SalMar ASA (SALM) Earnings Call Transcript & Summary

[Foreign Language] Moving on Jim Gallagher from Scottish Sea Farms. And Jim has just to sit tight and listen to some Norwegian for a couple of hours, and then it will be some English. So... [Foreign Language] [Presentation]

When you go through the dark, hold your head up high. [Foreign Language] [Presentation]

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Ladies and gentlemen, my name is Roy Reite, and I'm the CEO of SalMar Ocean Group. And Frode, I'm really proud to be a part of the SalMar Group. I would like to say a few words about SalMar Aker Ocean and what we are doing right now. I can also say that before I was hired to SalMar Aker Ocean, I've had almost 20 years as the CEO of VARD Group. So it's relevant for our oceangoing activities. We believe that there is a growing demand of salmon, as has been said today. But we also believe that new technology is needed to achieve growth. And SalMar Aker Ocean is positioned to develop such technology. Our focus in the value chain is at the sea phase. We want to utilize the oceans to give our salmon great conditions. Therefore, we are monitoring potential locations when it comes to temperature, current waves, et cetera. And when we have these data, we can design fish farms that fits with the locations. So that is core in what we do. Our journey has given crucial experience and insight. Ten years of development is our basis for commercialization of offshore aquaculture. And we have gained a lot of competence throughout these years. So a little bit about that. We had 2 production cycles before we upgraded Ocean Farm 1. As you have learned today, in SalMar, we need to do it better today what we did yesterday. So according to that, we have upgraded Ocean Farm. But before that, we had 2 cycles. And these 2 production cycles gave us solid growth, no lice treatment and high survival rate. So we are proud of the start we had when it comes to these figures. On the -- now -- right now, with learning from these 2 production cycles, we have completed the upgrade of Ocean Farm 1, and the third production cycle is now ongoing. And we are happy to share with you that another good production cycle is underway at Ocean Farm 1. Growth is on track to outperform the 2 first cycles. We have very low mortality, and we have low level of life. We have the intention to include Arctic offshore farming in the SalMar Aker Ocean Group. And the combined annual capacity for Ocean Farm 1 and Arctic offshore farming will be approximately 13,000 tonnes. What is also important for SalMar Aker Ocean is that we will gain experience with submerged production, and it will strengthen some SalMar Aker Ocean,, going forward, as a leading -- with our leading position with exposed and offshore salmon farming. So this is very positive for us that we can -- can go with two different types of units. It is this experience from exposed farming that enable future growth offshore. We have been granted 8 development licenses, but regulatory framework is still not in place. Clarity regarding tax and regulatory framework will, for us, be crucial for making investment decisions. When we go offshore, we need to develop the value chain, especially when it comes to logistics. And work is ongoing to define the criteria. As you can see on the picture, we will be located far from the coast line. And we meet some other challenges that we have close to the coastline. So this needs to be evaluated before we are ready to produce offshore. Offshore farming opens opportunities around the world. Biological conditions, value chain capacity, regulatory framework and proximity to the market are topics that will be evaluated, going forward. With this, a few words and updates from what we are doing right now, I can say that we have this ambition to produce 150,000 tonnes globally, and we work to achieve that every day. Thank you very much for your attention.

Yes, we have time for some few questions to Roy as well. So please raise your hand if you have any questions immediately to Roy, and he's more than happy to answer that. If not -- or I have one in the back from Alex here.

Alex Jones, Bank of America. Just a follow-up on those location points you made. Clearly, given the different tax regime in Norway now, albeit it's uncertain for offshore, does that change your thinking about how quickly you might do this in other locations? And if so, sort of where might you start first?

We are working with the global perspective. I cannot give you a timing when we are ready to announce, where to go or if to go on these things. But clearly, we are looking around for the potential locations. As you have learned earlier today, the location is very important for our salmon and our [ captain ], as it was said earlier.

