Salmones Camanchaca S A : Earnings Report 2024 - Q1

SALMONES CAMANCHACA S.A. AND SUBSIDIARIES

Earnings Report on the Consolidated Financial Statements

For the period ended March 31, 2024

Salmones Camanchaca

Salmones Camanchaca S.A. is a vertically integrated salmon producer engaged in breeding, egg production, recirculating hatcheries for Atlantic salmon and pass-through or lake hatcheries for Coho salmon, fish farming sites in estuary, fjord and oceanic waters used mainly for Atlantic salmon, primary and secondary processing, and marketing and sales of Atlantic and Coho salmon through five sales offices in its main markets.

The Company's Atlantic and Coho salmon production target for 2024 is between 48,000 and 51,000 MT WFE and for 2025 between 58,000 and 61,000 MT WFE. Salmones Camanchaca participates in trout farming through a one third share of an ACP, which uses Salmones Camanchaca farming sites in coastal-estuarine waters, and currently harvests an average of 9,000 MT WFE per year.

Salmones Camanchaca has 1,900 employees on average, 60% of whom work in its value-added plant. The main Atlantic salmon sales markets are the USA and Mexico.

1

Highlights for the first quarter 2024 (Q1 2024)

• Operating revenue was USD 117.1 million in Q1 2024, an increase of 3% over Q1 2023, mainly due to a 4% increase in Atlantic salmon sales volumes, while for Coho salmon volumes more than doubled from Q1 2023. This was partially offset by lower sales prices of 13% for Atlantic salmon and 27% for Coho salmon.
• Atlantic salmon harvest volumes for Q1 2024 were 9,911 MT WFE, a decrease of 11% compared to Q1 2023 of 11,089 MT WFE, mainly due to lower average weights of 4.4 kg WFE in Q1 2024 versus 5.0 kg WFE. The four sites harvested were affected by fish lacking appetite due to high solar radiation, and by the corresponding decision to postpone the harvest at one of the sites to Q2 2024 with expected weight recovery. Inventories as of March 31, 2024, were 3,000 MT WFE, a decrease of 15% over the same quarter in 2023, and a decrease of 45% over December 31, 2023. Coho salmon harvests for the quarter were 1,139 MT WFE, a decrease of 54% over Q1 2023, and the 2023-2024 season ended at 10,087 MT WFE harvested fish, compared to 5,856 MT WFE for the previous season. Coho salmon inventories were 4,300 MT WFE as of March 31, 2024, an increase of 51% over March 31, 2023, but a decrease of 52% over December 31, 2023.
• The quarterly cost of harvested Atlantic salmon (ex-cage, live weight) was USD 4.91/kg, an increase of 15% over Q1 2023, pressured by low harvest weights and sea lice presence at a farming site that represented 24% of the harvest for the quarter and with a cost of USD 6.2/kg LW.
• Atlantic salmon processing costs including transporting the harvested biomass were USD 1.18/kg WFE, which was lower than USD 1.24/kg WFE for Q1 2023, mainly due to lower outsourced processing and exchange rate effects, but still higher than the target cost of USD 1/kg for the smaller harvest.
• Consequently, higher costs and lower prices generated a gross margin for the quarter of USD 5.8 million, a decrease of USD 21.2 million over Q1 2023 when market prices were much higher, and the margin was USD 27 million.
• EBIT was negative USD 0.7 million, comprised of positive USD 2.2 million for Atlantic salmon and negative USD 2.9 million for Coho salmon. This was much lower than the overall positive USD 20.9 million for Q1 2023. EBITDA was USD 4.3 million for Q1 2024, which compares with USD 25.4 million in Q1 2023.
• Atlantic salmon EBIT/kg WFE1 was positive USD 0.19 in Q1 2024, which compares to positive USD 1.75/kg WFE in Q1 2023, due to the same reasons as commented above. Coho salmon EBIT/kg WFE1 was negative USD 1.02, lower than the positive USD 0.39 in Q1 2023 when there were higher prices and lower distribution costs due to faster inventory turnover.
• The net loss for Q1 2024 was USD 1.3 million, compared to net income of USD 7.9 million in Q1 2023. There was a positive fair value adjustment of USD 3.4 million in Q1 2024 compared to a negative USD 7.5 million in the same period last year, which is due to prices falling faster at the end of Q1 2023 than at the end of Q1 2024. Furthermore, the trout joint accounts association (ACP) business generated a net loss of USD 1.7 million for the quarter, compared to a net loss of USD 0.4 million in Q1 2023.
• In reference to the trout ACP, an early terminate agreement has been achieved, by which the financial implication will be terminated in the first half of 2025.
• The cash balance as of March 31, 2024 was USD 13.6 million, compared to USD 11.1 million as of March 31, 2023, while Net Financial Debt was USD 136 million compared to USD 87 million as of March 31, 2023. The increase in net debt is due to negative cash flow in the quarter and higher biomass. Thus, the Net Debt to EBITDA ratio for the last 12 months was 11.05, which reflects the lower financial performance in the quarter.

