P/F Bakkafrost (BAKKA) Earnings Call Transcript & Summary

Yes. Good morning, and a very welcome to all of you, and welcome to the Faroe Islands, welcome to Bakkafrost Capital Market Day 2025. We are deeply proud to host you here where this company has its roots. These days are always special. They give us an opportunity to pause for a moment, like standing on a ridge between the past and the future and look in both directions. On one side, we can look back and see how far we have come. Over the past years, our teams have worked with great care and determination to build further on the strong foundation Bakkafrost stands on today. On the other side, we look ahead, not only towards the next harvest or the next quarter, but further into the deeper waters of what lies ahead. We face new opportunities, new uncertainties and new responsibilities, and that is exactly why we have invited you here, to give you not just a snapshot, but a deeper understanding of the journey we are on. Our long-term ambitions stays firm, to produce the best salmon in the world, sustainably, responsibly and with respect for the environment, the communities and the people which we depend on. I sincerely hope that these days will give you valuable insights, raise good questions and leave you with a clear sense of the work being done on the path ahead. Thank you for being here. And once again, welcome to Bakkafrost. Thank you.

Yes. Good morning. We are -- we have a long agenda in front of us, both this morning and also during these 2 days, and I am sure that we will have some very good site visits, both today and tomorrow. Now in this presentation, we will first have a strategic update. We will look at the market, the sustainable growth ahead of us and then we will look at the CapEx plans, the updated CapEx plans up to 2030 that Hogni will take us through and how we finance these plans, we will go through operational update, sustainability, technology and digitalization. So before we dive into the matter, I will take you back to the beginning. Bakkafrost was founded and we started humbly our story back in 1968 at this very same fjord where we are today, the longest fjord here in the Faroe Islands, and in a small village of Glyvrar where we are heading a bit later. Here on the top left, we have my grandfather, and in the bottom there to the right is my grandmother. And here are the three brothers, my father Hans, Róland and Martin, which founded Bakkafrost. They weren't just starting a business. They were creating livelihoods, generating value and producing nutritious, delicious food based on local raw materials. They did it with integrity, a strong sense of purpose and a drive that simply would not be stopped. And that's the same value and the same force that have been with the company ever since and which makes it sensible and valuable for us to continue this journey. So I feel like we are sitting in the shade of the trees that they planted and we are -- we have been sitting there for -- having a good time, but we are also planting trees ourselves and continue that journey. Also, back in 1966, another company was established here in the Faroes that we are going to see a bit later, Havsbrún, which also has a proud history here in the Faroes. Havsbrún had a remarkable journey. Havsbrún was founded by the “Hvannasund brothers, which owned Dagsbrún, they had 2/3 of the shares in Havsbrún when it was founded. And then 1/3 was owned by Havsild, also local fishermen in Fuglafjørður. At the beginning, the daily capacity was around 500 tonnes and the idea was to source local raw material around Faroe Islands, produce fishmeal and oil, healthy food for the world, feeding the world. The first MD was Esmar Fuglø and Ditleif Eldevig was the first Chairman. The first raw material intake was on the 30th of June 1966, and the first contract was signed on the 18th of June. So it's 59 years tomorrow. And over the decades, Havsbrún steadily expanded, increased their production during the '70s and '80s, and we see on the chart to the bottom left that the raw materials in the early days were up to maybe 100,000, 200,000 tonnes and then it peaked a bit later. In 2012, Bakkafrost acquired Havsbrún. Before 2012 for at least 25 years, Bakkafrost and Havsbrún had a very close relationships, working closely together. So it was quite natural for us to include Havsbrún, and Havsbrún and Bakkafrost are today in the same group or Havsbrún is in Bakkafrost group, and we share the same value, one company, one culture. It's really important for Bakkafrost's ability to produce high quality and the best salmon in the world with the feed and the raw materials that we have here around Faroe Islands and especially the great taste that we can produce in our salmon. So built on the same values, care, responsibility, long-term thinking and respect for biology and communities are some of the values that we have built our operations on. Today, Bakkafrost has developed quite much since the old days. But the mission remains simple and clear to produce the best salmon in the world sustainably, responsibly and at scale. Everything rises and falls on leadership. We have great leadership in Bakkafrost. We have a strong leadership team. Everything depends on good decisions on a daily basis. Strong discipline and integration in our operations through the value chain have created a competitive advantage. Our operations today include a lot compared with the early days. We are operating in Faroe Islands, in Scotland, in Denmark, in France and in the U.S. Our processing facilities are in Faroes, Scotland, U.S. and in Denmark. And our commercial presence is across Europe, North America and Asia. We have around 1,600 colleagues in these countries. Every individual plays a very important role in developing what we do from biology, farming to processing, sales, logistics and different supporting functions. The teams are driven by the same core values that shaped Bakkafrost from the very beginning: Care, respect, knowledge, responsibility and long-term thinking. We have customers in more than 40 countries. So we feel that we are truly a global seafood company, yet firmly rooted here. Our state-of-the-art, fully integrated value chain includes fish meal, oil, feed, which is really important for us, broodstock, where we, every year, create a new generation of fish, smolt, Farming Service Vessels, harvest, processing, sales, distribution and services. This gives Bakkafrost a competitive advantage on traceability, biosecurity, operational stability and flexibility to respond to biological and market developments. This is the core of our competitive advantage, our value chain. This also gives us a good opportunity to minimize costs and to be strong on the cost side. It allows us also to build a strong biosecurity, full traceability, cost efficiency and be focused on product quality and especially with the differentiation in our products like the origin, the taste and the biosecurity. Small disciplines repeated with consistency everyday leads to great achievements gained slowly over time. And that's, I think, one of the competitive advantages in our value chain. Producing the best salmon in the world and doing so at scale, that's our simple mission. Our fully integrated value chain ensures total controlled, unmatched traceability and world-class quality, all rooted in the clean waters in the Faroe Islands and in Scotland. In 2025, Bakkafrost will produce around 3.5 million meals every day, and this will increase up to 5.6 million by 2030, every day. This Capital Market Day will showcase our numbers and strategies and reaffirm our shared purpose. We have built our strategy on five pillars: responsible growth rooted in provenance, driven by passion and guided by respect. We run a healthy business focused on sustainable growth, ethics and strong partnerships. We raise healthy salmon exceeding leading standards with our fully integrated value chain. We invest in healthy people, being preferred employer caring for safety, well-being and human rights, we protect a healthy environment through stewardship, efficiency and climate action. And we create healthy communities by engaging transparently and delivering shared value. Together, these pillars support our mission to produce best salmon in the world, sustainably, ethically and at scale. Despite we always aim for higher, we have delivered. Since the listing in 2010, our growth have been consistent across the full value chain. Harvested salmon has grown from 22,000 tonnes in 2010 to 91,000 in '24. And the EBIT has increased from DKK 247 million to DKK 1.55 billion over the same period. Turnover has grown from DKK 820 million in 2010 to DKK 7.3 billion in '24. Fish feed and meal have almost tripled. So this reflects both growth in volumes and also in profitability. Achieving premium for our products is a key in our operations. Faroe Islands in '25 year-to-date have achieved NOK 9 in average over Norwegian price. In Scotland, our premium is close to NOK 12 year-to-date especially because of good, large, high-quality fish harvested year-to-date. The ability constantly to achieve premiums reflects strong biological control, a high product quality, good marketing position and customer trust. Over time, we have built a stronger, more resilient platform combining biological progress with integrated operations. While we remain humble about the continuing work ahead, these results confirm the strength of the model that we have built. Over time, we have built a strong platform with external certifications and recognition, which plays an important part. This certification reflect product quality, food safety, traceability, ESG standards and operational consistency. The certifications in Bakkafrost are across the whole value chain. They include ASC, BAP, MSE, RSPCA, GlobalG.A.P., BRC, DNV, IFS, GMP, close to the whole Alphabet. And these standards are an important part of our close cooperation with customers but also partners in different areas and stakeholders. And we also have achieved recognitions, which we are proud of. For example, Time Magazine, we were chosen between the World's Best Companies in Sustainable Growth in '25. And multiple sustainability partnerships includes edie Awards, Scottish industry awards, Highland & Islands Food & Drink Awards. These acknowledgments, they reflect the work of many teams in Bakkafrost across the entire company. We see these certifications and awards not as a goal in themselves, but as an external confirmation that we are progressing in the right direction, while staying fully focused on the work to be continued. Delivering more with less is an important part of the biological operation. The core of our systems is the ability to convert smolt inputs to high output of high-quality food. This is where the full effect of the integrated model becomes visible. Bakkafrost in the Faroes is leading the benchmark globally. On net harvest ratio, Bakkafrost constantly outperforms all other regions. This reflects strong smolt quality, site -- good site management. high biosecurity and a fully system integration. The Faroe Islands remain the reference point for biological efficiency for global salmon farming. The turnaround in Scotland starts to show net harvest ratio to improve. The biological transition is now underway which will strengthen these numbers as large smolt deployment scales up. The Scottish platform is a clear path for biological improvement that we will see in coming years. Our focus is still to improve the yields, to maintain large harvested fish and the high quality of our fish and our good fish welfare. It is not volume for the volume's sake. It's controlled biological optimization. Producing more fish with fewer biological inputs and lower footprint, fully aligned with both economy and sustainability targets. Efficiency is a core strength in our model, converting inputs to healthy, harvestable fish. Feed conversion and survivability are direct reflections on the system strength. This is the foundation for sustainable growth and the same disciplined transition, which we now see also in Scotland. Also in here, we see that Faroe Islands are leading the global -- in the global number. And in Scotland, we are seeing improvements are well underway, but as smolt will improve going forward, this will have a great impact on our Scottish operation. Let's look into the market. The demand for healthy food continues to grow. This is supported mainly by two global trends. One is population growth and another is the rising middle class globally. Health focus and changing diary preferences, all of which continue to be in favor for healthy, sustainable proteins like salmon. Geopolitical resilience is important, flexibility and agility have never been more important than in these days. Navigating global volatility like global trade disruptions, sanctions and shifting regulations remain a real risk for seafood exporters. Resilience is no longer optional. It's a key part of the value creation. And for Bakkafrost, we have, for a very long time, been very focused on this because we are a small island and all our sales are exported and over the last 30 years, we have seen how important this is to be agile and flexible on this approach. So that's why our strategy over these years have been to both to be flexible on the markets, on the retail, on the different channels and with different geographies. So that's why we see that our sales are diversified both between geographies and market segments. The integrated model does not only drive biology and efficiency, it also is a core part of our risk managing platform. Resilience and flexibility secure market access and valuable stability in an increasingly complex world. The global population growth is expected to grow from 7.8 billion to 9.8 billion by 2050. A lot of this growth is in Asia and Africa. 110 million to 115 million people are expected to increase in the middle-class every year even with global headwinds, economical headwinds. And this drives increased demand for healthy food. High-quality proteins, sustainably, responsibly produced proteins. So these global megatrends are not cyclical. They are structural shifts. So salmon and in particular, premium responsively produced salmon is uniquely positioned to benefit from these long-term demand growth. When we look at the different megatrends, we also need to look at different segments. And we see that demand is not just growing, it is also evolving. The ask for or the need for healthy products, sustainably produced products and culinary appeals is exactly where future protein demand is heading. And salmon is doing good in those environments. Global consumers are increasingly prioritizing nutritious health and well-being. And salmon is high on Omega-3, which makes us -- makes it to one of the most attracted protein choices and fits well with a broad range of health-conscious diets. And Bakkafrost's integrated model and certification position is quite strong in this space. Sushi market is projected to double over the next 10 years. And this is one of the markets where a lot of salmon is being sold with a CAGR of around 8% per year. This underlines our global food trends directly fuel demand for premium salmon. Our differentiation strategy is well aligned to the global trends. Highly healthy, high-quality salmon with strong sustainability credentials are increasingly valuable for this market. This is where Bakkafrost is uniquely positioned and where future growth will continue to build. The differentiation in Bakkafrost is very much linked to the value chain: our ability to produce a feed which makes us unique or makes Bakkafrost salmon unique; our genetics, which makes Bakkafrost salmon truly different than anything else; and most importantly, also the taste of our fish, which will be different than anything else you can buy on the market. Our ability to produce large fish because of good control of the well-being of the fish and the health is also one of the key drivers. So high control on the full value chain from feed to final product is key, full traceability on certified food safety standards, strong alignment between responsible farming and customer trust are all key to our value creation. And this plays directly into the nutrition and product quality where a standard portion of 125 grams from Bakkafrost prove significantly share of daily nutrition needs for a human being. 