SalMar ASA (SALM) Earnings Call Transcript & Summary

Okay. Seems like everyone is on, in particular, the key people here from SalMar. So welcome to this Q4 presentation with SalMar, represented by CEO and President, Gustav Witzoe; CFO, Trine Saether Romuld; and IR Hakon Husby. The company will do a short presentation of the Q4 results before we turn to Q&A. And it seems like everyone is muted. That's good. And we also had everyone do the Q&A either by raising your hands or post questions in the chat. And with that, I'll leave the word to SalMar and congratulations with the NTS transaction.

Thank you. Thank you. I will just share our presentation and then Trine can start with the highlights for Q4 before we can talk some more details on the transaction of NTS afterwards.

Yes. I guess, at least some of you already have seen the report and maybe also seen the presentation on the webcast. But anyway, some key headlines from what we communicated today. Starting with the Central part of Norway Farming, we have harvested a record high volume. We have had some additional costs, which we tried to explain today. It's additional cost amounting to about [ NOK 3 ]. So if you take that into consideration, we will cost at the same level as quarter 3. And we also communicated that we expect to be back on quarter 3 level in this quarter. The main reason for having higher costs in quarter 4 was explained to be 2 main reasons. The one is that we had ISA on one location, meaning that we harvested out fish at a lower size and thus higher cost and also achieved the lower prices. In addition, we had some other companies with ISA, and we had license -- or location close to those, and we decided to also harvest [ out ] ours, even we didn't have an ISA, but to take out, unrisk. So that together also involves some additional costs with well boats and cleaning, and et cetera. So that is one explanation. And the other one is related to sea lice. We have had more sea lice than normally in the Central Part of Norway this year, and we was very eager to do our utmost before the winter season started in quarter 4. So therefore, we decided not only to use our own sea lice capacity, but also to hire an external capacity to reduce that risk and to have more treatments. And also, as we have said before, we are all the time working to use -- to have more tools to actually work to remove sea lice in a best possible way from a fish welfare point of view. So it's done some new treatment, a [ Clean Treat ] in the quarter, where we experienced some higher costs, but done by purpose. So that is the main explanation for higher cost in the quarter. When it comes to Northern part of Norway, we are very pleased with the result. We continue with stable costs. We have a good growth, good field conversion rate and low mortality, which altogether also gives good cost figure. We also highlighted the fact that we still are harvesting. We're using 7 different harvesting plants. And that adds about [ NOK 1 ] higher cost, if you're comparing to the cost in the Central Norway. And that is cost that we hope to get rid of during 2020 when we have our own processing and harvesting plant in full capacity at Senja. In the sales industry, we said that we are very pleased from an operational point of view that the organization has handled to harvest huge volume in many weeks and [indiscernible] doubled the volume compared to a normal week. And that also has challenged, of course, the sales organization, to actually sell all the fish to the market. So all in all, we have not as good prices as we would like to have. Of course, that is partly related to fixed price contracts, which is contracts that is entered into last year and also at the time when we were more pessimistic than we should have been if we had knew the current spot prices. So there, we have some negative contribution from those contracts compared to spot price. In addition, we have this, in general, some lower spot price achievement than normally and also due to this ISA harvesting with a lower average rate, but also due to extremely high volume in some weeks. When it comes to Iceland, I think everything is going quite smoothly. We are reducing cost significantly compared to 2020. We also already have seen positive effect of the branding that was launched in August, together with more and more fish is actually sold to U.S. by boat, reducing transportation costs. And we also just started to have value-added processing also from Iceland, started with some fillet production. So all in all, we are on schedule there and the efficiency is a very good quality. So we expect a significant high volume in 2022. And Scottish Sea Farm, as you probably have seen, we have bought the Grieg [ Shetland ] operation. That was -- transaction was finally concluded by mid-December. We had some cost, NOK 33 million, that was expensed in the quarter. So that makes that we actually have a negative contribution in quarter 4. If you take that out, we have a slightly positive EBIT margin also in quarter 4. And we have had experience on gill health issues both in quarter 3 and quarter 4. We know the explanation, that is due to some genetics and from the eggs. So we have changed the egg service -- egg provider. So that should be sold going forward. And also the operations report that status of efficiency currently seems to be a much better quality. So I think that was very fast, some highlights from the operation this quarter. When it comes to the balance sheet, we still have a very solid balance sheet, high equity and quite low debt versus EBITDA. We still have a good headroom of credit lines that is not used, NOK 4.4 billion as of year-end. And we have proposed a dividend of NOK 20 per share. So that is, I think, the most important -- yes. And also, as Gustav mentioned here, I also should have mentioned the volume, that we expect increased volume in all regions in 2022 both in Norway, Iceland and also the Scottish operation. And then we have the transaction. You've probably seen that we have this voluntary offer for all outstanding shares in NTS ASA. That was an important step for us. We tried to buy both SalmoNor and NTS previously, [ NRS ] earlier. So we have a quite good knowledge about those companies. And we also know that we have a lot of synergies when this is fully implemented. So we have, as you probably already have seen, 50.1% of the shareholders have already accepted the offer. And we are now -- just this morning, actually, we have sent an invitation to have this Extraordinary General Assembly meeting in SalMar to have the authority to have the shares available. And we have started to work with documents, the offer document that has to be approved by the stock exchange. And we will do our utmost to have that finalized as soon as possible, but anyway a good time before end of March. And we also started to work with the competition authorities when it comes to documentation to be sent. And the rationale for doing this is that SalMar, we are forming in the central part of Norway and the northern part of Norway, which are regions that we think is the best farming regions in Norway. And both SalmoNor and [ NRS ], they are in the same region and how much of the same culture and values as we have in SalMar. So from a farming point of view, we think this is perfect. When it comes to Iceland, our company there, Arnarlax, we are already doing some work for Arctic Fish. We're actually doing all the harvesting for them. And we are also in a close from an operational point of view. So that is obvious also that we have a lot of synergies. When it comes to offshore, we have SalMar Aker Ocean. And they have similar -- not similar, but also offshore project, which is the Arctic offshore farming, where they currently have 4 development licenses. So that is -- but overall, we really think that this is a good fit, that we are building an even stronger company. And it's more like a merger than our acquisition, and that we also make this is even bigger as an industry company and also could offer our customers also an even more stable volume every week. So we think this is a win-win for both shareholders in SalMar, but also for the shareholders in NTS. So I just wonder. Maybe we should just open for questions?