1 EBIT/kg is presented by Salmones Camanchaca as a profitability indicator on sales to end customers and it excludes any inventory provisions. These provisions apply to finished goods inventories in Chile and at its international sales offices. They arise when the estimated sale price is lower than the cost of those products. The variation of these provisions are included in EBITDA and EBIT, which for Coho salmon was positive USD 2.6 million in Q1 2024, and for Atlantic salmon it was positive USD 0.1 million.

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• Smolt stocking has been completed and normal production parameters are expected. Atlantic salmon harvest volumes for 2024 are forecast to be between 44,000 and 46,000 MT WFE, while Coho salmon harvest volumes are forecast to be between 4,000 and 5,000 MT WFE.
• All the biological indicators improved during the last 12 months (LTM) to March 31, 2024, compared to LTM to March 31, 2022 for comparable sites in the same areas, with a 37% reduction in antibiotics use, a 33% reduction in antiparasitics use and a 5% improvement in biological conversion ratio, which improved from 1.14 in 2022 to 1.08 in 2024.

3

Key Figures

	ThUSD	3m 2024	3m 2023	Δ%
	Operating revenue	117,100	113,794	2.9%
	EBITDA* before fair value adjustments	4,280	25,414	(83.2%)
	EBIT** before fair value adjustments	(731)	20,901	-
	EBIT margin %	(0.6%)	18.4%	(1,899 pb)
	Net fair value adjustments to biological assets	3,403	(7,456)	-
	Net income (loss) for the period	(1,250)	7,934	-
	Earnings per share (USD)	(0.0168)	0.1069	-
	Atlantic salmon
	Harvest volumes (MT WFE)	9,911	11,089	(10.6%)
	Sales volumes (MT WFE)	12,317	11,871	3.8%
	Ex-cage harvesting costs (USD/kg live weight)	4.91	4.27	15.1%
	Ex-cage harvesting costs (USD/kg WFE)	5.28	4.59	15.1%
	Processing costs (USD/kg WFE)	1.18	1.24	(4.6%)
	Price (USD/kg WFE)***	6.76	7.80	(13.4%)
	EBIT/kg WFE (USD)***	0.19	1.75	(89.2%)
	Inventories (MT WFE)	2,981	3,499	(14.8%)
	Coho salmon
	Harvest volumes (MT WFE)	1,139	2,491	(54.3%)
	Sales volumes (MT WFE)	5,793	2,683	115.9%
	Ex-cage harvesting costs (USD/kg WFE)	3.51	4.28	(18.0%)
	Processing costs (USD/kg WFE)	1.26	1.03	22.6%
	Price (USD/kg WFE)***	4.75	6.55	(27.4%)
	EBIT/kg WFE (USD)***	(1.02)	0.39	-
	Inventories (MT WFE)	4,329	2,869	50.9%
	Financial Debt	149,841	98,134	52.7%
	Net Financial Debt	136,209	87,061	56.5%
	Equity Ratio	43.8%	52.4%	(855 pb)
	Net Financial Debt / LTM EBITDA	11.05	0.88	1161.1%