695% of recommended intake of Omega-3 in this portion, 43% of daily protein needed, 133% of vitamin B12, 63% of Vitamin D, 50% of Vitamin E and 38% of selenium and 6% of iodine. All together, these are important drivers to support immune function, energy levels and long-term health benefits for humans. So this is the core of our positioning for premium salmon, healthy, nutritional and nutrient-rich products and a great taste of our products, and children like salmon, especially Bakkafrost salmon. The market diversification for Bakkafrost is broad, both globally and also with customer channels. We focus on the high-end premium segments where premium customers buy their products. We serve multiple high-end channels, including Horeca retail, wholesale, home and online channels. This allows us also to get a higher value and create a higher value for our customers. So the market strategy reflects the same principles as of our farming strategy to diversify, to be disciplined and create value and growth for our customers, which is fully aligned with customer long-term trends or market long-term trends. The branding adds another layer of resilience and value to our company. We build stronger customer relationships. We increased loyalty from customers. We focus to support sustainable margins over time. By enabling our own brand portfolio, we become stronger partner for our customers. We work closely together with them to differentiate ourselves under them in the market position. We built price realization beyond commodity markets. Heimland is one of the brands where we use this position. We built retail with premium supermarkets and special stores, food service culinary partnerships, customers focused activization in Asia, Europe and North America, which creates strong visual identity and an original story behind the product, which the customers can demonstrate to their end consumers. Also in Scotland, we have Native Hebridean, which have some of the same stories. And they have received international taste awards, retail and industry certifications and good and positive consumer reputation or feedback. Heimland is not only a product brand. It's also a part of our long-term value in the company, in Bakkafrost, in the strategy, how we create value. We linked biological strength to premium quality and market differentiation. With Heimland, we are strengthening Bakkafrost's position in this market and this reflects to our origin, the respect for nature and our care for fish welfare and quality. When we look at the global consumption of salmon, it's fair to say that this is still on an early stage. Salmon remains underpenetrated in many large markets. Scandinavia is leading with 4.7 kilo per capita. But when we come to many other countries, for example, the U.S. is 2.1, China is still only 0.1. There's a significant upside in the future to expand seafood consumption globally and Asia is one of the keys. Even in a modest increase per capita consumption in large economies like U.S. and China, this would transition in substantial volume growth globally. And salmon fits well with this need. Over the time, salmon pricing remains competitive related to other proteins like beef, pork and chicken. Despite volatility, salmon has maintained relatively price stability while benefiting from premium positioning. The demand runway for salmon is long, both in mature and developing markets. As income levels and health focus grow, salmon is well positioned to capture future demand growth for proteins. The short-term dynamics have been a bit more complex. And I think this relates very much to the unprecedented and unpredicted supply which came from Norway of whole fish for the first 4 months of this year where around 38% more whole fish was supplied to the market, which were quite unexpected. This shows a bit about the market composition where the price sensitivity is really much linked to the different sources of products that are delivered to the market and to each channel they are delivered. Also weight distribution is important. Grades and weight distribution plays a significant part in this price building. Spot prices for HOG have fluctuated significantly over recent years. Premium for large fish remains, however, attractive where we see that an average between 10% and 30% for larger fish, but also then a discount for smaller fish around 5% to 10% or up to 20% in some periods. For Bakkafrost, this short-term noise will always exist. And I think our strategy remains firm and important to secure a good biological control so that we can plan our harvest and produce larger fish and also our ability to make contracts which can create some resilience against short-term volatility. The overall market balance is, however, strong, and we think that over time, it is not expected to be a growth more than -- beyond around 2% to 3%. And this creates a quite strong backdrop for disciplined, value-driven growth. So therefore, it's important to remember that the market balance dynamics, both when we are on the top of the core and at the bottom of the core is the most unpredictable dynamics are the short-term outliers which we cannot see on this graph. So over a longer time, I think that we still have a very good market development. The conventional farming operation delivers limited growth globally as we see it over the next 5 years because there are no more new sites available. Nonconventional farming models will remain marginal contributors. The long-term supply growth constraint continues to support positive long-term pricing outlook for the industry. Land-based and offshore have been referenced to as a source of more growth, but these two categories are a bit muted. Even by 2030, land-based supply is less than 200,000 tonnes. And with this model here, offshore is 150,000 tonnes, which is still only creating around 2.4% CAGR over this period. So the majority of global salmon volumes will continue to come from conventional ocean-based farming. For Bakkafrost, growth only has value if it's sustainable, biologically, environmentally and financially. This shoots the core of our entire strategy. Sustainability is not a side project. It's what customers, regulators and communities increasingly demand. Growth only happens when biological performance allows it. Small quality, fish welfare and life management are really important in this area. Survivability and feed conversion ratios are leading indicators. No overloading of sites or pushing biological limits to chase short-term volumes. Long-term system health is always to prioritize. Sustainable growth is not a trade-off. It's exactly what enables us to build a stronger, more resilient Bakkafrost for the future. The growth options for Bakkafrost are imaged in five different paths. For Bakkafrost, we think that we have -- the best ability is to stay disciplined on the hybrid model with large smolt as the core platform. We will use technology to optimize license capacity both here in the Faroe Islands and in Scotland. We will prepare offshore as a potential long-term layer. We will monitor strategic acquisitions over opportunities, but only if operational synergies exist. So the key message is that we grow where biology works, where the model fits and long-term value can be created, and we call that disciplined growth. The large-smolt platform has been now developed for more than 10 years here in the Faroes. We started our first RAS system in the mid-90s, but the large expansion started in 2012. This allows us to reduce biological risk, to increase product efficiency and enable sustainable, controlled growth. This is a key to control our biological risk. Historically, we used 16 to 18 months in the sea to produce a salmon. With the smolt now on around 400 to 450 grams, we can reduce this to around 13 months and that reduces significantly the risk. Year-to-date, this year, our average smolt size is 456 gram. We prioritized the robust, healthy smolt above size. We could have produced the fish a bit larger. But with the current capacity, this is the best equilibrium on value for Bakkafrost. The capacity that we have in place now in Faroes and in Scotland are on this overview here. Land-based is our key to create growth at the moment. We produce now more and more efficient land and reduce cycles in the sea. And that's our path for growth. The expansion here in our freshwater capacity is stepwise increased, and in '25, we have a total capacity of 9,500 tonnes. With Skálavík added on, we will increase that to 13,250. We also own the land and own a rig and have also the licenses in place. With that, we could increase to 17,000 in Faroes. In Scotland, we are gradually building our platform. Now with Applecross, our current capacity is 3,900 tonnes. Applecross is being ramped up this year and next year. So it takes some time to build that capacity up. And of course, there -- it's not a straight line. There are some bumps on the road. That's always -- also here in the Faroes. With the second hatchery in Scotland, we could go to 7,650. The Faroese license model gives flexibility and also maybe to some extent, some competitive edge. All fjords are licensed, but -- it's an exclusive right for the fjords. And so there is a possibility and a flexibility to set up new farms if the biology and the environment allows it. So there are some possibilities that we are pursuing in this 5-year plan. We think this is our most low-hanging fruit. The challenge is, of course, the environment and the biological limits. So that's why we have to work carefully. We are -- we have a really high focus on sea lice management, fish welfare and the environmental boundaries for our operations. One of the solutions is to look at technology, which allows us to use smarter solutions. So that's also one of our -- the plans in this 5-year plan. So we will look at exposed sites, we will look at current deflectors, we will look at some semi-closed containments, we will look at submerged pens, and we will look at waste collections. The key -- the answer for us is to be flexible and to use the structural flexibility to search for new possibilities. Growth options in Scotland are also significant. The Scottish platform is now entering its transition phase to a stable, long-term growth, which is fully aligned with the hybrid model and biological disciplines that defines Bakkafrost. They are key of Bakkafrost's long-term growth. At the moment, we are targeting 200 grams smolt in Scotland. When Applecross is up fully running, we should be able to do 250 grams. This is the most optimal operation as things are at the moment. We expect 20,000 tonnes of harvest this year. The licenses in Scotland now allow us for a maximum standing biomass of 72,000 tonnes compared with 65,000 at the acquisition. So there have been some license added on. There are around 10,000 tonnes of new consent in pipeline for us in Scotland. So when we have a good control biology in Scotland, there are upsides. We are looking at relocating and consolidation of sites and we are positive on that development at the moment. Western Isles are providing significant growth potential, which will be important, especially when we have good smolt availability and robust size smolt. So all in all, this new 5-year plan targets a growth -- compounded annual growth rate of 10.8% over the next 5 years from 97,000 tonnes in '25 to 162,000 tonnes in 2030. Faroes at 112,000 and Scotland, 50,000. The key drivers in Faroes are, of course, the completion of the Skálavík hatchery which will be starting operation next year. And in Scotland, this is -- the key is the ramp-up of the Applecross hatchery, to produce healthy and large smolt. The completion of the Skálavík hatchery is going well. we are at time line. And as we see here, the first eggs will be put in there in second quarter next year, and the first smolt will be released in the fourth quarter '27. Feed is a strategic part of Bakkafrost integration model and the key part of our ability to differentiate our products on the market. We also have some investments in Havsbrún that we are going to see later today. The feed mill is being built as we speak and will be started up maybe less than 1 year from now. And there are some new CapEx also, some new silos, et cetera, that's part of our ability to more than double our operation at Havsbrún over the next 10 years. We will come back to that on the visit. In the farming, we also have different options that we will talk about, which I also mentioned a bit earlier, there are flexibility in the fjords where we can set up new farms. For example, with this deflectors, current deflectors, so that's part of the growth which is beyond 2030. We think that this discipline in CapEx means that we need to look at the most valuable growth first before we go to more expensive growth, and that's exactly what we tried to show on this graph here that we have abilities which are creating more values for Bakkafrost. And I think also the development that we see in the moment in the market demonstrates that we need to be disciplined on capital, on investments and of course, on cost. Sometimes it is the right time to step a bit back and to wait. As my father used to say, sometimes, we just need to stop spending. That might be right, some times. Of course, there are times when we need to run and there are times, maybe where we need to dig down. But using the best and lowest hanging fruits is also always important. And we have a lot of possibilities that we are focusing on at the moment. More fish in the water requires also that our logistics follow. And in this CapEx plan, we have added two new vessels. We have not contracted any yet, but we have added two more vessels, one for Scotland and one for Faroes. Freshwater treatment has been a core tool for our improvements over the last couple of years. They help sea lice control. They are very good for gill health. We will show you tomorrow when we go to the site visit on Bakkafossur. They are really gentle on fish handling. So this is fully aligned with our disciplined growth model, disciplined growth model, which means that we need to prioritize biology, fish welfare, which is important, and we must have the necessary infrastructure in place to support the growth that we are delivering. One of the results also from this growth is that we will have more fish, which needs to be harvested. We have also flexibility in the processing -- harvesting side in Glyvradalur that you're going to see later today to expand that capacity without building a new facility. So that's also in the plan to build a holding LFHT, live fish holding tank, where we, instead of having a big boat sitting out there, expensive, can have like a hatchery, we can have live fish swimming there, so the boat can deliver the fishing and go away quite fast. It makes it more efficient so we can deliver more fish maybe twice a day instead of once a day. This is much more efficient than building a new factory or a much bigger boat for just carrying fish for operation. So this is also in the plan. In Scotland, we will also, in this period, need more capacity. We need more advanced harvest and processing site in Scotland, similar to what we have in Faroes. When we go beyond 35,000, 40,000 tonnes, come closer to 50,000 by the end of the period, we need to be more flexible, both to take the volume and also to have the flexible approach to the market. So we have also included our new state-of-the-art harvest and processing facility for Scotland. We can -- we will have one facility, not two as we have had previously. That is the most efficient operation, and it gives us also the highest flexibility and market approach to deliver and get the most out of our products. Our Broodstock development is also strengthening our position with the branding and the differentiation in the market. And we also, in this plan, have included a growth path for this. This is important for our value creation. It strengthen our system resilience and across both geographies, both in Faroes and Scotland, we will focus on this disciplined biology-first growth strategy. We have found the markers in the genome to select the right genes. And this will, over time, both differentiate our products, but also create a more robust fish. So in Faroes, we plan to grow from 6.2 million in '25 up to 22 million eggs in 2030. The capacity, however, is larger. We have -- we are building a capacity for 60 million, so we could scale further up. But this is how we have planned in our operations. There are also some optional investments where we have said, okay, we have not included this in this 5-years plan. These options are a bit further down the road. For example, expansions of existing hatcheries. We have the ability to add larger tanks. We are going to see Strond later today. At Strond, we can easily add larger tanks, for example, 3,000 to 5,000 cubic meter tanks. When at a later point beyond 2030, we would like to grow the fish, let's say, to 800-gram or 1 kilo on land to reduce the cycle from 12 months down to 8 months, doing so is quite easily done on the existing hatchery by adding another layer of tanks. We can see that later today. Also, the new hatchery in Ónavík is not included in the plan. And the second hatchery in Scotland is not included in the plan. So these are projects that are being worked on, but not included in this plan, and they will be further down. As my father said, sometimes it's the time to dig down. sometimes it's the time to run. And right now, it's time to dig down. I guess, Hogni, we have come to the CapEx and finance chapter in this.

