Mowi ASA (MOWI) Earnings Call Transcript & Summary

Good morning, everyone. My name is Ivan Vindheim, and I'm the CEO of Mowi. It is with great pleasure I wish you all welcome to Mowi's Capital Markets Day of 2021, this time around, digitally. Ideally, we would like to have you out on one of our many farms or in one of our many factories. But under the prevailing circumstances, I think this is a good compromise. The disclaimer, I think, we leave for a self-study. With me today to present and answer questions, I have our entire group management team. A very complementary team, if I may say so, composed of highly skilled and very experienced executives. We have a rich agenda today. I start it off at 8:00 to 8:25 with the business and strategy update; then our CFO, Kristian Ellingsen, takes us through cost and financials; then we have Sales & Marketing with our COO of Sales, Ola Brattvoll; before COO Farming Norway, Øyvind Oaland, rounds it up with Farming Norway. Then we have a short 5-minutes technical break at 9:20 before Ben Hadfield, direct from Fort William in Scotland via Teams, will take us through Farming Scotland, Ireland and the Faroes; and Fernando Villarroel from Puerto Montt, Chile, who will take us through Americas -- Farming Americas. Then Atle Kvist will walk us through Feed; before our CSO and CTO, Catarina Martins, will address important topics as ESG and R&D. Then I conclude it all before finishing it off with our Q&A session facilitated by our IRO, Kim Dosvig, hopefully, at 10:30. Then the first section, business and strategy update. Mowi is one of the world's absolute leading seafood companies, #1 measured in both market capitalization and sustainability. We are also the world's, by far, largest producer of Atlantic salmon with 440,000 tonnes in 2020 or 440 million kilos, equivalent to 2.5 billion meals per year. So we do not only make a difference in people's everyday life, we also play a role in global food supply. That is something we are immensely proud of. We have a fully integrated value chain. We are listed on the Oslo Stock Exchange, and we are headquartered in Bergen, the city we like to perceive as the capital of the salmon aquaculture industry. Mowi's vision is to lead the blue revolution where all that entails. You could say this role follow naturally from our size. As this graph shows, we have already a clear #1 position in Atlantic salmon. And our clear aim is to maintain and further strengthen this position in the years to come. Another takeaway from this graph is also how fragmented this industry still is. There is no clear #2 or #3 player in salmon. So it wouldn't surprise me if you see further consolidation of the industry as it evolves. As already said, Mowi has a fully integrated value chain from feed to plate. We produce our own environmentally certified feed, especially designed for the Mowi salmon strain. Contrary to our competitors, 100% of the Mowi salmon is from our own breed with the opportunities that bring about. The seawater phase takes place in more than 160 farms all around the world. We harvest fish and filleting fish in 12 primary processing plants and produce elaborate products in additional 21 value-added factories. Further to that, we have an extensive sales network physically present in 25 countries, selling our products all across the world. We have organized our value chain in 3 divisions: Feed, Farming and Consumer Products/Sales & Marketing. In volume terms, we are, as already said, #1 in farming. We are also #1 in sales and marketing and #4 in our latest addition to the Mowi family, feed. Our 2 feed mills in Norway and Scotland have made it self-sufficient for feed in Europe with our 2020 production of 540,000 tonnes. Capacity is 640,000 tonnes. So in the short term, we have satisfactory room for growth. We are the only true global farmer in the salmon universe with our 440,000 tonnes in 2020 from 6 farming regions: Norway, Scotland, the Faroes, Ireland, Canada and Chile. As already said, 440,000 tonnes, of which 330,000 tonnes or 75% were originated in Europe, where Norway stands out as by far -- as far as our largest farming region with its 262,000 tonnes or 60% of Mowi's total farming volumes. Americas, for their part, accounted for 110,000 tonnes in 2020 or 25% of the volumes. We are also the only true global player in sales and marketing with our 21 value-added factories and 28 sales offices in 25 countries. In 2020, we produced as much as 239,000 tonnes product weight. Like farming, our main footprint is in Europe, by far, the largest salmon market with 75% of our volumes. Reminder, other volumes are equally distributed between Americas and Asia. So why all this talk about volumes? Well, first, the driver of market capitalization in this industry is, to a large extent, volumes and volume growth. The truth is that for various reasons, neither Mowi nor the industry have managed to meet the strong demand for the Atlantic salmon for the last 10 years. Demand is partly driven by supporting megatrends like population growth, growing health concerns and issues, while fishery is at its maximum level, a growing middle class with increased purchase power, an aging population and climate changes. But demand is also strongly driven by the product itself. Salmon is scientifically proven natural super food. It is nutritionally dense and great for one's health. It is abundant in omega-3, vitamins, high-quality proteins, potassium and antioxidants. It has top appetizing taste, look, texture and color. It is versatile for traditional and evolving food occasions, both raw, grilled, cooked and smoked. It's appealing to all people of all ages. And last but not least, farmed Atlantic salmon is the most sustainably produced animal protein. So we have a lot to thank the salmon for. It ticks off all the boxes. This is indeed a very powerful slide. The blue line is demand and the red line is supply. And the graph demonstrates how demand has clearly exceeded supply in the previous 10 years. We strongly believe that, that will be the case also in the coming 5 years. Alternative farming technologies will not change that. Mowi Farming is working along 3 main pillars: volume, cost and sustainability. On sustainability, we are #1 in animal protein universe, cemented by Mowi yet again being ranked as the world's most sustainable animal protein producer in the 2020 Coller FAIRR Protein Producer Index. The prestigious Coller FAIRR Index assesses the world's 60 largest listed animal protein producers against 10 ESG-related criteria, including, among others, greenhouse gas emissions, water use, animal welfare and working conditions for employees. However, we are not satisfied with just being a frontrunner in this. We can and we will do more. Our CSO, Catarina Martins, will go in-depth on this under her sustainability session later today. On costs, we have been consistently #1 and #2 in the regions in which we operate. However, it is a fact that cost is still too high in absolute terms, particularly in some of the regions outside Norway. The cost spread between the regions is also too high. Personally, I think it is more important than ever that conventional farming strengthen its competitive edge on cost as alternative farming technologies mushroom much closer to the markets with the logistic advantages that bring about. We will address further cost initiatives in the CFO session and under the various farming regions. On volumes and volume growth, we are not satisfied with our relative performance over the past few years. Despite having harvested record high volumes in 2020, we have been clearly lagging behind industry growth. As already said, that is not satisfactory, and our clear goal is to grow our farming volumes at least in line with the industry going forward. Therefore, we will address several growth initiatives today and even more as we go along. In sales and marketing, we put the customer at the core of everything we do through 3 key elements: the product itself, our Mowi branding strategy and through operational excellence. The ultimate goal is to create customer value. We have a fantastic raw material, the salmon itself, that we must take care of and protect. We must also continue to develop new, innovative, high-quality products that are easily accessible to our customers to keep pace with constantly evolving food habits. Further to this, we will continue our long-term stride for decommoditizing the salmon category through our Mowi branding strategy. Both the salmon and our customers deserves more than consuming the salmon like any other commodity. At the same time, I think we must acknowledge that the lion's share of the salmon today is sold as a commodity under fierce competition, particularly in Europe. Therefore, it is key to be a cost leader in this part of the value chain, too, so we can make a reasonable profit on our sales. In terms of growth, we also have a clear growth ambition in sales and marketing, albeit with focus on selected segments and markets. After having doubled with idea for some time, we decided to go ahead with our feed plans in 2013, partly to break up the prevailing feed oligopoly and its steadily increasing margins. And in 2014, we delivered our first feed pellets from our feed factory or feed mill in Bjugn, Norway, and from our second feed mill in Kyleakin, Scotland, in 2019. It has truly been a challenging but, at the same time, very encouraging journey. Although we recruited some of the best individuals in the industry, we started in practice from scratch with all the challenges that entailed. In all honesty, it has not been a journey without bumps in the road. However, that being said, we have overcome them all one by one. And we now have a world-class feed that performs well at a reasonable cost. The strategy from here is to grow Mowi Feed with Mowi Farming Europe. We have unutilized capacity in our feed mill in Scotland. And in Norway, we can easily add on a new production line, if needed, with limited capital expenditure. The competition in the external market is currently too high to justify a general broadening of our strategy through going externally. But we are opportunistic, and we will continue to cherrypick from case to case. In other words, the focus in Mowi Feed going forward is to streamline our feed operations, working on costs and continue to produce high-performing quality feed especially designed for our Mowi breed. Then Mowi 4.0. This is perhaps one of the most exciting slides on the entire Capital Markets Day. The Fourth Industrial Revolution is upon us and gives us unimaginable opportunities. My tip is that this will completely change our industry in just a few years' time. Therefore, in order to leverage the opportunities Industry 4.0 technology offers and will offer, we have developed our own Mowi 4.0 strategy to facilitate a digital transformation of our value chain from roe to plate. The aim is to make it much more efficient than today. In farming, we introduced the concept Smart Farming, which you may already know from agriculture, where we will use new technologies to increase productivity and fish welfare and minimize our environmental impact. In Norway, we are testing out 3 applications as we speak. By means of advanced imaging technology and intelligent sensors, we perform real-time monitoring of biomass, digital lice counting and autonomous feeling. A tsunami of data, combined with machine learning, will enable us to grow the fish much more efficiently than today and in an even more sustainable way. By tracking the fish behavior and monitoring the seawater constantly, we can be proactive instead of reactive when it comes to acting on biological issues. My tip is also that Industry 4.0 technologies will offer much clearer scale advantages in the seawater phase than what we have seen to date. Finally, you could add to this. Bear in mind that even after 50 years, we are still feeding our fish manually, though with a camera and a mouse click and not a hand bailer, in Norwegian, [Foreign Language]. We believe feeding, maybe the most important component in our value chain, will be 100% autonomous in the future. Artificial intelligence and machine learning will outcompete the craftmanship. This obviously offers opportunities, particularly for large players like Mowi. Therefore, in order to secure the desired progress on this, we have set a target to have Mowi Farming Norway, our largest farming entity, fully digitalized by 2025. It's definitely a [ hairy ] goal. But because of its importance, we need a push on this. Say it out loud doesn't reduce our commitment either. Øyvind will elaborate more on this under his section. Digitalization and automation offer, of course, also huge opportunities in our more than 30 factories. As we all know, fish processing today is, in many ways, extremely labor-intensive. And often, we are talking about just replacing manpower with existing machines. Advanced available scanning technology also opens up for a much more efficient production and sophisticated product differentiation than what we have today. We will also use blockchain solutions for selected customers. Ola will talk more about this under his section. To give you a further teaser of the Mowi 4.0 farming concept, we have prepared a short movie. [Presentation]

Exciting things, I must say. Then, Kristian, the floor is all yours, and you can walk us through the finance section. Thank you.

