Mowi Q3 results show high volumes, lower earnings

Ivan Vindheim, Mowi's CEO (photo: Mowi)

Mowi Scotland continued to be affected by a series of biological problems during the third quarter of this year, it emerged today – but improvements are on the way.
The world’s largest farmed salmon producer has published its Q3 results which show, as expected, it achieved a global EBIT of €80 million, against €148 million for the corresponding period last year.
Its Scottish operations produced an EBIT of €5.6 million against €26.2 million in 2019, the equivalent of €0.35 per kg (€1.34 in 2019). Mowi said reduced earnings from the third quarter of 2019 were due to low prices from Covid-19, as well as lower volumes and increased cost on challenging biology, including an algal bloom which affected several of its farms in the Argyll region.
It said: “The overall price achieved was 23 per cent above the reference price in the quarter (20 per cent above). Contribution from contracts relative to the reference price was positive in the third quarter of both 2020 and 2019. The contract share was 53% in the quarter compared with 41% in the third quarter of 2019. Price achievement was negatively impacted by the size profile. The third quarter harvest volume was 16, 114 tonnes gutted weight (19, 634 tonnes). Volumes were negatively impacted by challenging biology and early harvest.”
On the disease issues, Mowi explained: “The cost level in our Scottish operations is affected by the biological situation which has been challenging over time. The salmon harvested in Q3 2020 had elevated costs related to biological issues in both the third quarter and prior periods including algal bloom, CMS (cardiomyopathy syndrome) , PD (pancreatic disease) and lice.
The cost items which increased from the comparable quarter were mainly feed and health related. “Production in the third quarter improved compared with the corresponding quarter of 2019. Incident based mortality losses amounted to €4.3 million mainly related to algal bloom, CMS, storm and treatment losses (€8.8 million in 2019). While the biological situation in Scotland is still challenging, mainly related to CMS, it is positive to note that PD levels are declining on increased vaccination. Sea lice levels are also lower than in 2019. Thus, we currently expect cost improvements in the fourth quarter.”
Commenting on the group performance, Mowi chief executive Ivan Vindheim said: “Our operations have been running close to normal despite further Covid-19 restrictions in the quarter. However, the pandemic still impacts out of home consumption to a large degree, and although retail sales are strong, our earnings are impacted by falling prices as a result of lower net demand.”
Mowi reported global operational revenues of €958 million (€1,023 million) in the third quarter of 2020. Total harvest volume in the quarter of 125,773 tonnes (116 989) was approximately in line with guidance and an all-time record for the company. This was despite reduced volumes in Scotland and – thanks to higher sea temperatures this year – Canada. Full-year harvest guidance for 2020 is unchanged at 442 000 tonnes. Harvest guidance for 2021 is 445 000 tonnes.
“I am very pleased that both Farming, Feed and Consumer Products delivered all-time high quarterly volumes. Mowi’s integrated value chain has yet again demonstrated its strength during these unprecedented times. It is also encouraging to see that farming production cost has improved,” says Vindheim.
“Mowi’s farming volumes have over the past few years been subject to significant growth. However, over time the company has been lagging somewhat behind the industry’s farming volume growth trajectory. Accordingly, Mowi will put even more focus on growing farming volumes going forward. Further to this, Mowi will arrange a Capital Markets Day on 17 March 2021 where this will be addressed in detail.
“Global supply growth in 2021 is expected to be 1% and would under normal circumstances be very supportive of strong salmon prices. Whilst Covid-19 has significantly impacted the salmon market and prices in the short-term, we still strongly believe in the positive long-term outlook for the industry, and for Mowi in particular,” says Vindheim.
The board has decided not to pay a third quarter dividend.


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