Yes, let us put some numbers on all of this CapEx. So let's start with having an overview of the 5-year CapEx and how it looks. So in total, we are planning on a CapEx of DKK 5 billion for the period, stretching to 2030, which is DKK 1.3 billion less than the previous CapEx plan that covered the period from '24 to '28. The shift reflects an increased focus on returns, but also the completion or near completion of large projects that have been ongoing and dominating the CapEx plan in the past. So like Applecross, the expansion at Havsbrún, which we have been working on for a long time, and also partly the expansion of the new hatchery at Skálavík. Instead, the new 5-year plan will target the following from the Faroes, the completion of the Skálavík hatchery, the new silos at Havsbrún, which will both add more flexibility in the feed production but also add capabilities for more R&D. New farming sites, as Regin mentioned, expanding existing sites with new technology or setting up new sites within our existing licenses with new technology. Expanding our harvest capacity, Regin also mentioned with the live fish holding tanks. So these are the main components of the Faroese CapEx. In Scotland, it's expanding and optimizing our farming sites and the new harvest and processing facility. The largest capital allocation in itself will be the two vessels in our FSV segments. This is around DKK 1.6 billion in total. This is a shared service for the group. We have also earmarked DKK 245 million during this 5-year period for energy transition. This is on top of the DKK 135 million that we have either spent last year or planning to spend this year for the same purpose. We are committed to decarbonize our value chain, and this is reflected in the investment decisions. Just to name a few examples, we are digging a 26-kilometer long electricity cable in Scotland from Applecross to connect it to a nearby hydro dam, which will enable us to run on 100% renewable energy on that site. It will also help on our energy costs. Also the new vessels that we have been talking about, we have plan to equip with dual fuel engines. So these are part of existing investments, but earmarked for energy transition. If we look at how this splits into regions and on harvest volumes, in the Faroes, the total investment will be DKK 2.2 billion, which is approximately DKK 4 per kilo. And in Scotland, we will be DKK 1.3 billion, which is around DKK 7 per kilo. The FSV investment will be around DKK 2 per kilo, benefiting both geographies. The investment intensity for Bakkafrost for the past decade has been around DKK 12 per kilo, will for this period be around DKK 6 per kilo. And this allocation supports our ambition to reach the 162,000 tonnes of harvest that we target for 2030, but also supports further growth after that. Of course, CapEx is only one side of the equation, maintaining a tight grip on our operational cost is just as critical, especially in today's climate, where we see more depressed summer prices. In our feed production, we are highly focused on maintaining a cost leadership position. This is essential as feed accounts for approximately 50% of the total farming costs. From '22 into early '23, we had a perfect storm with simultaneous sharp rises on both vegetable feed ingredients and also price increases on marine ingredients. This drove our total cost per produced feed upward around DKK 3 per kilo. This was driven by partly the invasion of Ukraine, which disrupted grain and vegetable supply chains, but also fisheries and anchovies had an impact on the pricing on marine raw materials. Since then, prices on vegetables have reduced again. They have sort of stabilized at pre-'22 levels, whereas marine raw materials have also stabilized recently, but on a higher level than we have seen before. Throughout this challenging period and actually spanning all the way back to 2019, so 6 years back, we have been able to maintain or limit the cost increases in the production. So if we exclude the raw materials themselves, the production -- pure production cost at Havsbrún have only increased by 3% over 6 years, which is quite an achievement, especially when we think of the general inflation in energy prices, salaries, et cetera. So again, it's a result of our strong cost discipline. If we look forward, we expect that, especially the marine raw materials will remain at a higher price point, however, stable. With the operational improvements that we see, we expect only slight increases in the total cost of produced feed from our operation in the coming year. If we move on to the smolt and farming costs in the Faroes starting with the smolt cost in the Faroes, we have seen very strong progress from that expansion of hatcheries and the larger capacity utilization that we have had. We have been able to drive down the cost of produced smolt through increased efficiency. In '22, we saw high costs due to low volumes and also the ramp-up of the Strond hatchery, which was still ongoing at that time. We have seen strong improvements since '23 with better capacity utilization and strong cost control continuing also in this year. And despite a very positive development on costs, there is expected a small uptick in costs at the end of this year on the produced smolt, which is linked to volume effects on the output. But otherwise, a very positive development on costs on Faroese smolt production. We are steadily increasing the harvest weight as -- the smolt weight, as Regin mentioned, 456-gram year-to-date. We are on track, you could say, to the 500-gram target, but it is more beneficial for us to stay at that level than chasing the last 50 grams because it gives us a better utilization of our farming sites. In the farming operation, ringside costs rose in '23. It was mainly a lagged effect from the feed inflation that I talked about before, but also the fact that we had lower harvest weights in '23. Last year, we saw some lagged cost of ramping up the new vessel, Bakkafossur, which also impacted our farming costs. But from mid-'24 and onwards, we have seen significant cost improvements in our farming operation, driven by lower feed input prices starting to showing up in cost of harvested fish, higher harvest weights and in generally better biology and resource efficiency. There's typically a 9- to 12-month delay from changes on input costs to the cost of harvested fish. And that's what we are seeing happening now. If we look ahead 1 year or so, we expect that ringside costs will remain around the current reduced levels that we have seen already in -- at this time. If we turn our eyes to Scotland and look at the freshwater operation, we now start to see increasing production from Applecross. Last year, we had ramp-up issues and delays on our plan to bring Applecross up to full production. Capacity utilization was low and costs per release smolt was high as a consequence. In '25, we will see marked improvements as our volume increases and operation stabilizes. The site is progressing towards 250 gram. This year, the target is 9 million smolt in Scotland with an average of above 200 gram. And in Q1, we saw significant tick upwards on average weight on the released smolt from Applecross that reached 232 gram. When fully ramped up, Applecross can deliver 14 million to 16 million smolt at 250 gram, and that will materially reduce the cost of per release smolt just as we have seen in the Faroes as we have ramped up the capacity here. If we move on to the farming operation in Scotland, the improvements of high-quality smolt from Applecross is expected to begin to show in our farming operation from next year and onwards. Ringside costs have stabilized since early '24, although they are significantly above the Faroese levels. Cost is primarily driven by biological performance, harvest volumes, average weights which have been low in the past in Scotland, and as Regin also showed you, have changed into a different trajectory now with increasing harvest weights. However, further upscaling of volumes is needed in order to dilute the fixed cost base, which we will see in the coming years. We have taken action in Scotland. We have been waiting for the large, high-quality smolt. But in the meanwhile, we have introduced the derisking strategy, which came in effect from the beginning of last year. And that has been shown positive effects on especially mortality costs in Scotland. If we zoom out and look at Bakkafrost operational margin track record, it clearly supports our strategy. In the Faroes, we consistently outperform Norwegian peers on the all-inclusive EBIT per kilo. At group level, the margins have been diluted since we acquired the Scottish operation and as we have been working on the turnaround in Scotland, but they are still solid. Our objective remains to lift the group level profitability, closing the margin gap between the two regions as we increase our volumes and efficiency improves in Scotland overall. Much of our equity story is about growth and investment needed to drive that growth long term. Over the past decade, our investment have been high. We have been on a high CapEx intensity of around 18% of sales compared to 9% for our peers. We have now built huge capacities in our value chain and we'll be focusing more on returns, as I mentioned. Going forward, the sales to -- the CapEx to sales ratio is expected to reduce to around 9% to 10%, which is more in line with the industry while still supporting future organic growth. Of course, a high CapEx has had an impact on our return metrics. Our return on capital employed have been depressed in recent years due to heavy investments in the Faroes and also the ongoing turnaround in Scotland. Volume have grown, but they have not been sufficient to offset the capital deployed. But as we approach the 162,000 tonnes by 2030, we expect that the return on capital employed will recover strongly through increased utilization and improved margin capture overall. Crucially, our balance sheet provides the strength to support our strategy, and we are well capitalized. We have a sustainability linked bank facility of EUR 700 million with a EUR 150 million accordion option, which matures -- this matures in '29. We have low leverage, and we are well within covenant levels, also with an equity ratio of 65%, and this gives us great strategic flexibility. To close this section, looking at dividends and our dividend policy, that remains unchanged. We aim to provide competitive returns through a mix of dividends and share price appreciation. The long-term target is to pay around 30% to 50% in dividends. And with only a few exceptions since we were listed, we have been paying around 50% in dividends. So this balanced approach allows us to invest in growth while still rewarding our shareholders. And with those words, I think it's time for a 10-minute break. And then we will continue this session at 10:20 local time. [Break]