• EBITDA: Gross margin before fair value adjustments + depreciation - administrative expenses - distribution costs
• EBIT: Gross margin before fair value adjustments - administrative expenses - distribution costs
• EBIT/kg and price per kg are presented by Salmones Camanchaca as profitability indicators on sales to end customers and they exclude any inventory provisions. These provisions apply to finished goods inventories in Chile and at international sales offices and are related to situations where the estimated sales prices are lower than the cost of those products (Net Realization Value or NVR).

Operating revenue (USD

	EBIT (USD million)
Harvest volumes (MT WFE)	EBIT margin (%)

113.8		million)	117.1
		82.1	94.6
	63.4
Q1 23	Q2 23	Q3 23	Q4 23	Q1 24

		17.8	17.7		25.0
13.6					20.0
				11.1	15.0
	6.4				10.0
					5.0
					0.0
Q1 23	Q2 23	Q3 23	Q4 23	Q1 24	-5.0
					-10.0

20.9

18%

	-1%	-2%	-4%	-1%
	-0.3					-0.7
	-1.9
	-4.2

Q1 23	Q2 23	Q3 23	Q4 23	Q1 24

4

Financial Performance

First quarter 2024 results

Salmones Camanchaca harvested 9,911 MT WFE of Atlantic salmon in Q1 2024, a decrease of 10.6% over the Q1 2023 harvest volume of 11,089 MT WFE, but sales volumes were 12,317 MT WFE, an increase of 3.8% over the same period in 2023, thus reducing inventories from 5,464 MT WFE at the end of 2023 to 2,981 MT WFE. Coho salmon harvest volumes during the first quarter of 2024 were 1,139 MT WFE, which compares to 2,491 MT WFE in Q1 2023, and sales volumes were 5,793 MT WFE compared to 2,683 MT WFE in Q1 2023, thus reducing inventories to 4,329 MT WFE from 8,947 MT WFE as of December 31, 2023. The 2023-2024 Coho salmon season ended in January 2024, with total harvest volumes of 10,087 MT WFE.

The average sales price for Atlantic salmon was USD 6.76/kg WFE, a decrease of 13% over Q1 2023. This average price reduction was partially offset by Atlantic salmon sales volumes increasing by over 4%, which reduced the year-end inventories for 2023. The average sales price for Coho salmon fell 27% due to increased Chilean supply during the 2023 season and devaluation of the Japanese currency, which affected prices not just in that market but also globally. However, sales volumes were 5,793 MT WFE, which more than doubled Q1 2023 sales volumes. This resulted in total operating revenue of USD 117.1 million, an increase of 3% over Q1 2023. Market prices sharply increased during the first part of the quarter, which caused the increase for Salmones Camanchaca's raw material return to lag due to previous longer trade agreements for its value-added products.

The ex-cage live weight cost of Atlantic salmon was USD 4.91/kg for the quarter, an increase of 15% over Q1 2023, pressured by low average harvest weights of 4.4 kg WFE in Q1 2024 versus 5.0 kg WFE in Q1 2023 at the four farming sites harvested, due to fish lacking appetite in the summer and low oxygen levels and sea lice presence at one site that represented 24% of the quarter's harvest volumes.

Primary and secondary processing costs for Atlantic salmon totaled USD 1.18/kg WFE, a decrease over the USD 1.24/kg WFE for Q1 2023, mainly due to lower outsourced processing and exchange rate effects.

There were no extraordinary mortality events during the quarter, nor in the same quarter last year.

Consequently, gross margin was USD 5.8 million, due to higher costs and falling prices, which was lower than the USD 27.0 million for Q1 2023.