Thank you. Then we will have a short break Before we go to the next session, where Bjørn from Icelandic Salmon and Jim Gallagher from Scottish Sea Farms will join us on the stage. [Break]

Yes, then we are soon ready to move over to the Westfjords of Iceland and say, "Hey, [indiscernible] be earned." But before that, I would like to remind some of you people to register with [ Carolina ], who's standing in the back here. We need your information if you're going to the boat and everything tomorrow. They are quite strict with the rules. So please, if you have not registered yet [ said ] that you are here, please go to Carolina next break. So to give you some glimpse of how beautiful it is around Bíldudalur on the Westfjords. There will be a short video from that region right now. [Presentation]

Hello, everyone. So my name is Bjorn Hembre, I came into SalMar in '98. And since then and for 3 years until in 2009; I was the Operational Manager here in SalMar North. And I think when I left, we produced 13,000 tonnes or something, and [indiscernible] tell that they would be 130,000 tonnes. So it's an impressive development since then, and it's very fun to be here and see all the development. So Icelandic Salmon is a listed company in Euronext Growth in Oslo, which is the sole owner of the operational company, Arnarlax in Iceland. And Arnarlax is also our common brand for our operations, daily operations and/or product out in the market. We have, today, 4 small facilities with a capacity of 7 million to 8 million smolt, dependent on the size. We have our operations in the Westfjords of Iceland, where we have a maximum allowed biomass of 23,700 tonnes. We have our harvest plant in the Westfjords as well with a capacity of 30,000 tonnes per year. And we sell all the fish [ ourselves ] out in the global market from our sales department. So Arnarlax and Icelandic Salmon was established in 2010. The first smolt was put in to sea in 2014 and the first invoice was sent in 2016. SalMar came into the company in 2015 and has been quite a travel since then. We have our operations mainly in the Westfjords, where you see the red dots up there with sea farming. And we also have, in addition to the 23,700 tonnes, we have applications for 14,500 tonnes more license. Then we see the dots of the Southcoast, which is our smolt operations, and our sales office is in Reykjavík. To take the value chain and start with the smolt production, so we -- at the time being, we have 3 smolt facilities in use, and the fourth one is still under reconstruction. And when that is finished, we have this capacity of 7 million to 8 million smolt, dependent on smolt size. We need a diversity in smolt size since the output window for smolts on Iceland is much shorter than we see, for example, in Norway. So we start the output in second part of May, and we have to be finished first half of September. So for all practical reasons, 3 to 4 months where we put out the smolt. And then to utilize the maximum allowed biomass, we need to have a diversity in size. So like for this year, the smolt size is between 700 and 100 grams, dependent on the time of the season. On the smolt facilities that we have today, we have a license for a maximum allowed biomass of 3,000 tonne on land. And these facilities are sufficient to supply our existing licenses in sea. So we have the capacity needed for the existing licenses. And the kind of important things of our smolt strategy is to implement best practice in the operations to produce a good-quality smolt and of course, to have sufficient number and the right size at the right time. For the sea operations, we have 8 sites that we operate. You see the dots on the map there, which are split into 5 generation zones that we use for different years. All this production we do in sea is ASC certified, and then we feed all our fish from our high-class feeding center at our head office in Bíldudalur. So everything is operated, all the feeding is operated from one room where we can exchange competence and develop the persons who do the feeding to implement best practice on all sites. Our harvest plant is located in the Bíldudalur and has a capacity, as I said, of 30,000 tonnes. It's certified according to the BRCGS standard for food safety, so our customers can be sure that it's safe food. And one of the things that is important for us is that we super chill the fish before we put it into the box, take the temperature down to minus 1 degree, so that we can mitigate with a longer shelf life for a longer transport time out in the market because it takes a day more to sail from Iceland to Europe than to truck from Norway to Europe, for example. But with this super chilling, we can mitigate that. And with the 13,000 tonne, we have sufficient capacity for the existing licenses that we have. Our sales team is located in Reykjavik, and our main market is Europe. There are several reasons for that. One of the things is the logistics into Europe is good. There are boats on Monday, Wednesday, Thursday, Friday, so we can send the fish more or less when we want. And of course, Europe is the biggest market for fish between 3 to 6 kilos. Our second largest market is the U.S. market, which is typically a 6-plus kilo market, but we see that we are able to get more 5- to 6-kilo fish into that market. So one of the limitations we have there is because we send most of their fish to America by ship, fresh by ship, and that ship leaves once a week. This takes 7 days across the Atlantic and by using super chill and have extended shelf life, we have a good shelf life left in the fish when it enters the market. So it's still 11 days left of the shelf life when it enters the market. Our third market, which is approximately 2% of our volume, goes to China, which also is a 6-plus market. Iceland has a free trade agreement with China, which is a benefit, and it mitigate for the extra flight from Iceland to Europe. So in that sense, we compete on equal terms with Norwegian and U.K. salmon in that market. And we are quite strong believers in the position we have towards the American market that we can ship fresh salmon by boat. This has a huge impact on the CO2 footprint to reduce the CO2 emission with 95% compared to flights and it's a position that Iceland and the Faroe Islands have. That's the two options to get fish shipped by boat into the American market, if you then, of course, have the production in United States and Canada in addition. But this is a market of 600 tonnes -- 600,000 tonnes of salmon, so it's a huge potential for us there. And of course, the cost of shipping by boat is significantly lower than flying the fish in. And so far, we have only good feedback on the quality, even the transport takes some more time. For the potential on Iceland according to the regulations as they are today, there are two things that controls the production on Iceland. There is a calculation for the carrying capacity of organic load, which is 144,500 tonnes in total for the country. And we have a risk assessment towards wild stocks of salmon, which is calculated to be 106,500 tonnes for the country. It was raised in 2020 from 71,000 tonnes. So that has been a [ plan ]. The risk assessment [ goods ] to the carrying capacity, Iceland will come up maybe to our [ fourth ] position when it comes to volume of salmon producers -- salmon-producing countries in the world. Of course, way behind Chile and Norway, but still a significant production. And then there is a process going on, on Iceland, where the Ministry for Food, Agriculture and Fisheries are working on a new framework for the industry. They have done a lot of work that have been to prepare for this process. They have audited authorities to see weaknesses in the authorities. They have had a special group working with [ escapes ], with biosecurity. They have research experience from other countries, especially in Norway and the Faroe Islands. And they also hired in Boston Consulting Group to see what is the potential here. And the conclusion from the Boston Consulting Group for ocean or cage farming in the ocean is if we operate according to the regulation as it is today, sales 94,000 tonnes; with some improvements, 146,000 tonne. And if there is really a progressive alternative, which could take the cage farming up to 234,000 tonnes. And it's important that the politicians see this potential and give potential for growth for -- to reach kind of a critical mass for the industry to be even more effective. In addition to these numbers that I referred to is the potential that also is a part of this process for ocean farming and land-based farming. And just to put the Westfjords in a picture and compared to the Faroe Islands, so the coastline in the Westfjords is almost twice the coastline on the Faroe Islands. And the area of the Westfjords is much bigger, and it kind of shows that the potential is there since we know that the Faroe Islands produce around 90,000 to 100,000 tonnes of salmon. The last slide is view into the future. And as we said earlier today, we expect to produce 26,000 tonne within the existing licenses in the few coming years. And we keep the guiding for -- yes, 16,000 tonnes for this year. And the way we're going to go from 16,000 to 26,000 is by adapting the smolt production, and we get -- have application for 2 more sites and of course, implement best practice and improve the operations for what we are doing. And then we have the 2 applications for licenses, and we know that there is a process for a new regulation. And the signals that we get from the ministry today is that there will be adoption that will increase the production. And there seem to be a room for growth within a sustainable framework, which means life, mortality, organic load and so on. And if we see that glass half full with these opportunities and the -- assume that this goes in, we see a potential for producing in the area where we are operating around 50,000 tonnes. And the last slide I have is that we do know a dual listing on the First North, on the stock exchange in the Reykjavík, and that is expected to happen second half of this year. So that is decided and is now a work-in-progress. So this is important for involving the capital market in Iceland, and it's also important for the social acceptance. So one of the headlines when this was published in one of the biggest newspapers in Iceland was that Arnarlax is coming home. So it has a big attention on Iceland. So -- and then we also have the pleasure to announce that we will have a Capital Market Day in Iceland, in the Westfjords on the 28th of September. And details there will be published quite soon. Thank you.