Yes, if anyone have any questions, please raise your hand or just post them in the chat. And I am happy to start off. Maybe you can comment on the synergy potential on NTS and also time line for taking on synergies. I know that's been a question among some of the investors.

Of course, we have done our calculation in-house here in SalMar. And as Trine has pointed out, we see clear synergies across all parts of our value chains in all regions. And it's -- the strategic fit is quite strong, and it's quite easy to see a lot of synergies. In terms of figures and numbers, we will announce this after the completion, we get the full approval for the -- from the authorities regarding this transaction. So we expect finalizing everything somewhere in Q3. So in Q3, Q4, we will communicate more on that. But there are some clear synergies, take InnovaNor in Northern Norway, our new harvesting processing plant. It's built with a capacity that can handle all the volume from Norway Royal Salmon up there as well. Together, we get a better capacity utilization. In Iceland, we know that Arctic Fish is contemplating building a harvesting plant. Together, we can do something better, together in the West Coast of Iceland. In Central and -- in Central Norway, we are operating in the same areas as they are doing today. We can utilize the production capacity even better, the sites, the [ smolts ]. And we have a lot of small capacity in SalMar. We could provide them with the optimal smolt shed during the year. So together, we can achieve something even greater, and not talking about the market potential in terms of the industry segment, in terms of gaining access to new customers worldwide, the distribution network. The other companies have strong sales organizations, and together with the one we have, we will be even better. And so we see synergies as all across. So we think this is very good. And I would just like to add that, as you know, 80% of the transaction is in SalMar shares, 20% is in cash. And then we also bring them on board, on our journey going forward. I think that is very important when we succeed because we need to gain on the people, on their side of the organization, on board on this going forward. And already internally to us, we see very positive signals from all, from biology to industry, to sales to our support staff. And also we get signs on the other side of this as well. So we think this is a great potential to get there. And so for us, this is -- SalMar has been very -- since we start -- Gustav started 31 years ago, in '91. We have been a history as a company on a growth company, where we have done smaller M&A activities or an organic growth throughout the years to bring us where we are today. But this is the single largest transaction SalMar has done in the industry -- history. And it will bring us into another ballpark game, and we think it's a perfect match for us at this moment in time.