The Company's administrative and sales expenses increased by 7% compared to Q1 2023 to USD 6.6 million, due to 20% higher warehousing costs to store frozen products, partially offset by lower administrative expenses, which decreased by 8%.

EBIT before fair value adjustments for Q1 2024 was negative USD 0.7 million, comprised of positive USD 2.2 million for Atlantic salmon and negative USD 2.9 million for Coho salmon. This compares to overall positive USD 20.9 million for Q1 2023.

EBIT/kg WFE for Atlantic salmon was USD 0.19/kg WFE for Q1 2024, compared to USD 1.75/kg WFE for Q1 2023. Coho salmon sales volumes in Q1 2024 were 5,793 MT WFE, compared to 2,683 MT WFE in Q1 2023, with an EBIT/kg WFE of negative USD 1.02, compared to positive USD 0.39 in Q1 2023.

EBIT/kg that is presented by Salmones Camanchaca as a profitability indicator on sales to end customers, excludes any inventory provisions. These provisions apply to finished goods inventories in Chile and at international sales offices. They arise when the estimated sale price is lower than the cost of those products. The variation of these provisions is included in EBITDA and EBIT, which for Coho salmon was positive USD 2.6 million in Q1 2024, and for Atlantic salmon it was positive USD 0.1 million. These provisions as of March 31,

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2024 totaled USD 3.5 million for Coho salmon and USD 2.8 million for Atlantic salmon, which could be reduced if sales prices increase.

The net fair value adjustment for Q1 2024 was positive USD 3.4 million, compared to negative USD 7.5 million in Q1 2023. The increase of USD 10.9 million was due to smaller reversals of forecasted positive margin this quarter compared to the same quarter last year.

Financial expenses increased from USD 2.3 million in Q1 2023 to USD 3.6 million in Q1 2024, associated with increased financial debt that totaled USD 149.8 million as of March 31, 2024, compared to USD 98.1 million as of March 31, 2023, and an increase in the reference interest rate for bank loans.

Other gains and losses were negative USD 1.7 million, compared to negative USD 0.4 million in Q1 2023. This was explained by the trout ACP business, which generated a net loss for the Company of USD 1.7 million for the quarter, compared to a net loss of USD 0.4 million in Q1 2023. This business was affected by higher costs and lower sales prices in its principal market, which is Japan. This market was also weakened by the yen devaluation.

Consequently, the Company had a net loss after taxes for Q1 2024 of USD 1.3 million, compared to net income for Q1 2023 of USD 7.9 million.

Cash flow in Q1 2024

Net cash flow in Q1 2024 was negative USD 10.6 million compared to negative USD 9.7 million in Q1 2023, which was explained by:

• Negative cash flow from operating activities of USD 6.2 million, compared to a negative USD 4.4 million in Q1 2023, which was due to lower sales revenue for the first quarter associated with lower prices, and the working capital required for Coho farming and for the Company's Atlantic salmon harvest plan for 2025.
• Negative cash flow from investing activities of USD 3.9 million in Q1 2024, compared to negative USD 5.9 million used in Q1 2023, due to maintaining assets and preparing Atlantic salmon farming sites in the Eleventh region under the Company's production plan.
• There was no cash flow from financing activities in Q1 2024 nor in Q1 2023.

Salmones Camanchaca had net cash of USD 13.6 million as of March 31, 2024 and unused lines of credit of USD

7.2 million as of that date, which provided it with USD 21 million of available liquidity, compared to USD 69 million as of March 31, 2023.

6

Financial position

Assets

The Company's total assets as of March 2024, decreased by 6.5% compared to year end 2023, to USD 441 million.

Current assets decreased by USD 30.1 million, mainly due to the reduction in inventories of USD 39.2 million compared to December 31, 2023, with sales higher than harvest, but with receivables not yet collected, so cash decreased by USD 10.6 million and trade receivables increased by USD 23.9 million. USD 20.3 million of this increase in receivables came from sales at commercial offices of the parent company Camanchaca. There were no significant movements in non-current assets.