Yes. Any questions for Bjorn?

[ Martin Karam ], ABG. Is it possible to comment on the current cost level and compare that to the Norwegian farming industry potential for lower in the sea? And you have unutilized capacity, could that -- is there a potential to get closer to the Norwegian industry with your increased harvest potential or harvest volumes from 15,000 to 26,000 tonnes, for example?

Yes, we should be careful commenting on cost. But I -- over time, I think that should be possible, absolutely, to get the effect of scale. And yes, because we have quite a few benefits as well, disease situation and so on, lice situation, so there are pros and cons. And in total, over time, I think we should be there.

Wilhelm, Danske Bank. Just a question on the super-chilled fish that is sent to the U.S. Is it possible to share a bit on how large a share is now sent this way? And also, do you see the same price realization as you do when you fly the fish over?

So the share that goes by ship to U.S. is approximately 90% of the fish that we send to America. And we are not able to take the whole delta in logistic cost back to Bíldudalur as it is today. So as it is now, the customer experienced a bit cheaper fish, and we have a bit more profit. So that's how it works today. But the goal is, of course, to get most of that back to Bíldudalur.

And then we have to move a little bit closer to Continental Europe when we go to Scotland. And the one guy who's very glad when we played, You Never Walk Alone because if it reminded him on Celtic earlier today. So please say hello to Jim Gallagher.

