmon sea farms are starting now as well. Here, we can see Westfjords population change in the South and East 2001 to 2022 and also estimated development. Here in Patreksfjörður, Bildudalur and [indiscernible], it's the blue line. The development of decreasing population changed in 2013. When the salmon sea farm started and the forecast shows growth until 2030. Strandir, the Eastern part of Westfjords has similar population, but no new business and a decrease is clear since 2001. Drastic changes are needed to alter the situation there. Now to the local area of Arnarlax. [indiscernible] was established in 1955 in Patreksfjörður. So it has been running for 68 years, the company works in engine repairs as well as all kind of maintenance mainly for the fish industry. The business is still going strong, but now around 25% of the business is directly related to fish farming industry, but also a number of indirect products connected to the fish farming. In 2022, it was almost 2 positions, working directly for the fish farming industry but as you mentioned, there were 8 last year. And 1 of them left to Arnarlax. [indiscernible] is a fine example of a company that is holding its position in business, along with the growth in the fish farming industry. [indiscernible] has focused on contract on sea and by the coastline all around the country, starting from 2014, servicing aquaculture industry in Westfjords. The service has been increasing along with more growth in production capacity for aquaculture in Westfjords with approximately 40 employees. They still focus on services, diversified projects to even out seasonal highs and lows in the aquaculture sector. They are holding the environmental system certification ISO 14001 as well as ISO 45001. For a fully grown company like Arnarlax, there are expectations towards the company from society. The people seek stability, a good image and safe business operating in the best possible manner according to society and the environment. It is crucial for the local societies that the whole operation takes place in the area. We must build up harvesting plants, education, research, monitoring, control and other services. Sustainable business encompasses all elements the future of the company and the people in Westfjords are entwined. In recent years, the aquaculture industry in Iceland was grown -- has grown tremendously. Our future, a further increase in growth is anticipated as a result of rising global population, growing environmental consciousness and desire for product traceability. It is crucial for the industry to have skilled and knowledgeable labor if it is to meet these expectations. To some extent, educational institutions in Iceland have not been able to follow the rapid growth which has led to a lack of education and training for aquaculture employees. Furthermore, the number of jobs in research, innovation and monitoring has not risen in step with the expansion of the sector. Last year, we have been working with the long live learning center in Ísafjörður, meaning Western [indiscernible] the result of that where were is that in January 2023, Arnarlax, ArcticFish and [indiscernible] made a contract with the junior colleges in Ísafjörður, supporting the college to launch a new study program with the name, the sea, environment and resources. The Ísafjörður junior colleges will launch this program in cooperation with the junior colleges in [indiscernible], which is placed here in Patreksfjörður as well; [indiscernible]. So it's all around Iceland, aiming to spark interest with student 16 to 19 years old. On our travel, visiting educational institutions in Iceland and Norway, I should mention that one name came up everywhere, and that was Bjorn Hembre. He has been there as well just last week or coming next week. And one of the results of our analysis showed that there is a need for a development of Blue Competence Center like in Norway. And the next logical step will be for us to take on the task of developing a collaboration platform for aquaculture industry players. The following steps involve assembling stakeholders and determining how to finance the creation of a blue competence center. We are now working on establishing a research center in one of Patreksfjörður heritage building [indiscernible], that's the big one here. The aim is to acquire knowledge and create a platform for cooperation between stakeholders involved and we are seeking further support from official parties, Westfjords' development office and the municipalities, [indiscernible] have visited affiliated institutions and the plan is to open the [indiscernible] center early next year. All partners agree but it's important to build up aquaculture science, society in Westfjords. But the flow of money is a bit slower than the flow of our mind. In 2020 and 2022, the Westfjords development office conducted a survey asking everyone older than 18 years old, living in Westfjords about their opinion on the aquaculture industry in Westfjords. I would like to stress that the answer came from the people living next to the industry. One of the question was fish farming creates valuable income from municipalities. And you can see on the histogram that in 2020, 80% said they rather agree or agreed that the fish farming was creating valuable income for the municipality. However, in 2022, only 68% believed so. The statement fish farming requires technical and higher education with good salaries in the local area of the fish farming. Here in 2020, 75% rather agree or agree and in 2022, the number is 67%. This new industry has developed new jobs for those with technical and higher education in the companies. But now we must focus on further development in the research industry in Westfjords as well. When developing a new industry, it is crucial to have support from the local people and from the previous [ tales ], we don't have to worry, I can say. One of the main questions was looking at the whole industry in Westfjords, how positive or negative are you towards fish farming. The result in 2020 was that 81% of those answering was rather or very positive. But in 2022, it was 67%. This decrease is something we must consider, but take note. And remember that 67% support is a high number. I believe we can do this together, creating a synergy that benefits us all the company as well as the society. Now I would like to welcome General Director of Westfjords [indiscernible] Sigríður Ó. Kristjánsdóttir.