And in addition, we would, of course, also increase our purchasing power.

Super. Thanks for that. [Operator Instructions]. Since this seems to be a quiet audience, I have more questions from my side. Maybe a bit on the competitive authority and the process there.

Yes. I can. As you've seen that we have taken some kind of full ball for this -- condition when it comes to competition authority in Norway, but not on Iceland. But we also said that we have on this condition up to end of October. So whatever is not clear before October, it's really on our risk. But we think this should be okay. It's a lot of work to be done, of course. But if there are something, we are quite sure that we will handle that with doing some changes. So we don't see a huge risk involved in that one. And we also have noted that when [ Mowi ] sent the offer, which is after withdrawn, it was no condition at all. So we think that this is the work we have to go through, but we don't see a significant risk into that.

Very clear. And then on Antoine Barbant, you raised your hand?

Can you hear me well?

Yes.

Great. I was just wanting to ask a question about minority shareholders in NTS. Do you expect this to be an issue in integrating the company? And as a second question, do you expect -- what do you expect to do with the non-forming assets of NTS?

In terms of the minority shareholders in -- the shareholders outside of the 50.1%, which has already the pre-accepted the offer, we have a -- we are open for a very good and constructive dialogue with all partners there. So -- and this offer is for everybody. It's for all outstanding shares in the company. So we are open for discussions in all manners there. So we did think this is doable. And we are -- as we have said, we are willing to be a 50.1% shareholder and we are willing to be 100% shareholder. So we will be -- go out with open arms and take a dialogue with them. So I think this is -- I think it's quite obvious that a lot of people see the synergy potential as we see as well.

And hopefully, we will know the answer mid-April because our offer will be sent before end of March and we start with 2 weeks. So I guess we'll have a very good indication mid-April.

Yes. In terms of the non-farming assets, I guess, you mean the Aquaservice company, Frøya, mostly there. And of course, they are a very great company, which has a lot of crucial service provider to the aqua -- to us as our culture company in terms of service boats, service vessels, well boats and so forth. So this is something which we believe is -- fits well into us. And of course, in terms of structure of the company at the end, we will need to look into this going forward.

And if somebody else could do this job better than we can, it's easy to say.

It's something we will consider down the line. Our ambition in the first term now is to succeed with transaction of NTS. And then in the meantime, when we are awaiting the final regulatory approvals, competition and everything, we will, of course, do our integration plans internally here. And then we can announce more when that is finalized to you guys, what we will want to do with the company.

And then there was a question on the chat from Pierre Boudeau asking on Aquaservice. I guess we just developed that question. But also on offshore development, can you make an update on change versus expectations, outlook and the competition in offshore?

So I guess that's a general question, not related to this acquisition?

Yes. I guess so.