Good afternoon, everyone. My name is Jim Gallagher. I've been the Managing Director of Scottish Sea Farms now for 22 years. Been in the salmon industry for 25. My background is in finance, and I'm really happy to be part of the SalMar family. But what I was trying to do is give you an insight into Scottish Sea Farms and also salmon farming in Scotland. So the history is the Scottish Sea Farms was created in 1969. In 2001, we were sold by Hydro Seafood to Norskott Havbruk, which is a 50-50 joint venture between SalMar and Leroy. So I have the pleasure of having 2 Norwegian owners to work with throughout my career in salmon farming. And you can see progression over the years has been to develop and grow, purchasing the Orkney Sea Farms activity in 2007, building new farms and then in 2019, building our first RAS hatchery in Barcaldine on the [ Mainland ], and I'll go into a little bit detail on that in a minute. But in 2021, at the end of December 2021, we acquired Grieg Seafood with the sole intention of creating our farming activity in Shetland that can compete and manage against the global competitive nature of industry in Norway. And we have the opportunity to consolidate all of the farms there. And again, I'll go through that and transform the activity in Shetland. Today, we have 3 farming regions. West Coast Mainland, Orkney Islands and Shetland Islands. Today, we have 3 freshwater hatcheries, 2 RAS facilities, 1 that we acquired as part of the Grieg acquisition in 2021, our [ Barcaldine ] hatchery. So today, we have a total smolt capacity of around [ 15 million ] fish at 150 grams. We have 57 million farms, and I'll come back to that when I talk about the opportunity in development for Scotland, and 2 processing facilities, one in Mainland Scotland with a 30,000-tonne capacity and one in [ Shetland ], of 50,000 tonnes. So when you look at this graph, I'm always challenged on how can it be that Scottish Sea Farms, historically, are only really delivering 27,000 tonnes of annual harvest volume. In 2022, we delivered 36,000 tonnes, but we had significant biological challenges in the industry in Scotland, and I'll come back to that in a minute and give you an insight to that. The guidance for this year is reduced to 27,000 tonnes. But at the moment at the end of August, we have biomass in the sea, [ closing ] biomass in the sea that will help us deliver plus 40,000 tonnes in 2023, '24. And we'll give a further update on the guidance for '24 during the November update from the listed companies. Our main markets are -- we have a huge, great opportunity with the domestic market and 60% of our volume ending up in the U.K. market. Scottish Sea Farms has worked in being the sole supplier to Marks & Spencer since 2006, a really strong retail activity and also supporting other U.K. retailers, including Waitrose. So a really strong retail domestic market and exporting 40% of our volume to totally different countries in the Far East, China, Taiwan, Japan, U.S. and France, our key main markets and in all of these markets, achieving a price premium to help us compete with the extra production cost that we see in Scotland compared to the production cost in Norway. So what's been happening in Scotland? The last 2 years have been really, really challenging. You can see on the slide here, prolonged periods of dry weather affecting oxygen, salinity and levels in seawater, increases in seawater temperatures. So the last 2 years, we've seen a 1 degree warmer temperature profile than we've seen historically in the last 8 years. We've had an unseasonably mild winters, again, impacting on bugs and [ fishes ] in the sea. And main challenge in 2022 was we saw new jellyfish called [ Muggiaea Atlantica ] coming into Scotland and really toxic jellyfish. But you can have really strong production. And suddenly within a couple of days of this jellyfish been in on or under farms, we start to see fish mortality and fishing off production and really leading to really significant levels of fish mortality and making us have to harvest fish at lower average weight and lower harvest volumes and affecting the cost and price achieved. So our main and the most significant issue in Scotland on mortality is gill health, and #1 is gill health, #2 is gill health and #3 is gill health. Sea lice is not really an issue. But when we have compromised gill health and we've got these activities going on, the additional handling we're doing is creating more stress and giving rise to increased mortality. So what measures have we been taking to try and solve these challenges? First major investment is we've done is we've increased our fresh water treatment capacity, just as I heard from Roger and [ Roy ] today. We've got 2 [indiscernible] treatment systems in play, which arrived in December '22 and January '23. So far this year, that's giving us really positive results in terms of gill health and [indiscernible] health development. We've worked really hard to try and understand from a genetic point of view, what broodstock can help us with the improvements that we need to make in terms of survival. So we've been investing in our [ food ] stock, a facility working on-site [indiscernible] in Scotland to select from the fish that have been growing on our farms, subject to the environmental challenges we've seen. And we've completed the upgrade of our incubation facility at Barcaldine to help us with egg survival and again, improve the genetic activity working again with [indiscernible]. And in -- at the end of this year, we'll finish upgrade of the Girlsta Hatchery that we acquired as part of the [indiscernible] sea farms activity. In Mainland in farming, we've consolidated a number of farms, modernized 14 of our firms by the end of '23, giving fewer bigger pens on our farms, create more space, but also resting 5 farms that have had historical or had in the last 2 years, biological challenges. Again, investing in aeration system and on our farms very much investing in early detection, more surveillance and educate our staff on what we need to look for in terms of trying to mitigate against the challenges we've seen. So farming for the future, as we've invested in small hatchery in Barcaldine, we've continued to upgrade the facility at Girlsta, [ made sure ] there was water quality. And so our objective was to deliver bigger, more robust smolts and enhance the survival at sea. Again, the new incubation