Welcome back. Now it will be on the operational update from Faroes. And I will start with Havsbrún. Three slides that are more or less the same, but a few explanation from it. We started the production of fishmeal here in '66. And then we started production of fish feed in the beginning of the '80s and built a new factory in '88, and still building. We have a salmon meal and oil -- small salmon meal and oil factory here. And then we have some big tanks for fish oil storage, 28,000 cubic meters. And then we have five tunnels, 24,000 square meters inside the mountain. And when we look at the capacity, then we can produce 2,500 tonnes of fish per day at the meal factory, meal and oil factory, we can produce 600 tonnes of fish feed per day. That gives us approximately 150,000 tonnes of feed per year, 2 line, Line 1 and 2. We can store 32,000 tonnes of oil. And we can -- in these tunnels, we can store 40,000 tonnes of fishmeal. So all in all, we are pretty well prepared for the future. And the material that we drilled from these tunnels is here, 330,000 cubic meter of stones and rocks. We will build a key site here, have an area of 10,000 square meters and 300 meters of key sites. We are applying for new small oil tanks in this area and the new silos that we talked about, they will be placed here and they can hold 12,000 tonnes of fishmeal. In the future, we will build feed storage in this area. So we can store maybe up to 1,500 -- 15,000 tonnes of fish feed as well. It's not included in this -- the next 5 years' CapEx model. But the next line of a new feed meal and oil could be outside here. And we -- there is place in this building for the fourth line. So we can take actually -- we have a capacity up to 400 tonnes in that new building that we are building at the moment. So this will be the harbor, more or less the same picture. We have the tunnels here. And one of the big improvements with the tunnels is actually that we can store different types of quality of fishmeal within these tunnels now. If we compare it with a year ago, then the tunnels was totally full, and we couldn't differentiate the quality. But that is something that we can do in the future. I will come a bit more closer to that. But being a part of the industry, of the fishing industry is not easy. So here, we had the raw material sourcing for Havsbrún since '66, since we started. It all started with herring north of Faroe Islands. And then we had the Norway pout, but as you can see, the bulk of our raw material the last 27 years is the blue whiting. So blue whiting is extremely important for our operations at Havsbrún. And what is the current situation with the blue whiting? It is quite healthy at the moment. The stock is healthy. And we are fishing of the year classes '21 and '22, which actually has been the best historic in the history, but we will also see that the recruitment of age 1 has been not that great in '24 and '23. But this can change. We can find them later on, but -- it has been very strong. Probably in the future, we will see a decrease in the quota. But that's too early to say. We don't know anything until late September when ICES present the numbers. Here is the raw -- the feed sales from Havsbrún, the production. We started in the beginning of the '80s. And then we had produced around 10,000 tonnes, came up to 40,000, 50,000 tonnes and stayed here for 80,000 or 100,000 tonnes. But lately, we have been in this area, 130,000 tonnes. And this year, we will probably be around 140,000 -- 145,000 tonnes. And then we are utilizing the capacity of the feed meal, yes, as closely as 100% as possible. And we are installing equipment, new equipment on Line 3 in the feed factory, which enables us to have a capacity for 275,000, 280,000 tonnes. So that will give us a huge possibility in the future as well. Production of fish feed has changed dramatically during the last 30 years. In the beginning of the '90s, it was almost just fish meal and fish oil and a bit of wheat. Then in 2000, there were some vegetable proteins in the recipes. And 10 years later, we start -- the industry started to have vegetable oil as well. Today, this is the picture, and we have looked at '24 numbers. Probably, we will see an increase in the fish meal and fish oil inclusion, 1%, 1.5%, 2%, but not more than that. While this is the recipe of Bakkafrost, we have high inclusion of marine ingredients, fish meal and fish oil. And why do we so? Of course, while salmon eat fish but we also see that we -- when we look at -- when we produce a high marine diet, we can see that we have lower CO2. I will come back to that later, but also water, land, deforestation, and biodiversity is -- we can tick positively there as well. And when we look at the fish, at the fish welfare and performances, we can see that we have better FCR with this diet, fish welfare, mortality is lower, product quality is better, local biodiversity risk is lower and the growth rate is quite -- is higher as well. And then more or less all of this is or a big part of this is locally produced. The only negative thing is actually that marine ingredients are quite expensive. So it is more expensive to produce a recipe, a feed like what we are doing in the Bakkafrost. But when it comes to cost to produce, how much does it cost to produce a kilo of salmon, then again, we can tick a box and we can see that we are quite efficient and at the same cost or lower as our competitors. We have tested CO2 wise, the CO2 footprint, our marine-based standard diet versus a plant based on the diet, exactly the same feed. And the conclusion was actually that we have a 25% lower CO2 footprint on our marine diet. And that is, of course, because it's fished just mainly south of the Faroe Islands. The blue I think is fished quite closely to the Faroes. Flexibilities is needed. And now when we are building a new factory, the third feed line, then we will have full flexibility that we will have 27 silos, which enables us to bring a lot of new products into our recipe if we want it. We will see you how things will develop. And the same goes for the oil storage, and we are applying for this area also with 10 smaller tanks, 325 cubic. So we will have full flexibility to adjust our recipes in the future. And this is something that is totally new for us compared with the old factories. So I would say that we are quite well prepared for the future and what the future may bring us. R&D is quite important for us. We have carried out more than 40 big projects over the last 15 years. And many of those projects has been full-scale products. We have worked together with the Norwegian research stations such as Nofima, [ Gilles Gauthier, Aqua Nutrition ] and now lately also Icelandic research station. We have worked together with farms in Norway and Faroe Islands. But of course, by the far biggest research station is, of course, Bakkafrost. With our long value chain, we have a much better opportunity than our competitors. And you can imagine how lucky we are, that we have the possibility to nerd with meal, oil and fish feed, salmon. So this is quite unique for us, and we love this job. It's quite exciting to work with. And as I mentioned, this gives us opportunities that our competitors don't have. So there's always a lot of discussion going around and there are many plans going forward as well. I will now take you through a test that we did late last year actually. It's a growth and digestibility feed trial. We tested 6 different types of fishmeal, 4 types of blue whiting meal and 2 types of trimming meal. This was all produced into feed. And then we did this growth and digestibility trial. 30 fish triplicated trial for 6 week and the fish size was 500 grams. And the inclusion of fish meal was 30% in every single feed but the quality of the meal was different. This is the best one with the lowest TVN and this is second one and so on. Here, we take -- we didn't use -- so technical, we didn't use an LT drier, we just steam-dried the meal, and then we have the trimming meal. And what we saw actually was that the fish meal with the lowest TVN, the best quality had the best specific growth, and there is a big difference between the best and the poorest and when we look at the growth, the feed conversion growth, how much feed do we need to produce a kilo, then it was much low or it was lowest with the best quality. So this tells us again that it's extremely important for us to try to control the boats coming in that they will cool down the fish, so they will have as low temperature as possible. And we are winning in both areas, both with the specific growth and also with the feed factor. And if we calculate these numbers that I showed you in a production cycle of 350 days, then there is a difference between -- 1.5 kilo between the poorest performers and the best performing meal. And this is just fish meal that we have looked into. Being a part of a small village like Fuglafjørður, you will see it later on the day, that we also have to think about social responsibility and kind of license to operate as well. And so we started this odor control to map the odor in Fuglafjørður. And this was Havsbrún in '67 and this is Havsbrún today. We have an outlet of 150,000 cubic meter of air, pit line 1 and 2. We will double that with the third line as well and 100,000 cubic meters. So there's a lot of air and just 150,000 cubic meter, that is the same as if you take a football pitch, and you have a 30-meter high. That's the air that we blow into the small village per hour. So we did this mapping and looked at the dispersion of the odor. The red is a quite strong smell while the blue one is a weak strong. So this was actually when we -- before we start our -- this is when the feed department and the meal department are running at 100%, this is the picture. And as you can see, we have almost 60 years of this. So this is kind of a DNA in the village where I come from, the smell. And we have -- what we did last autumn was actually that we cleaned the air with a -- in a scrubber from line 1 and 2 from the feed department, and then this is the picture. And mainly, this is the picture also because we are running the meal factory as well. But our plan is actually that -- to reach this picture, to clean all the air that we let out in the environment and also the air from the feed factory. So hopefully, in 3 years' time or 4 years' time, then this will be the picture. And just lastly, this is from a neighbor. I would like to express my gratitude. Now that you have reduced the odor in Fuglafjørður, it is fantastic for us living close to Havsbrún. So wonderful for us to enjoy the fresh air. Best wishes to all of you who have been working on this project. Best regard, a very satisfied neighbor. So people recognize us doing this. So it's good. Thank you. Regin?