Thank you very much, Ivan, and good morning, everybody. I hope everybody is doing well. My name is Kristian Ellingsen. I always get a bit hungry when I see such nice pictures of salmon, such as we see here in the presentation, but I hope that you are also having some appetite for some numbers. We'll start with some exciting numbers showing that we are doing well. Today, the different business areas of Mowi will present their plans for the coming years, including how to grow their business, including how to improve our performance. But now at the beginning of my presentation, I will be a little bit backward-looking, look into the recent historical performance since 2015. And this is a benchmarking of EBIT per kilo versus our listed peers. And over time, this benchmarking shows that we are consistently #1 or #2 in the different regions. This benchmarking captures the differences in operations and costs because price differences, they tend to even out when looking at this over several years. And the overall conclusion is that Mowi is consistently #1 or #2 in the different regions, and that is a strong achievement. Remember that Mowi is the only global company in our industry, and we are measured against companies that can focus their entire resources on just 1 or 2 farming countries. So Mowi is performing well in the different regions, and this is a good starting point for further improvements. We know that conditions vary between the farming countries, both with regard to environmental conditions, legal framework, the supplier industry, culture and other factors. So therefore, the measurement must be fair and it must be performed region by region. We start with our largest farming region, Norway. In Norway, we are #2 in total. If you take the most recent year, 2020, as an example, Mowi Norway performs well. We are #1 in Region North. We are #1 in Region South. We are a little bit behind in Region Mid, which for Mowi is a large region encompassing 3 production areas with differences in performance. And the 2020 figures are adjusted for the currency effect on price from the weakening of the NOK. This is important when we are comparing Mowi, which is a euro company with our NOK peers because, again, this is a proxy for cost and operational benchmarking, and we do not want that to be disturbed by the FX price effect. If we move on and look to Scotland, we are #2, but closer to #1 than #3. In Canada, we are #1. In Chile, we are #2. But note that in 2019 and 2020, we have been a clear #1. In the Faroes, we are in line with #1. And for the other regions, we are a clear #1 in Ireland compared with the other regions. If you move on to the cost graph here, the first graph we see up to the right, we see that the blended farming costs for Mowi has been relatively stable for the past 5 years with an annual increase of approximately 2% or an inflationary increase. If you look at the graph below, we see that our costs in Norway, our most important farming unit, they have increased less than the industry. And this overview includes the total industry in Norway, not just the listed peers. So also some smaller, high-performing farmers are included here, and they can often be hard to beat on cost. But as Ivan also mentioned, while costs are relatively stable and we have a good cost position as the #1 or the #2 in the different regions, the cost level is still too high. For many years, there has been an underlying cost pressure in the industry, also for Mowi, and cost-cut initiatives are important to address this underlying cost pressure. And we have succeeded so far in keeping costs under control due to cost focus and cost-cut initiatives. And with these cost drivers, more challenging biology, increasing feed prices, more complex regulations, it is a battle to manage a 2% annual cost increase in total. We have been able to offset much of the increase through our work on cost. And the main driver for the cost pressure is biology, more specifically, the change to more costly mechanical treatments. And health cost has increased approximately 6% annually during this period. In addition to biology, the feed price is a cost driver. Feed prices have increased approximately 3% annually. Also, stricter regulations represent a cost driver. So there are many forces working in the opposite direction of our cost-cut initiatives. In addition to cost-cut programs, we are working on many initiatives in farming, which are addressing biology, and we will hear more about that from our COOs today. Our aim is to reduce costs, and this goes hand-in-hand with our work on growing volumes in a sustainable way. This slide shows the cost-cut programs since 2018. We see that they represent and practice over 800 different initiatives throughout our business. And we see that the effect was the largest in the beginning when there were low-hanging fruits. And then the focus has moved more over towards procurement and other types of cost work. Cost savings in the years 2018 to 2020, they amount to EUR 137 million. And the farming represents the largest part of our cost base and also of our savings. Each initiative, they represent a verified permanent saving. Many are related to renegotiation of contracts, procurement savings due to improved coordinations between departments and units, entering into frame agreements, volume discounts, tailoring of contracts to our needs, fee cuts, reductions on numbers of suppliers, cuts on external services and, in general, a careful review of our spend in all areas of the company. And the graph below indicates how the savings are split on different categories, such as boats and treatment capacity, nets and net cleaning, vaccines and other health items, procurement savings and other initiatives. And through these cost initiatives under this work, we have improved what we call our cost culture. We now have an organization which is more cost aware. And in the end, we are dependent on our organization to work in the right direction when it comes to cost. The target for the 2021 program is EUR 25 million in annualized savings. This includes the productivity program where we are also addressing our second-largest cost item in the group, which is salary and personnel expenses; increased productivity by working smarter, utilizing technology, automation; what we call Mowi 4.0 is an expectation not just from ourselves but also from society in general. And the volumes we produce today, we must produce with 10% less FTEs by 2024. In 2020, we demonstrated that it is possible to set new volume records with less FTEs. We produced all-time high volumes with 2% less FTEs than in 2019. And 2020 was the first year with somewhat less employees than the previous year. Further FTE reductions will, to a large extent, be solved through natural turnover, retirement, reduced overtime, reduced contracted labor. And our expectation is, of course, not to stay at today's volumes. Growth is one of the key pillars we are working along in farming. So in fact, we expect to be a net job creator in the coming years. Our cost-cut program also includes procurement initiatives. We have a long-term program to systematically address the entire cost base to achieve lasting savings through a lean organization, coordination, standardization and working as one company, what we call One Mowi. And IT and automation initiatives are important work of our -- work on -- important parts of our work on cost. In order to realize our plans, we need a solid financing. And we have EUR 2 billion in committed financing. The bank syndicate of EUR 1.4 billion is the backbone of our financing, and we expect that also to be the strategy going forward. We have a solid balance sheet with a 52% covenant equity ratio. This is comfortably within the covenant requirement of 35%, and there is no earnings covenant. We have a robust cash position. The year-end 2020 figure indicated here has increased due to the proceeds from the sale of DESS Aqua in January. Currently, 10% of our financing is green, and we expect this to increase to over 80% by 2022 and 100% by 2026. And speaking of green financing, we successfully issued the first green bond in the industry in 2020. CICERO signed off on our green bond framework, and the first bond was issued at very attractive terms. The total book ended almost 5x the issued amount. The bond has been admitted to Euronext ESG Bonds section. And the proceeds from the green bond is -- they are financing green projects across different categories in the company. The first green bond was very well received in the market. And we see that there is an excellent fit between Mowi's sustainability strategy and the ESG investor community. We believe in being transparent, accurate and consistent in our communication. Trust is an important value in the capital markets. We will issue our first green impact report next week, on the 24th of March, the same day we will release our annual report. Backed by solid financing, we will continue to grow in a profitable manner. And this brings us over to the next topic, sales and marketing. And it is my pleasure to introduce Ola Brattvoll, COO for Sales & Marketing.

Thank you very much, Kristian. My name is Ola Brattvoll. I'm the COO for Sales & Marketing. So I would like to take you through the Sales & Marketing division. As Ivan already mentioned, in Sales & Marketing, our main focus is customer value. And through our geographical footprint, we have the ability to serve customers all over the globe. As you can see to the right on this screen, we have sales offices across the entire planet, and we also have processing capacity in all main markets for salmon. Our main footprint is in Europe, the biggest market for Atlantic salmon, but we have grown our footprint in Asia and in the U.S. over the last few years as we have seen demand growing faster there than what it has done in Europe. In Europe, we have been working on restructuring of our processing footprint. And today, we have a footprint which is adopted to the current market. In putting the customer at the core in everything we do, we work along 3 main areas. First of all, the product itself. Salmon has intrinsic value as a raw material. Our role in Sales & Marketing is to value-add to that and to bring the quality of the raw materials to customers and consumers in the best way possible. Focusing on category management, customer intimacy, product development is key in order to bring more value to the salmon market. Our branding efforts was launched in 2018, and the first products were in the market in 2019. Our aim at the branding project is to decommoditize the salmon category. Having that in mind, we know that still, private label is dominating the salmon market. And in private label, you need to be cost efficient. So focusing on operational excellence and making sure that we have efficient operations also in the downstream part of our business is key. And we see further growth opportunities in value-added products. We will focus on selected segments and markets to grow our value-added volume in the years to come. As you can see from the bottom figure, we have grown our value-added volumes from 110,000 tonnes product weight in 2015 to 239,000 tonnes in 2020. We will continue to focus on growth in selected segments and bring more value to our customers going forward. Ivan already talked about the intrinsic qualities of salmon as a raw material. We believe that there are few proteins, few food products on the planet meeting the global megatrends better than what salmon does. And we think that salmon will continue to gain popularity among consumers all over the planet. And we are brave enough to say that we believe salmon will be the food icon of the 21st century. It has already had a fantastic growth more than most other proteins, and we believe that will continue as the megatrends are evolving in a direction supporting salmon even more in the future than what it has done previously. And you can see that also when you look at per capita consumption and market size in the most important salmon markets. As you can see here, there is huge variation in terms of how much salmon each individual are eating in the different markets. Norway ranking at the top with 8.2 kilos per capita. And you can look at big markets such as the U.S. with only 1.7 kilo per capita and China with only 100 gram per capita consumption. Looking to a market like the U.S., we have seen over the last few years a tremendous growth in the U.S. market with more consumer-friendly products being introduced, prepacked fresh products across national retailers in the U.S. market. And that has increased the consumption in the U.S. from 1.4 kilo only a few years back to 1.7 kilos last year. And we believe this trend is going to continue in the U.S. market. But you see also growth in most other markets across Europe and, of course, in Asia. So the global food trends, combined with more products being made available to modern consumers, will fuel growth in demand for the years to come as well. And we at Mowi are well positioned to capitalize on these trends. We have a global processing and sales presence with 6 value-added factories in Asia and 7 sales offices; 11 value-added factories in Europe, 15 sales offices; and 4 value-added factories in the Americas with 6 sales offices. This processing and sales presence makes us able to have relationships with all the key clients for salmon across the globe. We have worked on adapting our processing capacity to the current market. And we have done footprint restructuring in Europe, taking down the number of factories and focusing more volumes into fewer factories, reducing cost by that restructuring. We are also focusing on growth in especially Asia and the U.S. And we are, as you saw from my previous slide, increasing our share of value-added salmon. Our global customer networks makes us able to have a dialogue on category growth with all the key retailers across the planet. We have product knowledge and we have innovation capacity, which is something we are working closely with our partners on to bring more consumer-friendly products to the market. Working with the full category and making sure that the category is presented to consumers in a way which meets their expectations is key part of the partnership that we established with our retail customers. But it's not only about the customers. We believe that salmon as a category are lacking someone who can talk directly to the consumer. And our branding strategy is very important in that sense. It's a long-term strategy, and it is a venture that we just have started and that we will continue to focus hard on going forward. We believe that the brand will leverage our category leadership role with the key customers. Bringing a brand to the category adds value to the category. It makes the category speak. It makes us able to speak with consumers and to fuel demand with better information about the products available in the stores. And this will help us accelerate the value of the market and, ultimately, decommoditize the salmon market. We have built the brand based on our integrated value chain. And we believe that we can bring something special to consumers by the way we are organized. And the brand promise is caring. And this is based on the fact that as an integrated supplier, we care about the best salmon, bringing the best quality, the best product to the consumers. We care about the environment, which you will hear much more of later from Catarina. We care about our consumers and making sure that we meet demand in a better way than anyone else. And the tagline for the brand, "Salmon is good, Mowi is goodness," is taking the category responsibility for salmon by saying that salmon is good and also differentiating ourselves through everything we do throughout the whole value chain by saying that Mowi is goodness. I will show you a short video from the TV commercial that we aired in France last year. [Presentation]