Liabilities and equity

The Company's total liabilities decreased by USD 29.2 million or 10.5%, compared to December 31, 2023, to reach USD 248 million as of March 31, 2024. Current liabilities decreased by USD 28.5 million to USD 111 million, due to the decrease in trade payables. There were no significant movements in non-current liabilities.

Consequently, net financial debt increased by USD 13.7 million to USD 136 million, compared to USD 122 million as of December 31, 2023, associated with lower cash balances and the absence of financing activities, that is, there was no withdraw or payments of credits.

Equity decreased by USD 1.5 million during the quarter to USD 193 million. This decrease was due to net losses for the quarter. As a result, the equity to total assets ratio rose to 43.8%, up from 41.3% as of December 31, 2023.

7

Operating Performance

Salmones Camanchaca's performance is mainly driven by three key factors:

1. The price of Atlantic salmon, which is sensitive to Norwegian and Chilean supply conditions and North American demand.
2. Practices and performance of growing-out at sea and its environmental-sanitary conditions, which affect fish survival, feed conversion ratios, growth rates and the medicines required to improve fish health and welfare, as these determine most of the ex-cagecosts.
3. The cost of feed, which represents approximately half of the live weight unit cost at harvest.

I. Product Prices

Market prices fell during Q1 2024, and the average price of Atlantic salmon sold by Salmones Camanchaca was USD 6.76 per kg WFE, a decrease of USD 1.05 compared to Q1 2023. The Company's ability to react to market changes by changing formats and markets to capture the best return on raw materials helps it to achieve above- market prices over the long term. The Company's strategy also involves increasing the added value of its products and associating sales with medium-term commercial agreements that mitigate volatility. However, at the beginning of Q1 2024, there was a sharp rise in market prices, which caused Salmones Camanchaca's raw material return (RMR) to lag the Urner Barry market reference with a negative gap of USD 0.32/kg in Q1 2024.

9.0

8.0

7.0

6.0

5.0

4.0

Salmones Camanchaca

Atlantic Salmon Price (USD/kg WFE)

			7.81
				7.87			7.83
						7.80
	6.77										6.88			6.76
							7.42
													6.54

Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
	2022			2023		2024

Raw Material Return (USD/kg WFE)

Salmones Camanchaca vs Market

140	Urner Barry January 2022 = Base 100
120
100
80
60
40
20

Salmones Camanchaca

Urner Barry

Price per kg is presented by Salmones Camanchaca as a profitability indicator on sales to end customers.

Raw Material Return is the final product price less distribution and specific secondary processing costs. It is a price measurement before selecting the final destination for harvested fish and provides a homogeneous aggregate indicator for the Company's products.

The market RMR index is constructed from the "Urner Barry" spot price in Miami, net of Salmones Camanchaca's processing and distribution costs, in order to eliminate cost differences and isolate marketing differences.

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Volumes

Atlantic salmon		Q1 2024	Q1 2023	Δ	Δ %
Harvest volumes	MT WFE	9,911	11,089	(1,178)	(10.6%)
Production volumes	MT WFE	9,879	11,024	(1,145)	(10.4%)
Sales volumes	MT WFE	12,317	11,871	446	3.8%
Sales volumes	ThUSD	83,148	92,641	(9,493)	(10.2%)
Average sales price	USD/kg WFE	6.76	7.80	-1.05	(13.4%)

Coho salmon		Q1 2024	Q1 2023	Δ	Δ %
Harvest volumes	MT WFE	1,139	2,491	(1,352)	(54.3%)
Sales volumes	MT WFE	5,793	2,683	3,110	115.9%
Sales volumes	ThUSD	27,700	17,567	10,133	57.7%
Average sales price	USD/kg WFE	4.75	6.55	-1.80	(27.4%)

Salmones Camanchaca harvested 9,911 MT WFE of Atlantic salmon in Q1 2024, with an average harvest weight of 4.4 kg WFE from open cycles, compared to 5.0 kg WFE in Q1 2023. This decrease is mainly explained by fish lacking appetite during the summer. Harvest volumes this quarter were 10.6% lower than in Q1 2023.