Yes, they say in Fuglafjørður that the DNA is changing. So people have difficulties now to know which direction is north. So now everything is changing to south, used to be north because of this. We are going to talk a bit about the hatcheries, the freshwater segment, which is really important for Bakkafrost. And that's part of the growth. We are going to see Strond later today. And this is really where a very big part of our change has come from. As we see on this graph, there has been a good development in this smolt -- the sizes of smolt over the years. We started 10 years ago and the Faroe Islands are now above 500 and Bakkafrost is at 456 year-to-date this year. Last year, it was around 400. So the journey continues. Compared with our peers, we are good. We are increasing the growth or the size this year as well, and this is a big driver for our improvement. On the next graph, we see the development in capacity and in stock numbers. We see that, especially over the last 4 or 5 years, we have added capacity. We have expanded existing hatcheries and then we see Skálavík coming along from '26 and onwards. And then on the graph to the right top, we see how this corresponds to actually it sounds for smolt. This is the key to our growth. By expanding the capacity in the freshwater from previously around 50,000 cubic meters and now around close to 80,000 and then going up to above 100,000 cubic meters, we are significantly increasing our transfer of smolt, of large robust smolt. Also, this journey has also showed us that it's not just about producing the volume. It's really, really important to control all the different small indicators, small technical adjustments, and we will talk more about that later today. But just as Odd showed earlier, just with fish feed, fishmeal, just by doing small technical adjustments in the fishmeal, with the same recipe, we could have so big differences in the biology. And the same applies actually also with the smolt. By doing small adjustments, we have learned over the years how we can improve biology, how we can improve robustness and fish welfare. And this is creating a better operation, more efficient and creating better welfare indicators, but also this transfers also into economical indicators. But all in all, we see the journey of the number of smolt, this is Faroe Islands. How we go from 17 million pieces last year up to 24 million pieces in '28 and 24.5 million in '30. And in average, we normally say that we should be able to achieve around 5-kilo output for each input fish that we transfer. So that's -- that's one of our goals. We have used this graph earlier, but just to emphasize how important the robustness of smolt is, these are two batches of smolt that were transferred in December '23 to Kunoyarnes. This pictures of Kunoyarnes, we are going to drive past that area later today. There were two batches. And we're talking about December '23. So it's only 1.5 years ago. But at that time, the size of fish was, you can see to the left there, the size of these two batches was 268 gram and 285 gram. So that was only 1.5 years ago. Now we are at 456. So this also gives an understanding of the journey we are on right now that we have already now increased that size significantly. But this fish, these two batches, they were in the same environment, they had similar size, but they were -- they're one of the batches at robust high quality, one of the batches had lower quality. And the difference in the quality was because of the process in the hatchery, different temperatures, different parameters and the water quality, which creates kind of a difference in stress level. And what we can see here is that in the same period of time, the high-quality batch, despite being smaller at the start, was harvested at 5.2 kilo and the reduced quality batch was harvested at 4.4 kilos, very big difference. We also see that the mortality rate was 7% versus 3.1% and the harvest yield per input smolt was 5-kilo for the good smolt and only 3.3% for the bad quality. Also, the feed conversion ratio is 1.07 for the good and 1.13 for the reduced quality. So this is just an indicator how important it is to have a robust and healthy smolt. So it's important for us to focus and keep track on the small details. It's in the small details where the difference is. This is how we are how we are ramping up our hatcheries. We see that Strond -- when Strond started, there was a very, very long ramping up period, about 6 years. And there are many explanations why it took 6 years. There were some strategic decisions to take fish to the farming sites because we were in need of capacity, take them at farming site at a lower weight, which takes down the utilization of the site, but it was also some adjustments of the process at that time back in 2018 or '19, especially on the temperature, on the water quality. Even if we have been operating this for 40 years or more, we still had something to learn. We have taken this with us and adjusted now in all the other hatcheries, which have proven to be very, very successful. And that's why also we have been able to scale up Glyvradalur, Norðtoftir and Viðareiði much faster. We think now that when Applecross will now come up in operation that this will also help us to scale up Applecross in the future or over the next 2 years. When we look at Faroe Islands, the farming operation in the Faroe Islands, we have 21 farms. We are going to see one of the farms tomorrow. We are -- we divide this in three regions, the North region, the West and the South. And this is good for several reasons. One is reducing biological risk and veterinary risk, not to have too many movements between areas. And it's also good for biological control in the areas, et cetera. And we are -- we see opportunities in the different regions, how to optimize them. We run them as one unit operationally on management but we try to reduce the risk between the regions. When we look at the operation in the Faroe Islands over time, we see that one of the drivers which have improved our operations significantly over the past 2 to 3 years are our ability to control sea lice and the welfare of the fish. We were in a bit of a challenging period from around 2016 to 2020. Bakkafossur and the dual freshwater treatment has significantly improved our ability to balance the fish welfare and operation. The sea lice number is one of the key parameters which indicates this. We also see above -- on the graph above, mortality in treatments. When we do a fresh water treatment, there is very, very little extra mortality. Sometimes it is 0, but normally very, very low, 0.1% to 0.2%, in that level. Compared with other treatments, this is very, very low. And we see also a very good fish welfare during treatments. So that's been one of the drivers which have been important for us. This has helped us to increase average weight of our harvested fish. It seems also that this helps us to have a better key performing indicators because when the fish is healthy and strong, then it grows better and has less feed conversion ratio. And that's what we also see on this next graph, how feed conversion ratios in general are good in Faroes. And the growth ratios are better -- are going in the right direction and better than ever before. Fish is growing quite good. And I think I can say that the secret are in the small details. So it's being on top of the small details every single day. That's the secret to achieve these kind of numbers. The same goes with mortality or survivability. And this -- now we talk about a full generation, a full generation, not an average or 12 months or something. This is a full generation from stocking to harvest. What's important here is high survivability and a good average weight. That creates value for the company. And this is really important with a good fish welfare, and one of the drivers, as I said, has been our ability to treat fish for sea lice and keep the biology good. The yield per smolt, here as we see in the first quarter this year was 5.5 kilos in Faroes and 13.6 months in average. We see this has come significantly down. we have been around 13 months now for a while. This might come slowly down. But with 456-gram, around that level, we'll probably be around 13 months also going forward. We are, however, targeting 12 months in the future. When we look at where we come from, this is the fleet that we had for our farming operation in the beginning. I remember how proud my father was when we had the second vessel because that had actually -- this was our first live fish carrier. We actually could have live fish. There was a well in that boat. That was the first boat in the Faroes which had a well where we could have live fish. And they were so proud because now we could bring the fish live into the processing, but that's a big difference compared to the live fish carriers that we use today. So there's been a huge change. Today, we have a big fleet of vessels, and these are also technology that's driving our ability to develop the industry. By owning this technology, we have an ability also to develop the technology, to be part of that development. I see that very clearly that when we own it, we have a much better knowledge. We were the first in 2015 to introduce freshwater treatments, Hans á Bakka was the first freshwater treatment boat in the world. Actually, when we built Hans á Bakka, there was a person here in the Faroes which came to me and told me about this freshwater. And we -- as we were building Hans á Bakka, we converted it to the freshwater treatment boat. And Bakkafossur is the largest freshwater treatment boat producing fresh water on board, and that's been a significant game changer. We see also with our crew that they are really committed and driving changes. For example, now we have Martin, which is now converted to a smolt transfer. That's really a good utilization of the capacity. At low cost, we can make changes and use the equipment for different purposes. So this has been really a good change and possibility for us. So I think this is an essential part of our operations, also being able to take care of the fish, having the tools and the toolbox which are necessary as we are growing our biomass. Bakkafossur has become a cornerstone in our operation, securing fish welfare, biological stability and production efficiency. We have reduced mortality, improved survivability significantly. We are minimizing treatment mortality and also minimizing treatments because it's so efficient. Normally, we get much above 90% efficiency on sea lice removal and quite gentle treatment also at scale. I think we have a movie about Bakkafossur that we can maybe see. [Presentation]