unit, again, to give us option to fertilize on eggs and boost their survival. And the broodstock development that I spoke about earlier with [indiscernible] to select from fish that performed better with all of the historic -- all of the challenges we've seen in the last 2 years. In terms of trying to shorten the marine cycle, we have been looking at post-smolt actions. We have planning permission for a 3,000 tonne land-based activity at Barcaldine, which would be part of our Phase 2. We've got a detailed design and costing. And the investment looks like in the region of GBP 57 million. But at the same time, through the group activity, we want to be able to evaluate land- and sea-based option to see what the best choice is for us, going forward. So within the end of Q4, we will have a further discussion within our Board to see what actions we should explore, going forward, with the aim to reduce the marine cycle in [indiscernible] in Scotland to 10 to 12 months. So today, we have 56 active firms in Scottish Sea Farms with 88,500 tonnes of cumulative biomass. But we also have 39 inactive firms for 44,000 tonnes of consensual in total, 95 farms with 133,000 tonnes of cumulative biomass. The regulation in Scotland has changed the last 2 years. So SEPA, regulatory body who looks after the maximum allowed consent per farm, have taken away the ceiling of 2,500 tonnes. And in 2022, Scottish Sea Farms secured consent for 3,820 tonnes, the largest farm in any farm currently in operation in Scotland. So we have that ability to have fewer bigger farms. And at the same time, we've also had a change in the planning regime. And the planning regime is Scotland allows us to change the infrastructure on our farms without having to go through an [indiscernible] 2- to 3-year process of planning. So we've been able to modernize the 14 farms, change infrastructure, consolidate pen numbers, fewer pens, larger pens, 120- meter or 160-meter pen, all with the aim to improve the fisheries experience -- the salmon's experience and improve the biological performance. In 2021, we secured 2,000 tonnes of additional MAB because of the new model from SEPA . And then in 2022, we secured a further 5,500 tonnes. And so far this year, we've secured [ 1,000 ] tonnes of additional MAB on existing farms just using the new model and the hydrodynamic work we've done. And we have live applications right now for 4,000 tonnes of additional biomass. In parallel to that, we have 1 application at the moment for 3 of the inactive farms to be consolidated into 1 into a new location. So the whole game with hydrodynamic model is to give us a more evidence, scientific basis, for the site choices that we'll have to make sure that we're farming in the right location with the right current speed with the right temperature profile and less connectivity between our farms. And we have our ambition then to be able to reduce our number of farms from 56 to 28 with an average size of 3,500 tonnes and using 27% less cumulative MAB than we have today in our portfolio. In terms of processing, as part of the [ Grieg ] acquisition, we secured the Lerwick processing site. So now we've consolidated all of the activity into the Lerwick facility, 200 tonne, doubling the capacity of that facility and allowing us to deal with future growth should we have additional capacity and volume growth in Shetland to a total capacity of 50,000 tonnes. And in Mainland Scotland, we have 140-tonne single-shift capacity, again, 40,000 tonnes of annual capacity, again, allowing us to future proof where we are in terms of annual harvest volumes. As you've heard, salmon farming is one of the lowest carbon footprint of any protein production. And you've heard that a number of times from the guys in SalMar today. Scottish sea farms have been working specifically on 4 key areas to help us improve our carbon footprint. So reducing our marine ingredients, using novel ingredients, as Roger talked about also, in our marine diets, but also making sure that we don't forget the nutritional needs of our salmon. So making sure that we've got that. In terms of polystyrene packaging, we've taken 2.5 million boxes of polystyrene out since 2017, working alongside [ Marks & Spencer ], and we're rolling that out with all our U.K. retailers. We're sourcing all of our mains power from renewable sources, and you can see the carbon savings there. And again, on logistics, working very hard to improve the logistics and make sure that we're minimizing road [ mills ]. And as you heard from Roger, we're repurposing fish waste into more valuable byproducts. So lots of exciting and initiatives that will continue to help us deliver a more sustainable basis. So alongside our normal Global G.A.P., BRC Accreditations, Scottish Sea Farms is the first salmon farmer in Scotland to achieve Investors in People Platinum recognition. We have 3 Investors in People awards, Investors in People Platinum, Investors in People Wellbeing Gold, Investors in Young People Gold. Alongside that, we've been a real Living Wage employer. So since 2017, we've been paying above the normal living wage and with the average salary level in Scottish Sea Farms of GBP 43,000, which is GBP 10,000 above the average national salary level in Scotland. Most recently in June, we won the innovation award at M&S Agricultural Show for our work with producing using seaweed as a replacement for plastic [ kelp ]. And even more pleasing to win that war, considering we were up against all the agri producers that are in the M&A supply chain. So the key ingredient for Scottish Sea Farms, the magic that makes it all work for us, is just as we heard within the SalMar world is our people. And we've got a really diverse, highly skilled, highly motivated group of staff, who are totally dedicated and, like SalMar, every day looking to see how we can make improvement on our daily routines to help us make improvement and deliver better results. Yes, we've -- sorry. Yes, I'm really proud to say that every day, Scottish Sea Farms staff come to work, they're looking to make improvement and help us make a lasting difference. Our ambition is to be the employer of choice within the sector. And today, we have the most developed and leading training and development program for our staff. And at the same time, trying to compete with other activities in our area. So I'm going to leave the last word on the presentation to... [Presentation]