As I said, we launched the brand in 2019. And at the Capital Markets Day in 2018, we said that our long-term target is to grow sales to EUR 1 billion with a 10% EBIT margin. This is still the long-term target. Last year was a challenging year for all of us, and COVID-19 significantly impacted the launch of the Mowi brand. It is delayed as a result, as we didn't get access to all the channels that we were planning to get access to, and we were not able to execute all the brand support activities that we planned to do. But what we see is that in the markets where we were able to launch and in the channels that we did launch, we have had a very good sales development. So we maintain our target of EUR 1 billion in turnover and a 10% EBIT margin. Currently, we are selling the brand as smoked and fresh in Poland, France and the U.S. In Poland, we are in retail and foodservice; in France, in retail; and in the U.S., currently in e-commerce only. But we see a very good sales development in the e-commerce channels for both in Europe and in the U.S. We are continuing to roll out the brand, and we'll focus on key European markets in 2021, and we will continue to grow with new clients in the U.S. in 2021, then we will focus more on Asia and Americas in the years to come. As I said, in our part of the value chain, cost efficiency is extremely important. As the largest value-added producer, we will focus on yield improvements, labor efficiencies, overhead and fixed-cost reduction to improve our competitiveness. Yield is extremely important. 80% of the cost of our final products is raw material. And by focusing on yield, we can improve cost performance significantly. And this is -- has been a very important area for us previously and will continue to be so in the future. We will -- we established last year our processing excellence team, who will take a global approach to processing excellence and establish benchmark and best practice, focus on yield and efficiency across our global factory footprint, introduce lean manufacturing and automation and new technology in our downstream business. They will have a full value chain perspective from primary to secondary processing and establish best practice, focus on yield, efficiency and cost reductions. We think this will gain a lot of benefits in the years to come. On top of that, we, as already mentioned by Ivan, will focus more on automation and digitalization to cut cost and build value to consumers. We have a labor-intensive process, which gives a high potential for automation. And our full value chain control gives digitalization opportunities. By knowing more about the raw materials produced from farming, we can tailor this to the end products that we produce, increasing our yield and improving our efficiency. We can also link raw materials to end products in a better way and securing differentiation to -- in a better way than what we can today. And we also see that consumers are becoming more and more aware and interested in the origin of the products that they buy, and digital tools can help us communicate that in a better way in the future. So our part of the Mowi 4.0 downstream or 4.0 strategy is along 3 areas. It's about cost cutting with raw material scanning and grading. So scanning the raw materials at the primary processing and directing the raw materials to the right factories for the right end products, we think, can improve yield and efficiency in a very good way. It's about automation and robotization inside the factory, replacing labor with machines. And it is about better planning and logistics, warehousing through digital tools. On top of that, we can increase our value from differentiation by making sure that we produce the right product to the right customers and by allocating the right raw material quality for the best end product quality. And that will give us differentiation opportunities which are better than what they are today. And the third part is consumer and customer communication, where we will use digital tools in a different way, both for end customer -- end consumer communication but also for customer communication. And I would like to end my presentation with showing you a short video on how we communicate with our customers in the U.S. [Presentation]

So this virtual trade show we held last week, and this was the first time for us to do this kind of communication with our customers, and it proved very efficient and very beneficial to us. We were able to communicate with our customers in ways which we didn't do before. To sum it up, we believe global demand for salmon will continue to grow. We think that the trends are even more strongly working in the favor of salmon going forward than what they have in the past. And we believe that we have a very good starting point to bring more value to our customers and benefit from this demand growth by developing and producing products in line with consumer demand, by transforming the salmon category through branding and by increasing value on reducing cost in our part of the value chain. Thank you very much. And with that, I would like to introduce the next speaker, COO Farming Norway, Øyvind Oaland.

Thank you very much, Ola, and good morning, everyone. My name is Øyvind Oaland, and I've been COO for Farming Norway since April last year. I will, during the next 20 minutes or so, update you on the strategic direction that we take in Mowi Norway in order to provide even more of the healthy, sustainable and fantastic products that you just saw in the presentation from Ola. Mowi Norway, as been said, represents 60% of the total harvest volume of the Mowi Group. We are organized in 3 different regions with activity along the whole coast from Agder in South to North of Troms. And we have the full value chain from freshwater, broodstock, seawater and primary processing. We have 20 small facilities and more than 140 farms and 5 processing plants along the coast. And we are producing and harvesting approximately 260,000 tonnes HOG in Norway. And we are back on track on volume performance that is reasonable given the number of licenses that we control. But in my presentation, I will also share some highlights on our growth and productivity strategy as we do have an untapped potential for further growth that we will realize going forward. In Mowi Norway, we are on our way in realizing a strategy that will take us up to a volume above 300,000 tonnes HOG by the next 6 years. We're continuing our investments in freshwater capacity, realizing several small expansion projects, but we're also currently embarking on a considerable post-smolt extension. In seawater, we will enable our productivity increase through digitalization and automation with Mowi's Smart Farming concept. Our cost-saving initiatives and productivity program continues. This is about preparing for increased competition and maximizing our earnings. We are addressing our cost control, both by cost cut, productivity initiatives as well as growth initiatives. Farming animals is all about biological control. Good biosecurity practices are key and important, both for animal welfare, sustainability and performance. And maintaining and, in some areas, further strengthening biosecurity practices in Mowi and in the industry is an area we give high attention, both from a strategic perspective as well as in our day-to-day operations. Before I move into some more details on the above-mentioned elements, I will also give a short presentation of the 3 farming regions in Norway. Mowi South consists of 5 freshwater sites and 27 seawater farms in production area 1, 2, 3, with activity in Flekkefjord in Agder to Sotra outside Bergen. South operates 1 processing plant, Ryfisk in Hjelmeland, Rogaland. And South produce and harvest approximately 50,000 tonnes HOG and represents 19% of the Mowi Norway volume. After a dip in harvest volumes the last years, Region South is now on a good track. We have potential for and will realize a further improved license utilization over the next couple of years. Site availability is a bottleneck in South. And better utilization of existing farms and also seeking extension and access to new farms and farm MAB is a priority area. We're also realizing several smolt expansion projects, which both increased the number of smolt stocking as well as increasing smolt size. We will significantly increase the post-smolt availability for South through our post-smolt strategy, which will mitigate both biological risks as well as ensuring a higher turnover per license and per farm in the sea phase. Mowi Mid is by far our largest region with operations in production area of 4 to 6, with more than 120,000 tonnes HOG last year. We are running 9 freshwater sites and 54 seawater farms. And we have 2 processing plants in the region: Ulvan at Hitra in Trøndelag and Eggesbønes in the Ålesund area. And Mowi Mid represents 47% of Mowi Norway's production. Over the last 5 years, we have seen a reduction in production volume and site utilization in Mid. The southern production areas in Mid face similar challenges as Region South with a more challenging biological situation evolving. And therefore, significant investments have been made in smolt expansion projects and we also have several underway. That means our post-smolt strategy is also central part of increasing our production volumes in Region Mid going forward. Region Mid is also operating our most advanced remote operation center, an important part of the Smart Farming concept. Our North Region is defined by production area 7 to 12, where we're operating 6 freshwater sites and 59 seawater farms. We have 2 processing plants in the region: Herøy in the Sandnessjøen area in Nordland and Jøkelfjord in Troms. Mowi North represents 34% of Mowi Norway's production. North is by far our best performing region, also in Mowi globally, with a very good cost control, good site availability and favorable biological conditions. We have been able to grow our production year-on-year during the last couple of years by increasing site availability and smolt output. And we are obtaining a very good license utilization. Focus in the region is to maintain the good growth and favorable biological conditions, which is also about attention to good biosecurity practices. And we believe we still have potential to further increase the production volume also in Region North. We have invested in freshwater capacity in North. And going forward, we will take out the potential from these smolt expansion projects, among other, the most recently completed greenfield project at Sandøra in Skjervøy in Troms. Apart from purchasing capacity, optimized and increased utilization of our current license portfolio gives opportunities for growth as well as reduced production costs. In Mowi Norway, we harvested 1,080 tonnes gutted weight per license in 2020, which is good and above industry average. However, if we break down and look at our utilization compared with our peers in the various regions, it is clear that we have a potential, particularly in Region South and Mid. North performs at more than 1,160 tonnes per license, well above average and ranking as top 2 in industry benchmark. In Mid and South, however, we are below industry average and ranking as #3 and 6, respectively. As mentioned on the region slides, we have invested significant amounts into freshwater in Norway in the past years, amounting to approximately NOK 1.6 billion, which has given a steady increase in average smolt size and biomass release. We do see significant volume, cost and environmental benefits of larger smolts. And our proportion of smolt stock above 250 gram have increased significantly and ended at 17% of our total smolt stocking in 2020. From a volume perspective, big post-smolts facilitates growth to 2 main mechanisms: one is obviously the additional volume MAB effect through biomass growth on land; and the other is reduced production time in sea, which in turn improves biological performance and growth as well as better site utilization. We will enable growth in Mowi Norway by further accelerating our investments into freshwater. And during the next 6 years, we will expand our post-smolt capacity to deliver 100% of our smolts in Region South and Mid at 700 grams. In addition, Mowi aims to grow further by application of new farming technologies, purchase of additional capacity and potential M&A opportunities. Further into our post-smolt strategy, our plan is to include up to 10 sites in total where our main strategy is to expand existing facilities. This is both due to its cost effectiveness, but also as the ability to move relatively fast. In Region South, we are looking into expansion of 4 to 5 existing freshwater sites. And in Mid, we will expand 4 existing sites plus 1 greenfield project. The expansion will increase freshwater production of approximately 27,000 tonnes. And realizing the post-smolt strategy is organized by a central project team with in-house RAS and freshwater expertise. And we will also secure strategic partners for our portfolio going forward. The total CapEx for our post-smolt strategy amounts to NOK 4 billion for the period 2021 to 2026. We expect first harvest from the post-smolt strategy in 2024 with approximately 10,000 tonnes gutted weight. And the post-smolt expansion in total will contribute to an increase in harvest volume of approximately 40,000 tonnes with a full run rate in 2027. Post-smolt expansion opportunities in Region North will also represent additional potential, which we're also evaluating going forward. We are already well into realization of our strategy, and the first approved expansion project is at our existing facility in Nordheim in Region Mid. Nordheim is already a well-run RAS facility, producing 2,100 tonnes smolt. And the freshwater capacity at Nordheim will be increased by another 3,500 tonnes, up to a total of 5,600. This gives 8 million smolts produced at 700 grams. And the CapEx for the project is approximately NOK 450 million with a CapEx per kilo at NOK 115. The estimated contribution to increased harvest volume from the Nordheim project will be approximately 5,300 tonnes gutted weight. Groundwork has started at Nordheim, and we expect post-smolt from the new department to be released during Q2, Q3 in 2023, and we will see harvest during Q2 and Q3 in 2024. Smart Farming was covered by Ivan in his introductory talk. And Mowi 4.0 and Smart Farming is an important concept for Mowi Norway going forward. Smart Farming in Norway means managing our farms more efficiently by using modern information and communication technologies to enable further productivity increase at our farms. This is about enabling remote operations of our sea sites, taking into use advanced underwater sensing and software analysis platform based on machine learning, focus on automation and simplification as well as full value chain data capture and real-time analysis for better practices and value creation through our Mowi Insight platform that are currently in development. We are in advanced stages of innovative projects that will enable productivity increase through our Smart Farming. And we will work towards having all our farms connected and operated at smart farms by 2025. One of the key elements of Smart Farming is to take out the full effect of remote operations. From our remote operation centers, our trained personnel will manage feeding, monitor fish welfare, health and performance, and communicate with our staff, performing service and maintenance operations on our infrastructure and also operations involving fish transfer, movement, treatment and harvest. Eight farms are currently connected to our operation center in Herøy in Region North and 20 farms to our center at Deknepollen in Måløy in Region Mid. By 2021, all our farms in production area 4 and 5 will be connected. The infrastructure and setup at Deknepollen will be a model center for further rollout in the regions, including expansion of the Region North center as well as establishing a center in South. By end of the year, we will have more than 30% of our farms connected to remote operation center, and our goal is to have 100% of our farms connected and operated by 2025. As part of Smart Farming in Mowi, we're also implementing an advanced underwater sensing and analysis platform. Our R&D department have been testing a new intelligence sensing system based on machine learning that gathers intelligence about how our fish grow, how they feed, their behavior, health and their living environment. This is an all-in-one system for real-time growth, weight distribution, autonomous feeding, fish welfare surveillance and automatic lice counting. And we are currently well into the commercial validation phase with 13 farms in Mowi Norway involved in testing and documenting the performance at different phases of our production in different geographical areas and gaining operational experience from the field as we speak. Gathering value chain data combined with machine learning and artificial intelligence will enable us to grow the fish much more efficiently than today and in an even more sustainable way. By constantly tracking fish behavior, fish health and fish performance, we can be proactive instead of reactive when it comes to acting on biological issues. We will be able to better understand and implement optimal practices, and we will reduce risks in the sea phase. Smart Farming by 2025 and realizing our post-smolt strategy set out for the next 6 years are key tools to facilitate organic growth beyond 300,000 tonnes gutted weight in Mowi Norway. But in parallel, we will continue our systematic and hard work of all our highly skilled employees to optimize growth and manage the biological situation for improved harvest weights and survival rate. We're organizing Mowi Norway with strengthened focus on utilizing our vast knowledge and experience across the regions by a stronger coordination. We have established cross-regional strategy teams for better utilization of resources, capacity and best practices within several key areas, as listed here. We also recently rejoined Sjømat Norge, the largest seafood industry federation in Norway. We strongly believe in the need for sector-coordinated efforts, especially within the area of maintaining and, in some areas, further strengthened by security measures to allow for continued growth. Farming salmon is about biological control. It's about attention to details and daily control. So with this, summarizes the highlights from Mowi Norway and how we are working strategically and targeted to accelerate growth going forward. So then in our program, we're a little bit ahead of schedule, but we'll go for a short break. In 5 minutes' time, we will continue with Farming Scotland, Ireland & Faroes by COO Ben Hadfield, who will present from Fort William in Scotland. Thank you very much. [Break]