So in offshore development, if you then talking about SalMar Aker Ocean, we gave an update on the presentation today. We are now preparing to have -- to prepare what we can do to prepare before we take a final investment decision both on Ocean Farm 2, which is the improved version of the existing Ocean Farm 1, but also Smart Fish Farm that want to be in the very open sea. We also mentioned that we are waiting to have a commitment from the government, what should be the location for a Smart Fish Farm. And we also sent a request whether we could be -- have approval to put more fish into sea than the current 8 development licenses give us permission to do. So I think that there is not very much that has changed since the last quarter, but we are continuing to prepare ourselves to be ready, and we are waiting to have some more concrete time lines from the government. If you ask about competition offshore, I think nothing much has changed. We are still in the lead. It's only we that has actually produced 2 generation in the Ocean Farm 1. So I think that we are still in the lead position.

Thanks. And then it's Alex Jones. Something to add to that?

Excellent. Two questions, if I may. First one, following up on Antoine's point on minority shareholders. Does the synergy potential change if you own 100% of NTS versus if you own just over 1/2 of it? And then the second question on sort of your past acquisition track record. Could you give us some sort of details on how you've integrated previous assets that you've purchased and the synergy potential you created there?

I think the easiest is to take the most recent transaction. That was actually Refsnes and Nekton, where we bought licenses in 2021. And they are many months ago, fully integrated as part of our organization. And we are utilizing the biomasses, 100%. And the people are part of our organization. I think that is the most recent acquisition, which was about almost NOK 1 billion. So that was not a small acquisition either.

When it comes to your first point, Alex, in terms of -- if you don't get access to all other minorities, and are we able to take out the synergy potentials? Of course, it's easier with 100%, then you are in full control. But over 50%, you are in the [ proposition ]. You are managing the company. So in both areas, we are able to take out synergies because -- but of course, easier done in...

It's more complicated when we have only the 50.1%...

Yes. It's basically that. It's more complicated at 50.1% in terms of all agreements that need to be put in place and so forth. But 100% is easier.

All right. And then there was a question on the chat here. Can you develop on production and feed costs?

Could you please elaborate a little bit on that in terms -- are you meaning in terms of what we expect in the cost levels? Or meaning that we will be -- start our own...

[Foreign Language]

But what we can say, like Gustav is pointing out is that, in terms of our forecast going forward, we have a higher field price in our budget in 2022 compared to 2021. We see the inflation pressure on raw materials, like all of the industries around the world is doing. But for us, it's -- so we see -- we have a higher cost on feed in our budget in '22 compared to '21. But also, we have other cost elements, which we have lower because we expect to be even more efficient and better. An easy example is InnovaNor, our harvesting plant in Northern Norway, where, like Trine mentioned, 7 different harvesting plants we utilized in Q4 by just having 1 harvesting plan to send our fish in Northern Norway. I know that there is a lot of gain on the distribution side, the logistical side. So we are doing a lot of other elements in order to gain on that. So if you could -- if you can -- in terms of cost picture going into '22, we believe we have our plans to be at the same level as we delivered in '21.

Thank you. And then it's Marco Sormani.

First of all, my compliments for the outstanding results here achieving since so many years. So I have a question, more concerning your consolidation on NTS. In the case you succeed, what about Norway Royal Salmon? Do you plan to get privatize Norway Royal Salmon? Or you think it could be -- remain listed since NTS is a majority shareholder? Some of my question was on the chain and control chain. Maybe it's too early. But what is your plan in [ long term ]?

I think it's -- of course, we didn't need to look into the structure for both this and this is something -- like you know that NTS has a 68% owner share in Norway Royal Salmon after the acquisition they did last fall. But of course, we need to look into this. And -- but despite this, we were able to do a lot together in terms of synergy potential with 68% share NTS has in Norway Royal Salmon. And Norway Royal Salmon is in both Northern Norway and Iceland. So -- but that is something we need to look into in terms of structure, what is more optimal and everything. But then we need to know more about how large percentage of NTS are we able to get in terms of who -- how many shareholders are accepting our offer.

But of course, it's allowed to have some vicious and some long-term ambition and game plan. What is the kind of priority aim? And of course, it's easy to see that it would be good maybe also to combine some farming companies instead of having a lot of different listed companies. But that also depends on what is possible to do. And so -- but that's a natural thinking that maybe some of the farming companies could be merged.