Yes, you may have some questions to Jim. So please raise your hand if there are some questions to Jim.

Yes. Alexander Larstedt from Arctic Asset Management. How have the issues with Gill Health and these things developed over the last couple of months since the end of the quarter? And also on margins, could you give some guiding on expectations for the second half of the year and into 2024?

Yes. I think we're entering a period where Gill health has been a significant challenge in the last 2 years, but the industry now has more capacity. So in Scottish Sea farms, we're ready, more prepared than we've ever been to be able to manage Gill health, and we're very confident that we'll be able to do that. In terms of margins, I think with the level of biological challenges, it's very difficult to do a realistic benchmark with a significant level of mortality that we've had. But going forward, we're very confident in our ability to improve cost base, particularly when we consolidate our farms into much larger farms and also then maintain the price premium. So competing on an EBIT per kilo basis, I think Scotland has done in the past and we'll do again in the future.

Christian Nordby, Kepler Cheuvreux. Beyond post-smolt, what are the solutions do you see for the Gill health issues and the other sort of biological issues you've had in Scotland recently?

Yes. I think the regulator wants to be in more exposed locations. And the hydrodynamic modeling that we're doing will allow us to do that. So to be in fewer farms in the right locations is going to give us a real great opportunity to deal with the Gill health challenge, change the connectivity and more resources to be able to look at Gill health. And so I'm very -- again, very confident that with the combined work that we're doing internally and also the modeling that the regulators are doing is allowing us to have more unimproved site locations.

We can take last one here.

Wilhelm Røe, Danske Bank. Just a quick follow-up on that. Moving to the 2028 farms instead of the above -- you're talking a little bit about regulation. How long do you think that will take to concentrate down to the level of sizes of farms that you'd want there?

Yes. So as I said in the presentation, we've secured already significant increase on existing farms. So I think within the next 5 years, we'll be able to deliver that 28. That's our ambition within the next 5 years to deliver. It may take slightly longer, but our ambition at the moment is to be able to do that. And we don't see -- what we see in Scotland is the regulatory environment changing to allow us to be in a favorable position to deliver that.

Thank you very much, Jim. Then we have the last break before we have the last session afterwards when Ulrik will be on stage, and we will have some closing remarks. [Break]

Yes. So if you -- I can switch to Norwegian now actually because we're going to speak Norwegian in last session. [Foreign Language]

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