Yes. Then I think we are ready for the next section, Farming Scotland, Ireland and the Faroes with Ben Hadfield, direct from Fort Williams via Teams. Can you hear me, Ben?

Yes, I can hear you fine.

Good.

Thank you, Ivan. Good morning, everybody. It's my pleasure to present the business units in Scotland, Ireland and Faroes. I'll just share the presentation now. Okay. Thank you. So as Ivan said, I'm Ben Hadfield. I'm the COO for Farming Scotland, Ireland & Faroes. The highlights of the business units, starting with Scotland. We've been farming in Scotland since 1965, and we have 2 modern RAS facilities: we have one flow-through hatchery where we produce organic smolts now; and we have 47 seawater sites. And I'm speaking to you today from Fort William, where we have a primary processing plant. What you see in Scotland is that we have had growth. It's not been even growth, but we've had 3% per annum over the past few years. And we've been able to access and develop a number of new sites through an application process here in Scotland. We've had 7 new sites since 2015, and that makes us very confident that we can rise over the coming years to more than 80,000 tonnes gutted weight. Productivity is an issue in Scotland, and it's one that we must address. One of the big boosts that we'll have, and I'll come on to this in some more detail, is the change from 120-meter to 160-meter pens, significant step forward for Scotland. It's double the size of the pens and allows us to reduce the units. We'll also talk to you today about the post-smolt strategy. We have enough smolts to grow organically going forward, but we would like them to be at a much higher average weight to reduce the time in the sea. And then cost initiatives. Productivity is key, as Ivan said previously, and we expect that to rise significantly in Scotland going forward. We also plan to expand and debottleneck our existing processing plant with a compelling capital investment going forward. And we would point out that we're the U.K.'s largest food exporter. And in Scotland, the industry is subject to good regulation on a science-based footing. We have made significant advances in oceanographic modeling to allow larger pens and consolidated farming base. It's a significant reduction in pen numbers and allows us to access deeper waters in more exposed locations. We've been successful in removing the 2,500-tonne cap, which existed in the Scottish industry until last year. And we were the first company to expand and have sites of 3,000 to 4,000 tonnes. The significant benefits of reducing the number of pens and reducing the cost base through that, we expect to achieve in the next few years. We expect that this will contribute an increase of organic growth in excess of 15,000 tonnes, and about 50% of our sites are in scope for this change. Significant cost saving exists between FTE reduction and centralized feeding. And we also expect to see improved sustainability benefits through increased predator control, access of deepwater and more assimilative capacity in the oceans that we farm in. We do plan to reuse the equipment in Ireland. Many of the pens are not that old, in good condition, sanitized, that we transfer to Ireland and use to improve our operations there. One of the areas that we've succeeded in over the last few years is expanding into new locations and developing new farming biomass. Over the last 5 years, we've had 17,500 tonnes, and these are in very good biological areas, but there are also areas that are challenging from an exposure point of view. We strive to do these developments in partnerships with local communities, providing a lot of employment and providing significant infrastructure improvements. We expect to develop 5 new farms by 2025, and 2 of these sites will be determined by the authorities in 2000 -- sorry, in this year. In addition to this, we plan a series of semi-closed containment operations in Scotland. This is expansionary biomass, and it's aimed at increasing our post-stocking potential. We do this because we want to reduce the farming cycle and improve harvest volume, and it also improved this biology in the sea with increased following and better fish welfare. Like Norway, we plan to have post-smolt facilities. And here, we have the opportunity to transfer fish from our current recirculation systems into a post-smolt plant, and we're consulting with the authorities to side this at Kyleakin. The aim, like in Faroes, which I'll come on to shortly, is to increase in smolt -- or post-smolt stocking weight up to 800 grams. And we're confident that with the temperatures we have in Scotland, that this will allow us to farm and harvest fish within 12 months. It is accretive biomass development. The consultation that has taken place now is for a 3,000-tonne post-smolt facility in Kyleakin, which is on 182 acres that we own, and it's next to our feed mill which was commissioned in 2019. Screening applications will be submitted for both the post-smolt plant and for the closed containment -- or semi-closed containment at sea. And we do expect this to improve our ESG criteria going forward, as I said previously, with increased following, increased harvest volume, reduced time at sea and reduced treatment intervention because of the shorter farming cycle. We have significant potential for cost reduction in Scotland. But we must also see here that we have a differentiation strategy with higher-cost feeds, where we produce organic label rouge and especially grown ranges of salmon for key customers in the U.K. market. We've had a period of exceptional product quality and improving harvest weights. And we do expect the productivity from the reduced number of pens and being able to select the best farming locations to improve our cost base going forward. We've also made significant expansions in our treatment capacity, particularly this year in 2021, where we have a new thermalizer with high capacity, which arrives in July, and a second well boat for amoebic gill disease treatment, which is essential in Scotland. I'm also quite pleased with the performance of our cleaner fish operation, which is based in Angelsey in Wales. We have now risen to 3.4 million lumpsuckers, and we've had exceptional success so far with our ballan wrasse, which will be ready for deployment in July this year. And we expect that these, when they're cohabiting with our salmon, will improve sea lice control and provide us with a further reduction in medicinal treatment. Moving on to Ireland. In Ireland, we have a high-quality overproduction business. We also take eggs from Ireland to Scotland. We have 3 freshwater sites and 8 seawater sites and a processing plant at Rinmore. Ireland produces exceptionally high-quality salmon, and there's huge demand for the organic salmon that's produced in Ireland. It's a smaller volume, and it is focused on customer service and flexibility in volumes. Capacity. We have a capacity of 10,000 tonnes in Ireland. But there has been a reduction from that in previous years. This, we intend to reverse. We're working in partnership with local communities and working with the regulators. We expect to leverage on significant synergies with Scotland, utilizing cleaner fish operations in both lumpsuckers and ballan wrasse, and we expect to be able to use the treatment resources that we have in Scotland in a bio secure way with Ireland. I mentioned previously, the reuse of equipment from Scotland. The smaller pens which are made available from Scotland will be sanitized, and they're going to use environmental net systems, which is essentially 2 nets sewn together and instead of net cleaning, the net is simply passed underneath the fish. It provides a very high-quality farming environment and improves -- remove any requirement for antifoulants. And I'll just move on to the Faroes. The Faroes is the first region in Norway to demonstrate -- sorry, the first region to demonstrate the improvement of postsmolts. We have now a number of smolts here, which just up to 500 grams. We expect that to rise to 800 grams, and that will help us make incremental improvements towards 10,000 tonnes production in harvest weights in Faroes. We also expect to use passive grading techniques here to make further minor improvements to growth, and we expect to be able to continue to access the Russian market and the premium U.S. market. Mowi Faroes has a high average weight with exceptional quality and focuses on high color of the fish. Okay. With that, I'll hand you over to Fernando Villarroel, who is in Puerto Montt, Chile.