Hello, everyone. I have -- very much hate connection with those things so I'm just going to stand here. As Guðrún Anna said, we at the Westfjords Regional Development Office, [indiscernible], we have a purpose in the society, we are the association of municipalities, but we also work with companies in the region, and we advocate the interest of the Westfjords of Iceland through administration, through marketing, coordination, cooperation and dialogue. That's one of the main things that we are doing. And we have had great dialogue with this with the fish farming industry. But what we are working towards and what has been a really big part of our purpose through the years. And the municipality, the association of municipalities has been around for since 1959. And their main focus in 1959 was better roads, was better phone connections and better electricity system. We're still working on that. But in recent years, we have made great strides because our main focus is now and has been for several years on competitiveness. The competitiveness of this region as a region to live in, as a region to invest in and as a region to visit. We -- these are all interconnected, but they all rest largely on infrastructure. You need to be able to get here. You need to be able to travel here, and you need to be able to transport whether it is your goods going away or what you need to create your goods, that's basic. But this has been slow. It's been a little bit faster in recent years, and we are looking towards not having unpaved roads on our main system. And I shouldn't be saying that in 2023, but I am. And this is shocking. And it's also shocking, how slowly -- I'm sorry, [indiscernible], this is not your personal fault, but how slowly the national government has been responding to our wishes, the people of the Westfjords because we're working for them. Regarding the framework for this great big industry that is greatly impacting our future possibilities. We have, from the year 2008, the association of municipalities in Iceland has been calling towards the Icelandic government to create a proper framework for this industry. We are -- they are hearing us maybe now, but I -- this is perhaps the first -- the last few years is the first time we actually believed that somebody is listening. And it is shocking that it takes 15 years to respond for [indiscernible] to actually discover that the aquaculture industry has started in the Westfjords, but maybe it's the roads. But we are focused on these four growth sectors. This is not the only industries in the Westfjords, but these are the growth sectors that we have talked about: It's seafood, it's aquaculture, it's tourism and its energy. What is needed for these growth sectors to work and what we need for innovation for knowledge building and for the development of the region are those 5 things up there. This is from Iceland's innovation policy. But it's really relevant here. We need the right mindset inside of the Westfjords and outside towards [ not the least ] this industry. That's been a struggle for the last few years, hasn't it? All of you? Capital and market access is something that really isn't maybe in our power to work with, but we've been working on the framework. That businesses can grow here that people here can live here. And that human resource part is the education, where Guðrún Anna has been working very much with the companies here and with the school system and to build up because we are working with a regional plan of action, and this is the vision for 2030. Because we need -- this is part of a regional plan of action that's made for 5 years -- for a 5-year period. We're entering this last year, next year, where we will start working on our next plan. And we, of course, will contact all the companies and municipalities in order to do that. But we have been working the last 5 years, we've been working really hard on infrastructure and on job creation and as we have for the last years before that. But now we need to look at housing, which is needed for further growth. And we need to look at the education at the welfare and not the least culture. And I was really glad when Runar talked about, it needs to be fun. It needs to be fun to live here. The society needs to grow as well. And I welcome Arnarlax, and I congratulate you on this part where you're fully grown now on the Icelandic market and I really welcome Arnarlax, and thank you for the cooperation so far. And we, of course, are looking forward to cooperation from now on. And to thank you.

Thank you very much Guðrún and Sigrí for showing us how salmon farming has impacted the region. And as we see, we have a lot to go further. But -- future is close. So let's now the plan is to have a coffee break. We will have it -- yes, short coffee break, I expect everyone to be back in a [ sheet ] quarter past 3. So it's almost 20 minutes. Okay. The toilets are on the left, the right, there is coffee and right and left. So yes, enjoy. [Break]

Yes. Hello. We almost made it, but please welcome, everyone [ once ] getting back to their seat and hope you have enjoyed this break, of this whole baked cake and [ flatbread ], which is [ flakes ], which is kind of the Icelandic [indiscernible] bread so it's -- but yes, let's everyone sit down and then we will continue. We have only one presenter left. That presenter here will go into details of what Arnarlax is doing and how the outlook is for the coming years. If he would be at Demark, he would be known as [ Banca ]. But here in Iceland, we know him as Bjorn Hembre, our CEO. Please welcome him to the stage.