But the main question is that with the 50.1% of NTS, we control and can utilize 100% the [ entity ] in NRS, and that's the most important question. The next one will be for the future, what will be the best for the structure in total after?

Thank you very much. So I have an additional question concerning sea lice. So we see an increase in sea lice issues, but not only in Norway and Europe, but also in Chile, everywhere. So it depends on temperature, water going out. So what is your point of view concerning sea lice? First question. Second question, in terms of treatment, is it still chemical -- water plus chemical? Maybe some new products to treat the [ smolt ] and sea lice in a more environmental and a more healthy way also for the customers? So what are your thoughts about?

In terms of the sea lice, it's a natural parasite of the water. So we need to live with it, not take it away. And that's basically is farming in the correct areas where we see the sea lice pressure is not so high. We see differences from our sites, from our areas where we operate in terms of the sea lice pressure. And as Trine pointed out in the presentation, in Q4, we had a higher sea lice pressure, especially in some regions in Central Norway, where we see -- where there was a need to do more treatments in order to reduce the levels going into the winter season because we don't want to do the treatments when the cold temperatures kicks in, in the seawater. Because then it's -- we will basically get more mortality. It's not good for the fish welfare. In terms of treatment methods, we don't need -- use a lot of chemical treatment, but here in Norway we utilize nonmedicinal treatment methods. It's basically flushing of water, either normal temperature or a bit warmer water. That is our main capacity we have on sea lice treatment. But as you -- in terms of new treatment methods, and that was part of the cost picture in Q4, we have used this agent called [ CleanTreat ]. It's a new treatment method. And our experience with it, it is very good at reducing the level of sea lice at all stages, from mature to in the beginning. So we get the sea lice levels down. But a challenge with it has been a capacity to treat, to rinse the water afterwards because we cannot put this agent out into the open ocean. We need to take and rinse the water and treat it after we've done treatment. And that has been challenging in terms of the well boat capacity on those boats who do this. Since we are able to maybe treat 1 net pen, then we need to rinse the water, wait a little bit. But then the other net pen has sea lice. And in the meantime, it's transferred sea lice from the other net pen to the other one. So that is something we need to work together with it. It's not only at SalMar. This is something we as an industry need to work together with, to have this capacity in place. But -- and as we say, it's not on new Holy Grail, this CleanTreat agent, but it's part of our toolbox. And it has been a good part of our toolbox going into the winter season because when the temperature goes down, we can use this with a quite gentle treatment method, meaning that we have less mortality when we do the treatments. But -- and also, of course, we are testing out new type of technologies, new type of net pens. And we have disclosed net pen in the southern parts of Central Norway are testing out. And so we are always pushing to utilize the technology so it's better for the salmon and to live together with the sea lice. Everything we're doing offshore is directly on that because on Ocean Farm 1, we haven't had done a single sea lice treatment for 2 production cycles, which we have completed. And going out into the open ocean or going offshore, the strategy for SalMar Aker Ocean is part of that, to eradicate the issues we have with sea lice. But I think we would like to say that we have been good at handling the situation despite the higher sea lice pressure in summer or this year -- or at the end of '21. So the status of our fish in the sea now going into '22 is very good. We have a higher biomass both in Norway and Iceland. And it looks very promising. And so we are very content with that, that we have a good status of our biomass going into the '22.

Okay. Very interesting. So maybe an additional and final question from my side. So in terms of industry consolidation, you're for sure one of the main actor in this consolidation. How do you see mid-long-term the consolidation in your industry?