Can you please unmute, Fernando?

Okay. Thank you for the introduction. I am Fernando Villarroel, CEO of Farming Americas and also the MD for Mowi Chile. I am connected from Chile now in the other side of the world. I'm forward -- behind -- it was fairly earlier steps, then let's hope the connection work well, and I will put the presentation up now. Okay. I hope it's there already. Well, I have the pleasure to be presenting today our Farming business in Americas, in Canada and Chile. Farming America represents about 25% of the harvest volume for Mowi group with 110,000 tonnes in 2020, where over 90% of the volume was sold within Americas, being U.S., our largest market; and Brazil -- followed by Brazil. The main focus of the presentation today seeks to explain what are we doing in the region to secure an efficient production at low cost, while we try to, of course, grow the business in a sustainable way. But also, we will try to cover some particular aspect of our Canadian operation. I will start for Chile first. Our operations in Chile is currently 65,000 tonnes in 2020, with a forecast of close to 70,000 tonnes for 2021. All this is on [indiscernible] and equivalents. We have 2 project regions in Chile, Region X and Region XI, and these 2 regions are fully [ integrated ] from egg to processing and more or less [indiscernible] in each region. We operated 26 sites for the year. Out of the 180 licenses [indiscernible]. As you may know, in Chile, 1 license is equivalent to 1 site. In that regard, it means that we have a large and huge license capacity, but also means that the licenses in operation can be strategically located in our best production areas. In terms of growth, our strategy seeks to maximize the stocking within the existing regulatory regime, which should give us, in Chile, a 3% to 4% annual growth. I will come back to the point in the next slide. To achieve such growth, we are concentrated in developing our existing capacity. At this time, we have no plans to enter into new production regions in Chile. Our focus is having an efficient production at low cost. For the last few year, we have focused on building and developing a very competitive saltwater operation, both in term of cost and biology. And for competing, we don't necessarily focus on Chile, but we aim to beat our best-performing area in Norway, and this has been a very successful move to improve our operations in Chile. In addition now, we're adding -- we're focusing adding -- or building freshwater capacity and improving our productivity in harvest and processing by adding more automation and technology, and I will go more in detail on those 2 ideas in the presentation. The current regulatory regime in Chile use future smolt stocking to control the industry in any situation, but also consider certain incentives to grow for those firms that have a good sanitary performance. It is a sort of a traffic lights system which is based on low mortality, good life management and minimal medicine use. As mentioned previously, our strategy to maximize the stocking within our framework, which should give us a 2% growth per year. In terms of saltwater, we're building internal capacity to reduce the dependence on third-party supply because after we finished the production of the smolt in the lakes, the vulcan eruption in 2015 destroy of our [ production ] up to 60% of the smolt were produced in the external hatcheries. The goal is to reach 80% internal production within 2021, and the remaining is in a long-term contract with a local company that has been producing -- or growing, actually, our smolt for the last 6, 7 years. In the seawater, we are focusing on our largest and fewer sites, trying to the best licenses in term of bio security, biological performance and environmental impact. This will allow to optimize the utilization of the new tools in the way incorporated for non-medical treatments to manage sea lice like flashers or use of large well boats within other option being considered. In addition, this will facilitate utilizations of new technology like centralizing feeding, real-time monitoring or artificial intelligence, for instance. In order to increase efficiencies on -- and productivity in our farms. In term of SRS, which is a particular issue for Chile, the strategy but also complex to execute. The use of vaccine, reduce the stress, like having a low prevalence of caligus as one of the main stress factors, and a close monitoring for an early detection of the disease. In the area of harvesting and processing, we're adding well capacity, with 2 new vessels on hire and adding a new technology in the processing plants in order to increase the capacity and improve productivity. The 2 main areas we're investing in adding capacity and improving productivity are freshwater and processing. We just recently did the expansion on one of our facility in [indiscernible] and we have way in the contraction of -- to adding more capacity in the [indiscernible] hatchery in [indiscernible]. All of this investment will significantly reduce the cost of our smolts in addition to make the operation more efficient. The other area that we're focused in the freshwater is advancing our internal genetic program by incorporating the latest genomic technology for [ both ] selection. And for this year, we have the plans to commence the contraction of our Mowi facility which consolidates our growth stock and genetic program, which will result in considerable reduction in costs and improving productivity, but also will bring our genetic program to the next level. The vision of new technologies and automation of certain processes has been the latest investment in harvesting and processing. The increase of harvesting capacity in both plants will allow better utilization of larger vessels, of the larger base we'll be adding and to substantially reduce the [indiscernible] cost, which is an important cost here in Chile. On the repetitive and labor-intensive processes in the plants, we are incorporating more automation that will improve capacity and productivity. In that respect, we're using the knowledge that we can access within the Mowi processing excellence team that was mentioned by Ola Brattvoll earlier in this presentation. What I have to say for Chile it will explain -- or trying to explain in summary, a focus on our core business and how we aim to have an efficient production with low cost. I am moving now to Farming Canada. Our business activities in Canada are located at the door of one of the largest market as is U.S., a market that probably has the largest growth potential in term of consumption on some -- our Canada West operation are in British Colombia on the Pacific Ocean side. Here, we operate 76 sites in 5 cluster areas. We see, as a province itself, has a coast line larger than Norway, but historically have had a challenging political environment to our salmon farming. Our strategy in the region is to maintain a stable production of 30,000 tonnes of [ harvest ]. And in the other side of the country in the Atlantic Ocean side our Canadian -- is our Canada East operation, located within 3 provinces, Newfoundland, New Brunswick and Prince Edward Island, where we operated 40 licenses. And 29 of those are a Newfoundland, a region where we have a significant growth potential. On this coast, the provincial government, whom are the primary regulator of the industry are being supportive on developing a strong salmon farming industry. Our strategy in this region is to reach a stable production of 25,000 tonnes per year. But unfortunately, in both of our operations in Canada, we have faced a significant environmental, sanitary and political challenges that require a re-structuration of the operation. As you probably have heard, on December 2020, the federal government announced the decision to phase out some farming licenses in the Discovery Island area by June 2022. The announcement also mandate the [indiscernible] can be stopped in the Discovery Island licenses during this time, but it's allowing existing environments to end its production cycle. In consideration the decision, a re-structuration plan was necessary to implement it. Such plan was seen within other important points, the closure and decommissioning of the second area, a new production plant to maintain a harvest volume at or above 30,000 tonnes and establish a new organization that will reflect the new company size. The decision made by the government will have an estimate impact of a reduction of up to 200 employees by the time of this site are out of in operation in 2022. And going forward, a priority on the political side will be to secure business certainty through key relationships and agreement with local groups of interest. This, in order to support an advocacy plan with both provincial and federal government, that can bring security to our investment in the region. In term of operation, the optimization and reduction of expenses related to sea lice and net management and net cleaning, is a key priority in the short-term to reduce cost to a more sustainable level. This is in addition to continue with a high focus on gill health prevention and Tenacibaculum prevention, the 2 most important challenges -- fishermen challenges in this field, after sea lice, of course. The rightsizing and streamlining of the operation in the West side of Canada, with a strong focus on biology and cost, can make this operation a very profitable business considering its competitive advantage given by the proximity to the U.S. market. The operation on the East Coast has been badly impacted by biological environmental events since it acquisition in 2019, resulting in falling behind in our old growth plan. Then a turnaround/restructuring plan has been defined, including the change in management with the appointment of a new MD, with extensive farming experience in the area. Our aim is to return to profitability and in grow path as soon as possible, but the execution plan has changed. The initial plan was too ambitious in term of growth pace considering the challenge on this region, particularly in Newfoundland. One key success factor on the strategy is obviously improving the biological performance. And on that component, we're focusing the 2 most important issues there, ISA and lice management. ISA has been the most difficult biological challenge that we have encountered as it hit us on a fast growth plan. And considering long production cycle in this region, it will take longer to recover the expected harvest volume in the short-term. It has been an issue in -- ISA has been an issue in all production regions. And in all of them, it has been successfully managed. We're confident that the rest exists and will be implemented in these East Coast. In the other hand, now we are much better equipped in terms of treatment capacity for sea lice. Then we will be able to more efficiently managed sea lice levels in our farms. And in term of operation, the priority right now is rightsize the organization to an appropriate scale, including the rationalization in the use of resources, considering the new time line to achieve the expected production volumes. An important point in that, is Canada is -- particularly Newfoundland, is one of the few farming region with a significant potential for growth. And Mowi has the fundamentals already in place to capture such potential, like having established the program of a localized trading and [indiscernible] capacity to do so. Well, I am coming to an end of my presentation for Americas, and I will leave you now with Atle Kvist, COO of Feed, to present our Feed division. Thank you very much. It was a pleasure.