Going to visit Bakkafossur later. So you will see it firsthand. But having this operation in-house is also a clear economic opportunity and benefit for the company. The cost of operation is significantly lower than any other life treatment that we can find. Bakkafossur is a large boat, 108 meters long, 23 meters wide and can hold 10,000 cubic meters of water, whereof 3,000 are freshwater. As we heard earlier, we have included two of these vessels in our CapEx plan. One of them will be the same size as Bakkafossur and one of them will be 30% larger because of the operation that we think we are going to have in the future. So this is in order to balance with the production that we will have in 2030. We think this is a strategic advantage, and we see also on this graph what this is leading to, larger harvested fish, lower sea lice levels and also very, very low treatment mortality. When we look at Scotland, we also see a similar development where we also, with the same treatment with dual freshwater, have seen a significant drop in mortalities and also a much healthier fish, lower mortalities and also low gill score. Gill score is on the gills to see how good the gills are. The gills are like the lungs of people and are very important, of course, for the salmon. And thus, you have a lot of different pathogens or allergies and plankton in the water. They are impacting the gills and the freshwater is cleaning the gills, so that's a side effect with the freshwater. So fresh water treatment is really, really important, not only for sea lice, but also for the general fish health protecting for different things. As mentioned, we have now amended or upgraded Martin to do a smolt transfer which has worked really, really well. Also, this is an example how internal skills are creating values and so using an existing vessel for a smolt transfer is now giving a more robust smolt, large smolt to be transferred to the water. And we are right now doing the same with Bakkanes. So Martin was transferred a year ago and has been now in operation for 8 months, very, very successfully. Bakkanes will now go to Scotland with the same equipment. Bakkanes is normally working in Scotland, but now we'll take care of all the smolt transfer. This is an overview of our harvest and processing facilities here in the Faroe Islands, Glyvrar and Vágur. And in Scotland, we have two, Cairndow and Marybank and in New Jersey, U.S., in Wayne, and in Denmark in Munkebo. These are processing facilities where we also have a kind of a flexibility. Just as I mentioned earlier, we see in Faroese over the next 5 years, we think we can upgrade the existing facilities to take care of all the volume with some marginal investments. In Scotland, we have mothballed Marybank. So we are upgrading Cairndow to take care of all our harvest for the next coming years. But as I mentioned earlier, we have won a new plant and included in the CapEx program that will take the volumes after we have come higher than a certain capacity that we have available today. That's needed also for the flexibility and for the products that we also need to do in Scotland. So if we look at the operational update for Scotland. As you know, we have had some difficulties in the turnaround process. It has been more challenging and a more bumpy road that we have been on than we all had expected. But I heard someone saying that failing forward is the ability to get back up, after you have been knocked down, learning from your mistake and move forward to a better direction. So that's what we are doing. We are keeping our goal. It's also a bit like the river. Somewhere you have the river, maybe you thought that the water was going directly to the ocean. But sometimes the rivers are not going the direct route. Sometimes they go a bit the different directions. But eventually, they will come to the same result. And I think that's exactly how we are going to do it in Scotland. We are on the path. We have been looking at risk reduction which has been successful. But it has taken longer, and that's, of course, not good. But we have to do the job, and we are going to do the job. So we are doing it step by step. At the moment, we are very focused on Applecross, which is going to take us to the next level. I think we have been successful in reducing the risk, improving efficiency, producing the largest fish ever now in Scotland for the first 5 months this year, a good premium, a good efficiency but we need scale also. In order to take costs down, we need scale, and that scale will come as Applecross will be ramped up. And we are in the middle of that process at the moment. Also, we see here there's a lot of other details, for example, with the processing plant, where we have mothballed one of them. We only have one in operation now and in the future, we will only have one. That will be a new one, but we need also to do the right things at the right time. So that's why we are waiting a bit for that project. This is an overview of Applecross. These are the different units. The last one, which we have had into operation was last fall. That was the E1 and E2. E2 was last one. And right now, normally, we have referred to it as AP6 and AP7. AP6 and AP7 is what we see here as A2, C2 and B2, that's AP6 and AP7. So the reason why we refer it this way is that A, A is where we take the eggs in. So A1, that was the original site where we had the eggs in. And A2 is the new site for eggs when we decided to go from 7 million to 15 million or 16 million, that's when we had to add A2. So we have new two hatcheries where we take the eggs in. And then the eggs, when they are hatched, they will go from A1 to B1 and from A2 to B2. And that's where the frys grow. And then they will go from -- to C and D, et cetera. And then eventually, they will all be together. In D2, there are actually also two units. So D2 is A and B or two separate units, which are also biologically or veterinary different units also on the biosecurity. So this is now all -- and actually, we have put eggs now in the A2 unit. Was it last week, Ian? Yes, last week I think. So this is now in operation. And so Applecross is now about to be scaled up. But just as I mentioned, with the river, the road is not direct. It goes a bit. So -- but I think we have learned a lot, both is Scotland and in Faroes. So hopefully, most of the big bumps are behind us. This is an overview of many of the old hatcheries, which we have laid down. Applecross is now the one where we have our prioritized operation. This is a fully biosecure site, where everything is like a closed system. Working on the same standards as in the Faroe Islands, we still have KLM and Couldoran in operation. They are not biosecure, but until we have a better capacity, which will probably be later this year, we have to run them. At that time, we will have to decide whether or not we are investing in a more biosecurity system then we need to lay them down for a while and to upgrade them or what we will do. And the second hatchery is not in this CapEx program this time. This is an overview of Scotland. So last year, we had a transfer of 6 million smolt. This year, it will be around 9 million. We took it from 10 million to 9 million. We think that in the fourth quarter, it looks like we will be a bit short. So therefore, we took it down to 9 million. Next year, we expect maybe around 13 million and then hopefully, full capacity from '27 of around 16 million fish per year. So this is an overview of this development and we are steadily -- we are in a transitional period at the moment in Scotland. We still have a fish in the water, legacy fish, you can say, which was produced with the old systems. So this year is a transitional year where the biomass in our marine farms will be exchanged with new healthy smolt. So next year, in '26, the majority of the fish will be high-quality fish and then onwards it will be only high-quality fish. So despite delays, the Applecross expansion remains a cornerstone in the Scotland transformation. And once fully ramped up, this facility will enable significant smolt capacity increase, which is crucial for our operations. The first batch was delivered earlier this year and -- in January. And that batch was 932,000 fish at 180 gram. This was healthy, good smolt. And compared with earlier batches which were transferred at the same time, we see a very good development so far with very strong growth and good feed conversion ratio. So we are confident that we are on the right path and that the river will reach the sea at one point. Also, when we look at -- so these numbers are, of course, not yet demonstrating that development. This development that we see here on this graph is demonstrating the risk reduction program that we introduced 1.5 years ago which has been successful, which have taken down mortalities, which have taken down the issues from jellyfish and lice, et cetera, and have given us the ability to produce larger fish. We have produced larger fish now than ever before, and that's a result of the risk reduction plan. And we will still apply this risk reduction plan for this year because we still have some fish in the water, which are challenged from earlier, so that will still be in place also in '25, which means that there will be some smaller fish harvested over the summer and in the third quarter. But we will now -- as the large fish that we transferred in January will come to harvest maybe by the end of this year or early next year, we will start to see some new development of that fish. We see here that the expectation is that the turnaround will mean that our yield per smolt will increase gradually. We were quite low and are gradually now during this derisking period, increasing our sizes to larger fish, driven by the good operation, especially on freshwater FLS and also then eventually with larger smolt. So the journey now is to move from challenge to stability then eventually grow. In our harvest and processing in Scotland, as I have mentioned already, we are, at the moment, running only one site, which is Cairndow. These two sites, Cairndow and Marybank, had daily capacity of 50 to 70 tonnes, we think that with Marybank now, we are maybe able to do maybe something like 100 to 130 tonnes per shift. So we are able to do everything in Marybank. Maybe in Cairndow, maybe we can upgrade slightly further so that we can use this plant for some time. But then in the future, we will invest in one plant, one future plant, where we will have a targeted capacity of at least 250 tonnes per day. And we will have the ability also to produce different products, which will be important for the future in Scotland. And now we will go to sustainability. I think it's important to just to say very briefly that for the next 5 years, we -- Bakkafrost, we will have very high focus on reducing the risk. We need to be -- to keep our -- we need to step a bit back because of the situations which we have been in. And we need to build system strength in the full value chain. And when we see times like this, we need to step a bit back and protect our balance sheet and our operations. So that's, I think, what the conclusion on the lower CapEx plan for the next 5 years is demonstrating. Hogni?