The requirements to us, as an industry, to operate, to do salmon production get stricter and stricter. So with size, we have some scale benefits compared to smaller competitors. And with size, we have some scale benefits when it comes to access to customers signing contracts with large retailers in terms of volume and everything. So -- there is -- I have seen different figures from Norway, but there is quite a big proportion of Norwegian salmon production, which is from smaller producers, if you can call it like that, not large as us -- as we are. But there are also a lot of good small farmers operating around the coast of Norway having strong operations. But in the longer term, yes, it's natural. It will become more consolidation. Remember, this is a quite young industry, if you think historically. It started on the neighbor island here in Central Norway in the 60s, 70s. This -- we're only like 40 year -- 40, 50 years after that. And we are still a young industry, a lot to learn. And for all industries, in the beginning, there's a lot of players. And after a while, there is some certain larger ones who succeed. But we think it would be a mix of both smaller and larger and if there are people willing to coming dialogue that we can do something together, we bring them here to our head office in open arms and we can take a good dialogue with that.

But also be aware that [ NRS ] in the beginning was a company with independent farmers, started there. But after maybe 10, 15 years, they sold them out and become a listed company called [ NRS ]. So yes, I think the consolidation in the future will be based on bigger companies.

Could I maybe jump in? Sorry, it's Alex Sloane from Barclays. Apologies I'm not on the video to raise my hand. But if it's okay to ask one question. Just on the sales and industry. Apologies, I kind of missed it. But in terms of how we should think about that business into 2022. Obviously, we see a quite a sizable drag on the group profit in '21 after being kind of -- '19 profit -- in '20. So yes, just wondering, can you get back to profit in that area in '22?

I think that the question is, first of all, we need to have a more like a longer view on the sales industry and not only look into the quarter. So I think if you look in the whole year, you will see that it's very much close to 0 to 1% in margin. And the whole ambition to sales industry is actually to gain some additional value on top of the farming, that's really how it's organized. So I think that for every NOK they are able to earn about farming, that is additional value generated. And when it comes to 2022, we have entered into some fixed price contract. That is a part of kind of risk planning, that we need to have something that is fixed. And last year, we were too pessimistic when it comes to spot prices this year, which I mentioned. So -- but if you take the average of the contracts we have entered into for this year, that is quite close to the average Fish Pool prices for the entire 2022. However, it's a huge difference between Fish Pool prices the first and second part of the year. So if you even out, we expect -- and based on the current spot prices, we expect to have some losses on the contract in the first half of the year, and opposite, have some gain on the contracts on the second part. So I think it's more important actually how good are we in selling the spot price every day. And the, we should have just the same opportunities as everybody else.

And also it's fair to say that with InnovaNor in Northern Norway coming up, gradually ramping up volume and harvesting and value-added processing activity in '22, I know there is a lot of people in our organization. We're just glad for that because it's easier in terms of logistics, distribution and everything, knowing that we can utilize the fish in the correct manner instead of using it at these 7 different harvesting plants. So we will have some gains there as well, but you don't need to be a rocket scientist to understand that we will have a negative contribution from our contracts in Q1 when the spot prices we are experienced these days. But for us, this is a part of our strategy. And as you know, in SalMar, this is -- this can be a little bit different from different farming companies. But in SalMar, farming gets the spot price deducted with some constant and logistical elements. In other companies, they could take contracts all the way down to farming segments. It differs. But for us, we are very open and transparent on that. Farming gets spot, sales and industry get the hit if there is something on contracts.

And what we are very pleased with the sales and industry segment, it's really that from operational cost of view, effectiveness and cost, they are just on target. It's really the price achievement, which we missed.

So we are very content with our employees and how they have handled the situation.

That makes sense. If I can maybe just add one final one and then pass it on. And apologies, I can't get my Teams to work. But just on the offshore joint venture. In terms of -- I think you've shown on your slide that there's potential for this technology to work well beyond just Norway. I guess as we're thinking kind of longer term, would you expect the joint venture itself to kind of go into geographies beyond Norway? Or is the opportunity longer term more about kind of, I guess, licensing the -- maybe the technology and the expertise to other players?

No, I think that definitely the plan is really also to expand SalMar Aker Ocean also to be out of Norway when they're ready for it. And we have also earlier given some examples for countries that it could be natural to be in. We have mentioned in Scotland. It could be Iceland. It could be out of the U.S.