Thank you, Fernando. And good morning, everyone. My name is Atle Kvist, and I'm the COO of Feed. We have, as mentioned earlier, 2 feed mills in Europe, one in Norway and one in Scotland. Our daily focus is on making efficient, high-performing feed at a low cost. We are turning out every stone in our value chain to identify and attack cost drivers going forward. Going forward, our production growth will, as Ivan mentioned, be in line with volume growth in Europe. Our current capacity is approximately 640,000 tonnes, which is sufficient to supply internal demand and in addition, some external sales. The development since our first year of operation has been, I must say, both fantastic and impressive. 2019 production-wise was more or less all about bringing the new feed mill in Scotland into operation. That, we did with success. 2020, we produced 540 tonnes of well-performing feed, the 2 feed mills combined, an all-time high for us. This also achieved with less FTEs than in 2019. Our modern facilities, combined with efficient logistics and supply chain, gives us a good basis for low-cost operation. We have a high focus on sourcing sustainable raw materials, widening our raw material basket and last but not least, to develop new sustainable feed ingredients. Zooming in a little bit on our feed mill in Norway. The picture shows our first feed mill, Valsneset, that opened in June 2014. It has 2 high capacity production lines for production of seawater grower feed. The feed mill has a premium coastal location in mid Norway with deepwater access. We can handle up to 3 vessels efficiently at the same time. At the picture, you can see 2 of our state-of-the-art feed vessel, [ LNG forward ] being loaded and one, raw material basin vessel unloading. In 2020, the feed mill set a new production at 390,000 tonnes of feed, which is really close to full capacity utilization. Mowi's Norwegian farming operations were 95% supplied with Mowi’s own feed in 2020, this will feed for both feed mills. The picture shows our second feed mill in Kyleakin at the Isle of Skye. We opened feed mill in May 2019. It's a highly flexible feed mill with 2 production line, one high capacity line and one medium capacity line, set up to produce the smallest feed sizes. Also at Kyleakin, we can handle 3 vessels at the same time. It's no secret that starting up a new feed mill can be challenging, but the start-up has been really good, well supported by transfer of knowledge from our feed mill in Norway. From Kyleakin, we deliver freshwater, seawater and organic feed to our operation in Scotland, Thailand, the Faroes and Norway. Our location and our own deepwater pier allow for efficient bulk transportation of raw materials to the feed mill and feed out to the farms by larger vessels. Our calculation shows that on an annual basis we save more than 3,000 tonnes of CO2 compared with transportation by road and smaller, less efficient vessels. Mowi 4.0 has been mentioned several times by my colleagues earlier today. Going forward, we are convinced that 4.0 will make all interaction with farming even better. In short, we see 4.0 as a fantastic tool in making high-performing feed, especially designed for the Mowi salmon [ stack ]. We will see productivity increases through smart operations. Progress in data collection, sensors, robotics, automation and AI technologies will help us improve going forward. There's no doubt that the 4.0 will give established methods a new edge. It will change to the entire value chain. It will reduce manufacturing and supply chain cost. And last but not least, it will increase sustainability by increasing energy efficiency and improve raw material utilization. A small example of how we use 4.0 technology today can be shown on the picture. We use sensors to monitor status of critical bearings. Earlier, we changed bearings when we had a breakdown or in a planned maintenance stop. Today, monitoring them by sensors, we can run them longer and change them in due time before breakdown occur, thus securing production uptime and reducing cost. Our product range satisfied Farmings feed requirements. The portfolio includes feed for all life stages in seawater, both organic and conventional. The portfolio also includes feed for freshwater parr and fish larger than 2 grams. As can be seen on the pie chart, Scotland has a higher product complexity than the Norwegian one. It produces more feed types and more of the smaller sizes. But with this highly flexible setup, the team in Scotland is designed to handle this complexity. We tailor our feed to match the changing requirements of the fish through the life cycle. The pie chart gives an overview of the main ingredients in our feed. Fish meal and fish oil accounts for about 26% of the ingredients. Modern feed formulas and feeding skills makes us a net producer of fish with a fish-in, fish-out ratio of 0.68. With the continued investment in feed R&D, we continue to pursue alternative feed ingredients that provided the necessary nutrients for state-of-the-art feed. We are testing a lot of novel feed raw materials. Novel feed raw materials that have a low-carbon footprint, that have the required nutrient value, that are available in sufficient volumes and that are cost competitive, will be a part of our raw material basket going forward. Our feed are good for the fish and good for the environment. We are sourcing feed raw materials globally with a clear target on sourcing as local as possible. We have, and we follow a strict policy on sourcing of sustainable raw -- feed raw materials. All ingredients we use shall have a feasibility system in place. Raw materials -- marine raw materials we source from suppliers who adhere to responsible fishery and that are certified as sustainable. The soy used in our feed is 100% deforestation-free. We have also a zero-tolerance approach to modern slavery and the Mowi Code Of Conduct for supplier shall be followed. Thank you very much. And then I hand over the floor to Catarina presenting ESG and R&D.

Thank you, Atle. Good morning. It's a pleasure to be here and introduce you sustainability strategy and the R&D work we are doing at Mowi. I would like to start with really taking a helicopter view and ask ourselves a quick question which drives the passion we bring to work every day, and that is, what is the contribution of Mowi to making the world a better place. And in fact, if we think that we have to feed 9 billion people in the future, we actually will need to produce about 50% more foods than what we do today. Now it's not only about producing more foods, that food has to be produced in a way that does not add to the problem of large environmental issues that our planet is facing, like climate change. In fact, seafoods and salmon has a proven record of low-carbon footprint as compared to land animal proteins. So not only seafood is a climate-friendly alternative, but it's actually an excellent combination of nutrients like vitamins, omega-3 fatty acid, potassium, which are important to keep a good health status for human population. So if we actually think on a big picture, food from the ocean is very important for people because it's healthy. It's very important for the planet because it's climate-friendly, and it's also important for business because in the end of the day, it supports both local and global economies. So food from the ocean is really a triple win, and Mowi is very well positioned to have a significant contribution to make the world a better place because the core of what we do, which is producing seafood which is sustainable and healthy, is part of the solution to both climate change and food security. So ocean-based Atlantic salmon farming is on the right side of sustainability. And I have to say that biology is really on our side here because fish, if we compare it with mammals, for example, with pork and beef, they do not need to spend energy on keeping their body temperature, just like as we humans have to. So in the end of the day, that is reflected in a much more resource efficiency use basically, because every kilo of feed that we give to a fish is then very easily converted in kilo of weight gain, which is not happening in the other land animal proteins. So that is also reflected then in a lower carbon footprint, as you can see here, the figures on this slide. In addition to the carbon footprint, water consumption -- freshwater use in our production is also much lower, 2,000 liters per kilo of edible meat as compared to, for example, almost 16,000 in the case of beef. This is actually a very interesting slide, which I would like to spend a few seconds. The message here is really important because it talks about the avoided carbon emissions from our business. So basically, if we think that 440,000 tons of salmon production would have actually been produced by a mix of animal proteins, being poultry, pork and beef, we would have ended up with 4 million tonnes of CO2 being released as compared with the 2 million tonnes of CO2 that Mowi has released in 2020 considering the combination of all our scopes, scope 1, 2 and 3. So that actually, the difference of these 2 actually gives us what we call the net avoided CO2 emissions, which is close to 2 million tonnes of CO2. Converting these numbers into a figure that all of us will connect to, this represents 380,000 cars removed from the road every year, now that's a significant impact. Mowi, as we have heard already several times across this presentation, has been ranked #1 on sustainability among food producers. We are very happy that if we take, for example, the FAIRR Index, FAIRR stands for Farm Animal Investments Risk and Return. And as even as mentioned in the beginning of these sections, it ranks the 60 largest animal protein producers in the world in important ESG metric, covering environmental aspects like deforestation, water use, antibiotic use, climate footprint, but also other very important aspects, such as food safety and also working conditions for our employees. So meaning that the social pillar of sustainability is also considered in this rating. In addition to FAIRR, I also would like to mention CDP. We have been rated in the A leadership category, both on climate action and also in our supplier engagement ratings, which is really important for the scope 3 activities we are doing connected with our climate footprint. So in addition to the FAIRR and the CDP rating and several others that you have seen on that slide, I also would like to point out a number of other sustainability highlights. 100% of our harvest volumes in 2020 are -- were and still are certified sustainably accordingly to GSSI-recognized standards, which means either ASC, BAP or GLOBALG.A.P. We have also seen, for the first time in 2020, a reduction by 2.7% of our greenhouse gas emissions, which is the sum up of all the scopes, including scope 3. 100% compliance with our sustainable sourcing on feeds policy, as you have heard Atle mentioning about. The majority of our sites, 93% of our marine sites, they have a minimum benthic impact, and that's really an important element for us as well in terms of the seabed biodiversity which we monitor and we -- and the results here show that the impact is at the minimum level. A further reduction in dependency of medicines to manage sea lice, and that is really as a result of all the integrated sea lice management approach that we have been taking over the last years. Now when it comes to sustainability certification, I've mentioned the 100% harvested volumes being certified. And because we are a fully vertical integrated company, it becomes quite important that our sustainability credentials are strong along the value chain. And therefore, both in feeds we have heard GLOBALG.A.P, we have also heard about our soybean 100% deforestation-free certified using the ProTerra certification, but we also are very strong on marine raw material certifications using, for example, the Marine Trust or the -- or equivalent certification schemes out there. And then on more the downstream side of it, we -- on the processing side, we follow the ASC Chain of Custody certification and on the food safety, the GFSI recognized standards. So I would really like to welcome you, everyone who is watching this presentation, to dive into our sustainability strategy, which we call Leading The Blue Revolution Plan. You will be able to find it publicly available at mowi.com. And there, you will be able to find all the details and all the commitments that we have set in our sustainability strategy. These are targets that are smart targets. They are specific and they are time bound, and they cover elements on the planet section, as you can see here, on being part of the solution to global challenges. There, we have set science-based targets on greenhouse gas emissions reduction. We have also targets on both our plastic packaging and also the farming equipments that we use. We aim to run an eco-efficient value chain they recover both waste and circular economy and also freshwater use. We farm in harmony with nature and there we cover elements of sustainable certification that we have heard about, also escapes, sea lice, fish health and welfare and sustainable feeds. Now sustainability wouldn't be complete if we wouldn't also look at the people side, and that's really an important element for Mowi as well. We live our vision, values and leadership principles every day. We run an operational excellence program which really drives the purpose that we have in our company of Leading The Blue Revolution. We comply and make our suppliers also follow our Code of Conduct across the group. And we promote a safe and meaningful work, focusing on absence rates, reduction on LTIs, but also a culture of diversity where gender ratio equality is also important, both in the operations but also at management level. And finally, when it comes to communities, this is really an important part, we operate locally in coastal communities, and we create a very positive ripple effect there as well. Transparency and communication about our sustainability progress. I've mentioned already our sustainability strategy, Leading The Blue Revolution Plan. You will be able to find all the sustainability metrics being reported in our annual report which will be released next week. But also the industry handbook, which is really an important piece of work. And as well, our CDP of reporting our United Nations global competitors, our impact report from the green bond, which will also be released for the first time next week. The way we report -- we follow held up guidelines when it comes to sustainability reporting. We followed the Global Reporting Initiative and also the Sustainability Accounting Standards Board. And for the first time, we will be releasing together with our annual reports, our Task Force on Climate-related Financial Disclosures, the TCFD report, where you will be able to read more about the risks and opportunities to our business connected with climate change. Now I would like to spend a little bit of time on our low-carbon transition plan. We have talked about the opportunity it represents to our business, but that doesn't mean we are on a standstill and do not act to make our business even more sustainable. We have a plan, and that plan covers our 3 business areas. If I start with feed, the focus to achieve an improved carbon footprint to the group is operating energy-efficiency feed plants and optimizing logistics. You have heard the examples from Atle how many trucks we have been managing to pull out of the road because of the strategically well-located feed plant in Scotland. We are also designing feeds for an optimal FCR meaning that, in the end of the day, with lower FCRs, low -- less amount -- a lower amount of feed raw materials need to be used and also purchasing only deforestation-free soy. When it comes to farming, reducing the dependency of diesel to run our farming sites by connecting them to land power, this is significant. In Farming Norway, more than 60% of our sites are already connected to land power. And in locations where it's difficult to do that, then we will install hybrid generators where we know we can reduce the diesel dependency by up to 60%. Increasing the share of renewable electricity at our freshwater plants and processing plants is also an important action we are taking. On sales and marketing, optimizing logistics, working with our suppliers to promote the climate-friendly supply chain and also running more efficient -- energy-efficient processing plants. When it comes to plastics, it is a hot topic these days and we take a big responsibility on having a responsible plastic use. We do that really through 3 main actions: reducing the amount of plastic used in packaging; reusing plastic equipment; and recycling packaging and farming equipment. A few interesting examples I would like to share with you. For example, in 2020, we were able to reduce by 2,000 tonnes the amount of virgin plastic used by a number of win-win solutions, as we call them. For example, lightweighting our packaging. For example, redesigning, making it more simple. We don't need double layers of packaging and also using recycled PET in our Mowi packaging. We also reduced plastic equipment. For example, in Scotland, some nice examples, 124 tons of returnable crates instead of disposable boxes have been implemented. And also in the recyclability I mentioned, close to 16,000 tons of packaging and farming equipment and that includes both nets and feeding pipes have been recycled in 2020. And here are some really interesting pictures. We actually recycled the nylon of our nets into materials that you might well come across in your daily lives, like, for example, carpets, swimwear, socks and even those beautiful green chairs that you see there on the picture. So next time you see a green chair, maybe you can think about these recyclability actions that we are taking at Mowi. So talking about recyclability, it connects very nicely with our circular economy approach. As we know, avoiding waste is crucial also on the fight against climate change. And I think Mowi has excellent examples of how we are addressing circularity. We have mentioned already the examples on our farming equipment. But I also would like to show you some examples across our value chain. So if we think about our freshwater plants, in 2020, we were actually able to use 14,000 tons of sludge as compost in agriculture. This is not waste. It's actually a valuable raw material for other purposes. And then if we think about downstream, we have the beautiful example of Mowi Nutrition. And actually, what we do there is approximately 40,000 tons of byproducts like trimmings and offcuts, they have been up-cycled to fish meal and fish oil used in nonsalmon aquaculture, pet food and even human oil capsules. So you see how -- what the traditional term of waste is, by far, waste. These are valuable raw materials for other sectors and we are making sure that we do that. So going from planetary aspects and environmental sustainability, I would like to touch base on the human aspects again. And this brings me actually to put this together into a concept that maybe some of you have heard, which is called the planetary health diets. And salmon is extremely well positioned to be, and it is already considered an emphasized food together with fruits and vegetables. And that is really obvious. If we look at this beautiful combination of nutrients that the salmon has and the proven effect that it has been shown by health authorities and experts all around the world on promoting cognitive development on children, on preventing cardiovascular diseases in elderly people. So it is really a proven record on health benefits. So going back to the social dimensions of sustainability, we create a positive impact on local communities. The ripple effect through local suppliers, through local employment is significant. And in addition to that, we really want to promote a safe culture within our organization, which focus on develop our people and also on promoting diversity. So I will change hat now from my sustainability hat to the R&D aspects, and I have 2 slides to share with you. The first one really illustrates our global focus when it comes to R&D. These are examples of our R&D and innovation hubs all around the world. We have R&D hubs that support innovation and technology development in farming -- in our Farming business areas in Norway, in Chile and also in Scotland. Feeds as well, we have our R&D feed centers in Norway and Scotland. And then in the business area of sales and marketing, we have in the U.S., Poland and Asia several new product development centers. So from farm to fork, innovating for the future and making sure that Mowi is well positioned to bring value to our stakeholders and shareholders. I think it's really important that this slide as well puts together again the Mowi 4.0 that we have been hearing about and Smart Farming into the context of all our value chain. And from breeding and genetics where we focus on using the best genomic tools to enhance fish robustness and product quality, to feed production where we maintain the raw material flexibility and focus on ensuring an optimum nutrient composition, to our freshwater plants making sure that our RAS systems are operating in the best way possible and where we optimize our post -- our smolt and postsmolt production. Also in seawater, we have heard about this really well examples of how we aim to have our eyes in the water in a way that they have never seen before with our Smart Farming concepts. And then processing with our Processing Excellence Team, focused on online scanning and capitalizing on all these data that we are collecting, as well at the end with product, sustainable packaging and new product development. So thank you very much. I'm very happy to bring our CEO back onstage to wrap up our Capital Markets Day. Thank you.