Yes. Let's now look towards sustainability, which continues to be a defining pillar in Bakkafrost's strategy and also an enabler for growth. Much of what Regin has explained about with the progress and the results from Bakkafrost, just to give that as an -- use that as an example, keeping these farming KPIs so well controlled is also enabling our future growth. Our commitment goes well beyond compliance. It is all about driving long-term value and resilience through responsible operations and innovation. At the core of this commitment is the product that we deliver, the salmon. Salmon already has the most sustained -- is amongst the most sustainable choice of protein available. It has an exceptionally efficient feed conversion, has a low impact on land and freshwater use, low deforestation risk and also low biodiversity risk. It has a high edible yield and also has a lower waste in processing as a result. And the carbon footprint is very low. We are about to finalize, we actually hoped that we had it ready for today, but we are about to finalize a full life cycle assessment to ensure complete transparency from feed to food and to be able to benchmark our climate impact against other protein sources. That assessment will be available very soon. But we know that we need to go further, and we know that we need to move faster. We have made clear and measurable commitments through the Science Based Targets initiatives to reduce our carbon footprint from Scope 1 and 2 by 50% in 2030 and reduce Scope 3 emissions by 52% in the same period. To get there, we have embedded energy efficiency as a core design principle when we build new facilities like the Applecross hatchery or the Strond hatchery or our processing plant at Glyvrar to name a few examples of that. And through our biogas plant and circular thinking about how we can use biological waste from our operation, feces and waste from our hatcheries, we are producing renewable energy, reducing both our emissions and also reliance on fossil fuels. Our path forward is ambitious, but it's clear. We have developed a group-wide climate transition plan which aligns with ESRS requirements, defines a clear path to net-zero in 2050. Models the details in -- the emissions in details and prioritizes the most efficient decarbonization levers. Some of our key projects on this journey is the Applecross hatchery, which will run on 100% renewable energy. Also a new pilot project that we are running linked to the Förka biogas plant called DecarbFaroe where we are piloting carbon capture in the Faroese basalt rock, which is displaying exceptional good ability to absorb and store carbon. And also the proposed 100 megawatts windmill farm Eysturlund, which is currently under review. We have still not received the approvals to initiate that project. But that would be a game changer for especially the carbon footprint that comes from our operation at Havsbrún. These are not side projects. They are really at the core of how we can scale sustainably in the future. That brings us to another enabler for growth, which is technology and digitalization. Digital capabilities are at the heart of how we drive performance and sustainability at Bakkafrost. We are investing in technology, automation and AI across the value chain. And the value chain is, by the way, heavily digitized already and has been that for a very long time. But we are taking the next steps. We are not just adopting off-the-shelf technology. We are actually building own solutions, deeply embedded in how we farm and operate. Our value chain is increasingly automated and AI-driven, allowing us to raise efficiency while improving our biological performance. Our central feeding stations are powered by machine learning algorithms using real-time data to optimize feeding. We are testing AI in hatcheries as well to improve energy efficiency and fish health. Our farms have real-time monitoring, and we have advanced sea lice simulation models to optimize treatment efforts and predict when treatment is needed. The operation is supported by ROVs, robots, sensors, et cetera. But what really sets us apart is our strong in-house capabilities. We develop our own operational technologies. We seek vendor independence wherever possible. We have recently achieved an ISO 27001 certification, and we operate a 24/7, 365 response infrastructure. Our IT department is very capable. And just to give you an example, they just have performed what could be compared to a heart transplantation on a live patient while the patient was at work. They have replaced the entire infrastructure of our primary data center over the past couple of weeks without anybody noticing that, that actually happened. So in very safe hands, in other words, and very capable. This approach gives us both speed, security and control of our own future. One of the area where digitalization and technology plays an important role are the centralized feeding systems. Apologies for the poor contrast on these slides, by the way, but the printed version, you will be able to see all the details. In central feeding, we have made significant improvements in the Faroes, where our operation, our farming sites are centrally fed from four central feeding stations, driving consistency and efficiency in feeding. And this afternoon, we will visit one of them on the way to the hatchery at Strond. In Scotland, we have also implemented AI-assisted central feeding, which has already shown really good results. We have achieved lower feed conversion ratios as a result of this transition. And this matters because it improves the precision of our feeding, it reduces over-feeding. It ultimately also lowers feed waste, emissions and costs. It reduces the name -- the number of daily trips, vessel trips needed, cutting fuel and carbon emissions. And it gives us a real-time overview of multiple sites with ability to intervene faster, if necessary. This is a clear example of how operational efficiency and sustainability converge through technology, supporting both our operational and climate goals. Behind all of this is one very critical ingredient and that is high-quality data. Bakkafrost is the most vertically integrated salmon farmer in the world, and that gives us an unmatched data footprint. Since 2014, we have collected data across our value chain. Every day, more than 50 -- sorry, more than 80 million data entries are collected, and that number is increasing every day. Our SCADA systems provide real-time process control and data are stored in our secure, redundant on-premises data centers. Building on this, our new in-house developed platform, which we call AquaMind, will be -- is designed to use AI to generate predictive insights, helping us anticipate issues before they arise, identify patterns or potential opportunities for optimization based on the enormous amount of data that we have available from the entire value chain. So this can give us a true strategic advantage and make us even more competitive, efficient and sustainable going forward. And finally, to close this presentation and before we move into Q&A, I would like to invite the senior leadership team from the Faroes and Scotland to come up on stage. Please come forward. Since we have -- since our acquisition of the operation in Scotland, we have been fully committed to build one company, as we call it. It's a core of our strategy. That means a shared culture, grounded in values and responsibility, collaboration and long-term thinking as an unified team working together across geographies and across disciplines and a clear ambition to operate as one single integrated organization. It's not just a vision, it's what we live every day. And the people that are here today are the ones driving that forward. You will be meeting these people again as we go on site visits. So please feel free to ask questions about what you see or reflections on what you have heard today. We are really proud of where we are and what we have built. But of course, we are even more excited about where we are going as one company. Thank you. And I think now it's time to move into Q&A. So Odd, Regin and I will stay on stage.