Yes. East Coast, West Coast.

East Coast, West Coast, yes. So that's definitely the plan and also part of the strategy.

Yes, still another question from me. So I have a question concerning the current spot price that are very high, so between NOK 70, NOK 80 and even more than NOK 80 per kilo. So how do you explain such a high price -- spot price at the moment, maybe some elements to explain it?

First is supply, lack of supply. And as we see it, there will be no growth in the supply for 2022. But especially in the first quarter, it's a lack of supply. And on the other hand, you can see then the industry, especially in Europe, they are buying at NOK 80 or even more. That tells us that there are no inventory. So they -- of course, they had their contracts, maybe 10%, 15%, 20% contracted. But still, while they don't have any inventory, they have to buy at a high spot price. That also had -- it seems like there will be even a better price for 2022 than in 2021.

If I may, a quick follow-up question. On -- in terms of price realization, there's been some volatility over the past quarters, particularly in Northern Norway. Could you give us maybe some insights on how should we think about price realization in the farming segment going forward? Have you been affected by things like winter wounds, quality downgrades? And are these factors which we should expect to continue going forward?

If you focus on Northern Norway and if you -- in Q4, as we said in the report, most of our volume was harvested in October and November, the period -- the months with, I think, the average price was high 50s compared to over 60 in December. So that explains the price realization in Q4. In Q3, it was that we didn't harvest in July. We harvested in August and September where the spot price was lower than compared to July. So this is -- in SalMar, we have us saying, "We harvest the fish when it's ready for harvest." It's not the sales people who can say to people out there in the ocean say, "I need your fish now because we have NOK 80 per kilo this week selling to customers in Europe." I remember, I talked to people in sales here last week, and it was quite, "We don't have enough volume." But that's our strategy. We wait until it's ready. So that explains most of the price realization issues both in Q3 and Q4 in Northern Norway. When it comes to winter wounds, nothing out of the ordinary that we have normally during the winter. There are always some sites, which has more affected by winter wounds than others, but nothing out of the ordinary. And I think if you compare our sellers towards others, historically, we have usually performed quite well in Northern Norway in the winter months. And I think it's fair to say we are quite glad that we have InnovaNor up and running, that we could do some more value-added production of our fish because then it could be that you just have a little sore or winter wound on its skin, then it's better to sell it as a fillet or a value-added product compared as a whole fish. So that is something that distribution people in sales and industry always are looking at. So -- but there's nothing out of the ordinary when it comes to biology. The status of our fish is good in both regions, Central Norway and Northern Norway and also on Iceland. It's very important to say that on Iceland because you recall, in January 2020, we had a lot of mortality caused by winter wounds and bad weather, cold temperatures. And we don't have that now. There's some good status of our biomass, and we are very content with that. And the reason for that is also we have changed some of our harvesting plans, stocking plans. We have less density in our cages of fish, of large-sized fish going into the winter season. When it's too cold, we don't use the most exposed sites. And that is small things which is important that gives us good status of the biology. And as Trine said, we are very content with what Iceland managed to achieve year-over-year in terms of biological development in Iceland. And the same goes for Northern Norway.

We have time for -- yes, Marco Sormani.

If I may, an additional question. My question is concerning organic salmon. So you are the Norwegian leader of organic salmon. How do you see the market mid-, long term for Norwegian organic salmon? Or maybe you can do organic in other area, too? So what potential do you see in this sense?

We don't talk too much about that actually. We thought it was a silent secret when the prices was good. Then suddenly, some competitors are starting to also increase the organic salmon. So actually, we have reduced a bit our production because it's not so -- it's not such a huge price difference as it was previously. But we still think it's important to have some because some of the customers would like to buy both type of salmon. So we do that. But we are not increasing our organic salmon versus previous year. So it's quite stable. But the total production has increased when you look into also the other players producing organic salmon.