Thank you, Catarina, and thanks for a very convincing presentation. And if anyone still wonders out there, salmon is on the right side of sustainability. Salmon is power solutions. So to each and everyone out there, eat more salmon. Then you have come to the summary of this Capital Markets Day. As already daily -- as already duly stated, Mowi Farming is working along 3 main pillars: volume, cost and sustainability. They are all equally important. However, contrary to sustainability and costs that we are very competitive, we have been lagging behind on farming volume growth compared to the industry. Therefore, we will particularly focus on addressing growth initiatives in farming going forward. That being said, to put all doubt aside, our main focus is conventional farming. We strongly believe in the future of conventional farming, particularly with the phasing in of Industry 4.0 technologies and opportunities that entail, especially for the large farmers like ourselves. We think this will transform the way we operate today, increase our productivity, reduce our costs and make our operations even more sustainable. So we believe the lion's share of both volumes and volume growth will come from conventional farming in the coming 5 years. For Mowi's part, with the right measures, we believe we have an intrinsic growth capacity from our current licenses to go well beyond 500,000 tonnes. In addition, we will pursue accretive -- acquisitive growth opportunities when it fits with our operational strategy. That being said, we also monitor alternative technologies closely and may introduce it when and if it's timely and profitable. And for [ all at stake ], we do not see alternative farming technologies as a threat, but as a potential opportunity for Mowi. So far, neither Mowi, nor the industry have managed to keep pace with the demand growth we have seen. We think that will be the case also in the coming years. We will continue to build sales and marketing through product innovation, operational excellence and branding with focus on growth in elaborated products. In Mowi Feed, we will focus on Feed performance and costs and grow it in line with farming Europe. If we need extra capacity down the road, we will just add on new lines into existing feed mills. And last but not least, we will deliver on the Mowi 4.0 digital strategy in every element of our value chain from feed to plate. New technologies offer huge opportunities that we want to take advantage of. Further to this, Smart Farming shall be rolled out in Farming Norway, our, by far, largest entity by 2025. With this, Kim, I think we are ready for the Q&A session.

Yes. Very Good. So that concludes all the presentations. Then we move on to the Q&A session scheduled to last approximately 30 minutes. We have received a range of questions from analysts, investors. The first one is from DNB, Alexander Aukner. He's asking what will the Mowi 4.0 digitalization cost CapEx be? And what cost savings can be expected?

Thank you, Alexander. I think our CFO, Kristian Ellingsen, should answer this question. Please, Kristian.

Yes. This is a very [indiscernible] project, of course. We believe that there will be split between CapEx and OpEx for the smart operations -- for the Smart Farming. For Smart Farming, there will be some subscription costs, some data subscription costs and some licenses and there will be some CapEx. But remember that we have already built one operation center. This is something we have done within the CapEx already used. We will continue to do this within the farming expansionary CapEx in the coming years in Norway. So we don't foresee any major additional CapEx in -- on the levels we have included in the CapEx estimates so far. This is something we will do within the framework we have. And when it comes to the OpEx costs, we will, of course, see that the aim here is to substantially reduce the health and the lice-related costs. So in total, this will be a net cost saving.

Okay. And then here's the second question is regarding Norway Farming volumes. He's asking organic Norway farming volumes of 300,000 tonnes in the next 6 years, will the growth be evenly spread during the years or back end loaded?

Øyvind, I think this one is for you.

The major contribution for the organic growth will be from the -- first and foremost, from the postsmolt strategy and that will be a phasing -- a gradual phasing on expansion projects. So we will see the first volumes, as I indicated, in 2024 from our first postsmolt projects, but then we'll have a phasing gradually year-by-year on -- towards the full effect in 2027. So it will be a gradual increase from 2024.

Christian Nordby, Kepler Cheuvreux. How should we think about your overall CapEx profile for the coming years relative to the past 2 to 3 years? Given the NOK 4 billion postmolt CapEx in Norway, will you skew more CapEx towards the Farming division and reduce CapEx in other parts of the value chain?

Kristian, I think this one is for you.

Yes. So the CapEx for the coming years. In general, we will come back to the CapEx guiding for each year. We have guided for the CapEx for this year EUR 265 million. As we have indicated in the guiding, we have approximately EUR 10 million for expansion CapEx in consumer products related to automation. This is something we also will have to do in the coming years in order to support the digitalization and automation in our factories. When it comes to Feed, we have 2 brand-new factories. So we don't estimate any major investments in those factories. That means that the rest of the CapEx is allocated to Farming and will support the growth in Farming in the coming years. When it comes to the postsmolt project, this will be something that we'll now be invested in over the coming 5 years, so accordingly split over several years. And that is also, of course, the case for Smart Farming. So the focus, I think it's fair to say, based on what I said, focus on more -- an increased focus on Farming CapEx in order to support the volume growth in Farming.

And then Carl-Emil Johannessen from Pareto. He is asking, can you say something about the time line to reach the capacity of 80,000 tonnes in Scotland and the 55,000 tonnes in Canada?

Right. Ben, I think we start with Scotland then. Can you hear me?

Yes, I can hear you fine. So in Scotland, we have potential to increase small stocking from the existing units that we have at Lochailort and Inchmore. The postsmolt plans, if they're approved, will obviously give us a significant boost in volume, but that won't be in till another 3 to 4 years. The main improvement that we have is of the new locations and the extra biomass, which will kick in over the next 2 to 3 years. So you will see an increase in Scottish volume this year and going forward.

Fernando, the second part of the question goes to you. Can you hear me from Puerto Montt, Chile?

Hello, Ivan. Yes, I can hear you well. Well, the answer about 55,000 tonnes for the operations in Americas, particularly in Canada, we -- in Canada West, we're already 30,000 tonnes or a little bit over. And in the case of the Canada East, we will be there around the end of '20 -- sorry, '24 more probably due to the laying of the cycles in Canada East. Destocking is already, in this coming year, will be in the 7 million smolts. But you can hear me or not?

Thank you. I think that was a good answer. Kim is nodding, so then I expect it's okay.

Okay. And then the second question from Carl-Emil from Pareto. In terms of postsmolt strategy, do you see 700- to 800-gram smolts to be the optimal size to produce on land related to CapEx per kilo of increased production in sea? Or can you increase production in sea even at the same CapEx per kilo by producing even larger smolts?