Coho salmon harvest volumes in Q1 2024 were 1,139 MT WFE, a decrease of 54.3% over harvest volumes in Q1 2023. Average weight was 6.2 kg WFE, compared to 4.7 kg WFE in Q1 2023, due to a high performance site harvested in January 2024 compared with the site harvested in January 2023. The 2023-2024 season harvested 10,087 MT WFE, almost doubling the 5,856 MT WFE harvested during the 2022-2023 season.

Atlantic and Coho salmon sales volumes during Q1 2024 were 18,110 MT WFE, an increase of 24% over Q1 2023, which generated revenue of USD 111 million and in line with Q1 2023.

Operating revenue

The Company's commercial strategy is to take advantage of its diversification and ability to cover all its potential markets by adapting to its customers' requirements and focusing on the markets and formats that offer the best medium-term returns on its raw materials, while preserving stable relationships with customers in its main markets.

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Sales by market segment for Q1 2024

											Asia,						LATAM
																except
	Product			USA		Europe			Eurasia		except		Japan		Mexico			Chile		Others		TOTAL
										Chile &
											Japan
																Mexico
				ThUSD		ThUSD			ThUSD		ThUSD		ThUSD		ThUSD		ThUSD		ThUSD		ThUSD		ThUSD
Atlantic salmon	42,457	6,196		725	3,449	1,857	12,752	11,718	4,104	1,756	85,014
Coho salmon	5,178	1,257		1,967	1,189	10,526	6,345	1,039	293	527	28,321
Others	0	0		0	0	0	0	0	3,765	0	3,765
TOTAL	47,636	7,453		2,692	4,638	12,383	19,097	12,757	8,161	2,283	117,100
Distribution %	40.7%	6.4%		2.3%	4.0%	10.6%	16.3%	10.9%	7.0%	1.9%	100.0%

Sales by market segment for Q1 2023

											Asia,						LATAM
																except
	Product			USA		Europe			Eurasia		except		Japan		Mexico			Chile			Others		TOTAL
										Chile &
											Japan
																Mexico
				ThUSD		ThUSD			ThUSD		ThUSD		ThUSD		ThUSD		ThUSD		ThUSD			ThUSD		ThUSD
Atlantic salmon	36,184	2,066		3,309	7,588	2,280	20,487	15,168	5,560		0	92,641
Coho salmon	7,163	1,777		0	0	0	8,099	0	528		0	17,567
Others	0	0		0	0	0	0	0	3,586		0	3,586
TOTAL	43,346	3,843		3,309	7,588	2,280	28,586	15,168	9,674		0	113,794
Distribution %	38.1%	3.4%		2.9%	6.7%	2.0%	25.1%	13.3%	8.5%		0.0%	100.0%

The Company has defined its value-added products as those that include whole salmon processing, which represented 85% of Atlantic salmon sales in Q1 2024, an increase over the 73% in Q1 2023. This proportion for Coho salmon fell from 98% to 74% in Q1 2024, due to higher production last season, resulting in increased non- value-added sales to Japan, which to a larger extent is a HON market for the Company.

The main market is the USA and its share increased this quarter to 40.7% compared to 38.1% in Q1 2023. Sales to Mexico decreased from 25.1% to 16.3%, while sales to Japan rose from 2.0% to 10.6%.

The conflict in Ukraine has forced several countries to apply sanctions to Russia that have restricted trade and the payment chain. However, these limitations are not affecting the medicines and food trades, so the Company sells food to Russia to the extent convenient, without involving expressly sanctioned counterparties and in compliance with Salmones Camanchaca loan agreements and international trading agreements.

The Company's other businesses, such as processing services for third parties, leasing farming sites and sales of smolts and byproducts, resulted in sales of USD 3.8 million in Q1 2024, compared to USD 3.6 million in Q1 2023.

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