And also we see that the price of organic salmon has been less volatile compared to conventional salmon. Like -- so -- but we have a proportion of our production is organic, and we are one of the largest in the world's anyhow since we have our volume. We have -- but I think it's important part of our product spectrum when we send to the customers because then we can offer both organic, conventional. And we can have value-added products in both the organic and conventional, and that is something some customers are really willing to pay for.

Okay. Concerning the more we move trying to develop also branding of their products. So what do you think about that? Do you think branded product can have some...

[Foreign Language] We are -- in Iceland, we're actually doing that. We launched a brand because it's a limited volume. And we think it's a fantastic opportunity and also the same as the [indiscernible] have done. And also to a certain level, the Scottish Sea Farm in Scotland has also created a kind of brand locally because there's limited production. But to create a brand with Norwegian-produced salmon with 1.3 million tonnes, that we think is a bit demanding. But maybe we should do that with the SalMar Aker Ocean when we are producing stable there. But for Icelandic, we think it's a fantastic opportunity, and we are working to take more advantage of that going forward.

Okay. Great. Why do you think [ Mowi ] decided to brand -- your competitor [ Mowi ], why do you think they think it's possible to establish a brand also for the main product? Is it mainly marketing, in your opinion?

I think you have to ask them. I think SalMar has kind of -- the most of the focus is really on the biology and production. So it could be that they have another philosophy, but I think you have to ask them.

Could I just ask one short question? Could you just talk about how big a ASA problem is? And you said that the biomass is in good condition now. But is the ASA problem been sorted out? Or is it an ongoing thing?

No, it was 1 location from the company that we acquired actually at Nekton. So it was 1 location in that company. So that was a one-off, I will call it.

We don't have it on any other sites in SalMar. And like Trine mentioned, we had it on some neighboring farms, but we didn't get affected. So it's -- we are done with that. It was a Q4 thing.

And just one last thing. I mean you -- in terms of going back to the question about synergies with this deal. I mean you painted a picture where as you've got a clear plan for that. But I mean, just as generalist, but which would be the more challenging area of synergies to achieve? I mean, because obviously, some things like maybe the buying feed is easier. But what will be the more challenging parts of the synergy?

Of course, [ Frøya ] is something that we are not doing. So if you're talking about synergies, there we don't have any synergies. So I think that is the one that is special. For the rest, you should be able to have synergies.

Okay. There are time for a couple of more questions before we take weekend here. Is there one out there?

If I may again. On the Grieg Seafood [ Shetland ] acquisition, how should we look -- what kind of time line are we looking for integration? How -- do you have any specific synergy targets you've set up? And what kind of time frame should we look at significant gains from combining those 2 businesses?

I think that the transaction was closed mid-December. But I think the most easiest to think is really that we have guided on the volume, 46,000 tonnes. You probably know what we have reported on Scottish Sea Farms previously. And if you look away from quarter 3 and quarter 4, because there, we have some special issues. But if you look into, for instance, the first half of 2020 EBIT margin, I think that if you use that and apply the 46,000 tonnes, I think that is the best starting point we could have.

But also our team there is now fully starting their work. We're integrating the company. And I think it's fair to say that the status of the biology and the biomass and the assets that came from the Grieg acquisition, status was really good. We are very pleased with that. And of course, there are -- we see synergies both operationally and biologically, but also in the Sales & Distribution segment gaining access to some customers and everything. So we need to let our team -- our great team in Scotland do their job. And I know that you talked with Jim last evening. He was not happy that [ Celtic ], his favorite team, lost against our Norwegian team. But we are quite confident that we will reach this. And historically, SSF has delivered good margins.

And probably also, we could revert to this issue in the next quarterly presentation when we have more insight.

All right. It seems like all questions have been answered and the time is approaching 4:00 in Norway. I guess with that, we congratulate on the NTS transaction and this year. Have a good weekend, and thanks for everyone for dialing in.

Thank you very much.

Thank you very much.

Have a nice weekend.