So any questions? Henrik?

Henrik Knutsen, Pareto Securities. You've had some delays on various small projects in the past. Do you have any contingency on your future small stocking guidance?

I think that the guidance now is more robust. Of course, we try to learn from failures. And I think that both the operations and the scaling up of the hatcheries are more robust now than previously because we have now more experience. And starting up our new hatchery now is a more detailed process, which we have been through a number of times.

And on that note, what will it take for you to reinitiate sort of building of the second hatchery in Scotland?

Sorry?

What will it take for you to commence building of the Fairlie plant?

What will it take? Yes. So we -- at the moment, what we are waiting for is to demonstrate that the upscaling and the development over the next 2 to 3 years will demonstrate that we are delivering. So at some point, we will come to that point where we see that we are now delivering. And now -- so it's -- we are quite sure that building the second hatchery in Scotland is the right decision. But the right decision in order to get right needs also the right timing. And we don't think that the right timing to make this is now. So that's why we have delayed it. And that's also one -- a very important part of our CapEx plan, that when things surround us change or when things within our operation change or not go as we expect, we must have the ability to adapt to the changes. We cannot just continue as everything was as we expected. And that's -- so I think that within the next 2 to 3, 4 years, we will probably come to that where we see that we are now delivering and then we can talk again.

Ola Trovatn, DNB Carnegie. One question on the CapEx plan. You allocate DKK 1.5 billion to the marine phase. It's the same amount as two vessels. Can you comment on what's inside that post?

This is just on allocation. So we are -- as you know, we have built Bakkafossur. We made that project internally. And we are now in the process of adapting the new project of two vessels. One of them will be the same size of Bakkafossur but with some amendments compared to our newest achievements. And the second one is around 30% larger. So this is just an allocation of funds. Hopefully, we will have some leftovers. So there will, of course, be a tender process. That tender process will probably be later this year. And then at some point, we will be ready to sign contracts, but that's dependent on Board approval at that time.

And you also comment on two new sites in the Faroes before 2030. What kind of technology do you foresee on this?

So as we talked about, right now we are pursuing the growth from existing licenses. That means that we are looking at exposed areas with high current, where we will use current deflectors. We already have one of the sites more or less ready and we have a few in the pipeline, and those will be with current reflectors where we have high current. Ten years ago, this would not have been possible, but now the technology is ready to go this path. So same technology as we are doing today, just with current deflectors and, of course, very robust equipment.

[ Kristoffer ], Arctic Securities. You mentioned in your presentation that return on capital employed has been declining in the last years. And looking ahead, FSVs are the largest items on your CapEx budget. Have you considered to maybe do something on the financing side of this? Is it necessary to have it on your own balance sheet?

That is something that we have been looking into. That could be a chosen route. So far, we have done that on the balance sheet. The most important part for us is to have full control and ownership to ensure that all the learnings -- so treatments is a part of our core operation. And we don't believe that it's the right thing to have that with a third party. So having this internally, having these short learning cycles, the same as we see from Havsbrún, where R&D and the development of feed recipes and all the nitty-gritty stuff that goes into a feed formula can be tested in our farming operation, it's exactly the same with the FSV part. It's so important to have that internally so that we can continuously improve. It is a big investment in these vessels, but we have also to remember that one of these vessels will eventually replace leased vessels that we have operating in Scotland. And we are doing it much, much more cheaply and can gain from the knowledge buildup and development.

Erik Cederberg, Handelsbanken. So I think you talked about flexibility in the licenses here in the Faroes, adding to 4 new sites and then maybe adding one new one. So what's the reason for why you haven't done this earlier?

As mentioned, this technology with current deflectors has been just recently developed and tested, so now it's a tested equipment and a tested way to operate. And also with the current sites that Bakkafrost has had over the last 10 years, we have not been able to develop new sites. We have, on average, had sites being followed for longer than necessary because we didn't have the smolt available to increase. So we have not been in a situation where we needed more sites. During these 5 years, we are critically coming closer to that point, where sites availability will be one of the constraint in our operation. So that's why now is the time for us to go this path.

All right. And then also the smolt output for Scotland in 2025, is that lowered from 10 million to 9 million? What's the reason for that?

Correct, correct. So as I mentioned, we are reducing in the fourth quarter. We think that we will reach a bit lower than what we previously guided on 10 million, some of this which will be coming into the first quarter of next year. So that's why we changed this from 10 million to 9 million.

We have one question also from one following us on the streaming, asking about to become 100% renewable, if we will invest in more clean resources. And yes, we have solar panels, biomass and wind power. Are we planning on combining that with, for instance, tidal energy, which is being trialed in the Faroes? Do you want to or should I?

Go ahead.

Yes. So with the projects that we have mentioned in the presentation, especially the [indiscernible], that's proven technology. It is clearly going to be able to give us the reduction that we are seeking. Tidal energy is still very early phase. It will take some time to develop that in the Faroes. Eventually, it could be an interesting addition to the grid in the Faroes, especially because it's predictable, it's reliable. You can plan the power generated from that 100 years ahead in time, knowing the tides. So it's more suitable for that. It could be a potential big game changer for the Faroese energy transition as a whole. For us, I think we have some good answers to what steps we need to take in the short term, and the projects that we mentioned before are very good stepping stones on that journey.

Alex Aukner from DNB Carnegie. So I got most of my questions answered in the break, so thanks for that. But on the demand side, you haven't really commented that much. So in the past 10 years, you really haven't grown your volumes materially, but you've had a brand premium, a price premium. Now you're going to grow by almost 11% per annum until 2030. So maybe some comments on where you're going to sell that incremental volumes and how the competitive situation in the market is now that Norway is back producing higher quality fish than over the last 2 years?

Yes, that's a good question, Alex. I think that we have a good ability to grow in the major markets. We are targeting both the U.S. market, the European market and the Asian market. I think there's a great potential in Asia. But with the ability for us to control our operations and produce large fish with differentiation strategies, I believe that we are going to have a healthy margin and healthy premium on our products. I think salmon, in general, is a valuable product. And being able to sell a large part to high-end customers, I believe, that we will be able to secure a premium. The premium is, of course, going a bit up and down depending on the competitive situation. As I mentioned a bit earlier, so far this year, we have had a healthy margin despite 38% extra whole fish coming from Norway. So I believe that we will be successful on that journey. Whether or not the margin will be lower or not, it's difficult for me to say, but our strategy is to maintain on that same route. There is a huge demand and growth in the market. And I -- when I look at a longer picture, I believe that there will be a low supply increase generally in the salmon business. Right now in the first quarter or the first 4 months this year, we see a huge increase of supply. Nobody had expected this high increase. I don't know any analyst or salmon producer that predicted this big growth that came this first months of this year, so this was very unprecedented and unexpected. And of course, this demonstrates that despite 38% growth in wholesale, we maintained a good premium. But of course, the prices are much lower now, so we will see how that develops.

Wilhelm Dahl, Dankse Bank. Just one more follow-up question on the FSVs and CapEx allocated to that. So with those investments, and yes, of course, you have a volume ramp-up and the conversion of Martin and so on. But do you get any redundancy now? How is the utilization? Is there a need to push out some of the capital spend there now? Or is it just for future volumes?

So you are referring to these two vessels.

Yes. And capacity utilization in the next couple of years with the currents.

Yes. So it takes 3 years to build. And we have not signed anything yet. We have still not made the tender. So this will be a delivery period. Even if we signed, let's say, by the end of this year, the first operation can only be '26, '27, somewhere in '29. And with the growth that we are building, we need also to have the infrastructure in place to make sure that we don't lose the high fish welfare and the control on biology that we have today. So we think that going from 97,000 tonne to 162,000 tonne means that we need to have more capacity on this area. And just as Høgni mentioned, we -- with this capacity for Scotland, we might also be able to release some of the capacity that we have today. One of the explanations is also that in Scotland, when we go to more exposed sites, we will also go to larger pens. At the moment, the largest pens in Scotland, is it 128 meters, Ian? Yes. 120? And in the future, it will be 160 like in Faroes. So that means that the vessels also need to have a larger scale, which is built in this program. So this is also to meet the demand in the future, both with the technology that will be more efficient also in Scotland with larger pens, but also with the volume that we will produce at that time, around 50,000 tonne. So it's both technology, scale and that the infrastructure must comply with the actual capacity of our farming operations. So I don't expect that there will be unused capacity. Yes. No further questions? Are there anyone, any followup? No, I don't see any. Thank you very much. And now we will serve dinner and/or some breakfast or whatever, lunch.

Yes. We will -- it might be breakfast for some of us, but yes, we will go for lunch now. And then you have all received a piece of paper where it says -- on day 1, for instance, it says group 2 for me. So you have been assigned to a group. We are split up in 3 different groups. And we'll be going to site visits in those 3 groups. After lunch, when we leave out for the site visits, there's a couple of tables outside where you need to pick up a headset for your assigned group and also a small carry-on bag with some refreshments, et cetera, for the afternoon. Thank you very much.

Seems like a good plan.

Yes, I think so. Thank you.