A tricky one, I must say. Øyvind, can you please elaborate a little bit on our thinking on this. We have spent a lot of time on maximizing the size of the smolt.

Yes. We do have a lot of experience on increasing sizes of postsmolt. So the 700-gram target is predominantly related to the utilization of the seawater farms. We see that when you get towards 700 gram, you go -- you reach a 1-year cycle in sea than different from today's up to 2 years between the fallowing periods. So the biggest effect then and why we have targeted 700 gram is the turnover in sea and the utilization of the capacities of our seawater farms.

Yes. So in short, we think that is the ideal size of the smolt.

And then a question from the investor community about land-based salmon farming. What's your view on land-based grow-out facilities and the viability of projects companies you see in the market today? And should we expect that Mowi will move into this market?

Well, I guess I can take this one. First of all, I would like to say that salmon is on the right side of sustainability. And the competition is not between the various farming technologies, the competition or the competitors are actually other animal protein producers. So to Mowi, as we said in the presentation here, we regard land-based farming as a potential opportunity for us. But that being said, it's very much about the right timing. We also have to be convinced about the profitability. So I know maybe this is not the answer everyone wants, but at least, according to me, the jury is still out. So let's see, but we really hope this succeeds. When we find the time right, if we get there, then we will use this technology as we do with the other technologies today. But I think we just have to be patient and wait when we decide this, if we decide it, then we will report it to the market. So let's see.

Very good. Changing topic to HR. People can be a key differentiator between corporations. What does Mowi do to attract and retain the best people?

Yes. I guess this goes to you, Anne Lorgen Riise. She is our Chief HR Officer, for those who do not know her. Please, Anne.

Thank you, Ivan. So we see that, especially young people, take a great interest in sustainability, in climate-friendly food production and in new technology. And in recruitment, we are focusing highly towards these future opportunities in our company in the possibility of taking part in the future of food production and working with new technologies that we believe will change the business already mentioned here today on AI, for instance, and this will open new and interesting career opportunities for really a wider group of talents. When it comes to the retention of people, the fight to talent is real and it's going to get tougher in the time to come. But we will continue to announce our strong messaging on our purpose, on our culture to continue to develop our leaders to the highest standard. We have recently just launched an executive program to develop our future leaders in the company. We will continue to fight to retain people in the company with an interest in and the passion for seafood, for sustainable food production, for making a difference in the world and people who are adaptable to fast-paced change. We believe that we will also have, to a greater extent, reskill and upskill the people, the workforce internally in the company, and we'll continue our relationship with great academic institutions around the world and the regions where we operate to provide education and learning in-house and to continue to build our strong learning culture.

Thank you, Anne. Never underestimate the value of good people. Over time, that's more or less the only component that distinguishes good companies versus less good companies. Kim?

Okay. Then moving on to sales and marketing, a question from Holberg Fondene, Jann Molnes, and also combining this with a different investor question. The sales of the Mowi brand in the U.S., is that related to Norwegian fish or Chilean fish? And the second question is, can you update us on Mowi's branding strategy for the U.S. market in general?

I guess this one goes without saying, Ola, please.

Thank you. When it comes to the origin of the raw materials on the Mowi brand in the U.S., we have a product range with 2 different set of products. We have what we call the MOWI Pure range, which is a high-end part of the brand portfolio. And there, we use Norwegian-origin fish. And then we have what we call the MOWI Essential range, which is more an everyday meal component of the brand. And for that, we use Chilean ASC-approved fish. So actually, we use both origins in the brand in the U.S. market. And the brand itself is not specified towards any of the origin. It is a set of criteria to quality of raw materials, and we are indifferent in a way in which raw materials we use. So when it's suitable, we use Norwegian; and when it's better for us, we use Chilean. To the second question on the rollout plans of the U.S. market. As I said in my presentation, we are currently selling, and I have to say, selling very well in e-commerce with Amazon as our key client in the U.S. market. So you can go to Amazon portal and see our products there and see what range we have presently available. We just recently launched with one bricks-and-mortar retailer in the U.S., and we have plans to continue the rollout in bricks-and-mortar in this year. This was very much hampered by the COVID-19 pandemic last year and it prohibited us from going to bricks-and-mortar in the scale we wanted to. But that we are reinitiating this year and we are going to launch in several bricks-and-mortar retailers in the U.S. market this year.

Then Alexander Sloane from Barclays Capital. He's got a question about feed. Can algae Omega-3 oil become a much bigger part of salmon feed replacing wild fish oil, given significant sustainability advantages and key algae oil suppliers claiming yield improvement in 2020?

A very important topic. Atle, maybe you can elaborate a little bit on this?

Yes. As mentioned in my presentation, we continually look at alternative feed ingredients. We have over the years carried out an extensive R&D to enable us to incorporate new raw materials when it's required. However, by comparison to more traditional commodity-derived ingredients, they do not typically represent good value in terms of nutritional value per unit cost. But as I said earlier, we are -- we will widen our raw material basket going forward, again, condition that they have a low-carbon footprint, nutritional value is okay. Last but not least, they are available in sufficient quantities. And of course, that they are cost competitive.

Thank you, Atle. Next one, Kim.

On ESG and the taxonomy. Do you think Mowi will become taxonomy-compliant? And if so, what are the biggest pros and cons in your view to achieve that?

Catarina, I think this goes directly into your expertise. Please enlighten us.

Good question. We are following, of course, very closely the developments on the EU taxonomy. We welcome the EU decision to classify sectors from a sustainability perspective. So far, we haven't seen aquaculture included yet. And that's actually a positive signal because what has been covered so far has been sectors or industries, which have a high climate footprint impact. So 93.5% actually of those companies and sectors that have been included, they are assumed to have 93.5% direct greenhouse gas emissions in Europe. So these 2 environmental categories, climate change mitigation and adaptation, which are covered now they focus, let's say, more on the negative side of climate. And as we have heard before, we are really a solution to climate challenge. So that's why aquaculture hasn't been included yet. Yes.

Thank you, Catarina, and very good to hear. Next one, Kim.

And a question from Nils Thommesen at Fearnleys. He's got a question about volumes in Chile. Is the 3% to 4% growth in harvest volumes based on 2020 harvest or 2021 harvest? And do you expect improvements in KPIs like harvest weights and mortalities to achieve this goal? Or will the increase come from increased smolt stocking?

Fernando, are you still there? Can you hear me?

Yes, I can hear you. Basically, on the question, the framework we referred to is smolt stocking. Then [ bait ] is every year you can get, of course, from 0. But in our target, it's 3% to 4% growth based on smolt stocking. Then 2021, we're seeing already some of it obtained in 2020.

Good. Thanks.

Then moving on to Sebastian Bray from Berenberg. He has a few questions. The expansion of Mowi's feed capacities seem to have gone well. Can the same logic of backward integration also apply to the Americas? And if so, what's the time scale?

I think this one I can take. Right now, we are fine with being self-sufficient for feed in Europe. So we will grow more feed going forward in line with the growth initiatives we take in Mowi Farming Europe. In terms of Americas, in the short term, I think we are okay with the current situation. In the longer term, that's something completely else. But today, I think we stick to the short-term part of that answer -- sorry, question.

And then a second question on CO2 emissions. I assume the CO2 emissions figure on Slide 78 include CO2 cost of air freight. What is the impact on carbon footprint of removing air freight? Put another way, what's the total -- what's the percentage of total carbon footprint is typically linked to air freight transport for salmon?

Catarina, I think this one is for you.

Thank you for that question. So the answer is 10% actually of the total Scope 3 emissions. So since 2018, we have a good overview of our Scope 3 emissions. This is publicly available in our annual report. So you will be able to see it next week already the 2020 figures. But it's 10% of the Scope 3. So for the total, scope emission of the group is even less than that. So it's quite important to have that number into perspective, which maybe a lot of people think it has a huge contribution. But in the end of the day, the majority of our Scope 3 emissions come from raw -- feed raw materials. So that is the most important action we are taking to reduce the Scope 3 emissions. Yes.

Thank you, Catarina.

Then 2 questions from Alexander Jones, Bank of America. Smart Farming. I appreciate this is an early stage, but are you able to give an indication of the magnitude of cost savings you expect to see from these digitalization initiatives in farming? Or what do you -- or what you have seen so far in the farms using this technology?

Cost. Kristian, I think this is your field?

Yes. We, of course, believe that the ability to be more proactive when it comes to acting on biological challenges will have a very positive impact on cost. We prefer not to quantify it. We don't generally guide on costs. But of course, this is something we believe in very much. And we think that this will have a positive effect on health costs; on feed costs due to the feed conversion ratio, which has increased; in mortality costs, partly offset by some higher license costs and subscription cost for the data subscriptions. But all in all, we believe this to be a positive effect in the coming years.

On CapEx given all of the optimization and growth initiatives you have discussed this morning, can you give us an idea of the organic CapEx budget over the next 5 years?

It sounds like you have to come up again, Kristian, CapEx. A lot of CFO questions today. So interesting.

Yes. So I think I broached upon it briefly also in a previous question. We have given the CapEx guiding for the coming year of 2021, and we prefer to come back to the guiding for the individual years as we usually do. So we are not ready to give the full CapEx guiding for all of the coming years. But in general, we have indicated a major initiative on postsmolt. We have indicated that farming growth is a priority, and farming will be a big part of the investment program in the company in the years to come. And the NOK 4 billion indicated, those will be distributed over the coming 5 years. So I don't think we have to -- or able to go into all the specifics at this point. We will come further back to that in the CapEx guidings in the coming presentations.

Thank you, Kristian.

Okay. We are nearing the end of the Q&A session. A question from Arctic, Thomas Lorck. He is asking about the brand strategy. Can you state any figures on revenues and EBIT for 2019 and '20 versus the target revenues of EUR 1 billion and 10% EBIT margin?

Yes. It's about numbers, but I think you, Ola, can take this one.

Thank you for that question. We do not make public the numbers of our sales. This we see as competitive number for us to protect. But what I can say, of course, as I said already, is that we are significantly delayed from the original plan. The branding strategy is a long-term strategy, and the EUR 1 billion target is a long-term target. What we have seen is that in the channels where we have been able to launch, we have had good progress and sales have, in large, been very well also compared to what we were expecting from the beginning. The issue has been to get access to the relevant channels and to activate the support programs in the channels, which you normally do. This has been significantly hampered by the COVID-19 situation. As this ease up, we believe that we will have more access and that this will take a better turn in terms of speed. So I would say that we are progressing. We are seeing good response from consumers and customers. But we are delayed compared to where we plan to be from what we said in 2018.

Thank you, Ola.

That concludes the questions we have received so far from the audience.

Okay. Then I would like to say thanks for having us, and thanks for listening to us. Stay safe. It's still difficult times, and take care. Thank you.