Mowi plans faster growth, supported by technology

Mowi, the world’s biggest salmon producer, is aiming to ramp up its volume growth over the next few years and the “new industrial revolution” is a key part of its strategy. That was the message from Mowi’s chief executive Ivan Vindheim, speaking at the company’s Capital Markets Day presentation.

Vindheim said that Mowi’s strategy had “three pillars”: volume growth, cost and sustainability. While the company is a leader on cost and sustainability, he said, it has lagged behind the industry as a whole in terms of volume growth.

He said: “To further strengthen the company’s position, Mowi’s strategic trajectory towards 2025 will be focused on four main objectives: growth throughout the value chain with particular focus on Mowi Farming, further cost savings across the group, greater sustainability, and capitalising on digitalisation and automation.

“All four objectives are of equal importance and apply throughout our value chain.”

Despite achieving record high volumes in 2020, Mowi Farming’s volume growth has been lagging behind the industry in the past few years. This is not satisfactory, Vindheim said, and will duly be addressed through various growth initiatives including increased investment in post-smolt.

Vindheim said: “With the right measures in place we believe Mowi Farming has the intrinsic potential to grow well beyond 500,000 tonnes organically, using existing license capacity.”

Investment in post-smolt production is expected to create volume growth in Norway, which accounts for 60% of Mowi’s output, from 2025. Ben Hadfield, COO for Scotland, Ireland and the Faroes said that we can expect to see volume growth in Scotland as from the current year, and Ireland is expected to reverse the decline in volume that has occurred over the past five years.

Mowi’s operations in Canada have been affected by the Canadian government’s decision to close down salmon farming in the Discovery Islands region in British Columbia, so the company expects that production in North America will remain static at best, but its Chilean operations are expected to see organic annual growth between 3% and 4%.

Vindheim said: “Mowi Farming will also pursue farming growth through accretive acquisitions when this fits with its operational strategy. The main focus in Mowi Farming has been and will continue to be conventional farming.

“That said, we are monitoring developments in alternative technologies closely and may introduce such technologies when, and if, we find it timely and profitable.”

He also pledged that “smart farming” – using technology to improve productivity, automate feeding and enable remote monitoring and control of farms – will be rolled out through all the company’s sites in Norway by 2025.

There was a hint that Mowi  could  increase production at its new Scottish feed factory which was commissioned  last year.

Shareholders were told: “After commissioning the second feed mill in Kyleakin, Scotland in 2020 Mowi is now self-sufficient for feed in Europe. Feed is by far the most important cost component in farming. The strategy from here is to grow Mowi Feed along with Mowi Farming.

Mowi has unutilised capacity at its feed mill in Kyleakin, Scotland, and can add a new production line at the feed mill in Bjugn, Norway if needed with limited capital expenditure.

Vindheim said the “megatrends” driving salmon demand are stronger than ever and driven by health trends, a growing need for more low-carbon footprint diets, and salmon’s ability to appeal to the wider population as highly versatile and suitable for almost any eating occasion.

Mowi expects the continued strong growth in demand for Atlantic salmon to exceed supply growth in the next five years.

“Salmon is a scientifically proven natural superfood. It is also versatile and appeals to people of all ages with its highly appetising taste, look, texture and colour. In the coming years, I see countless opportunities for Mowi and we are working on many important initiatives that will further develop the company and bring it into the future,”  he added.

On sustainability Mowi has again been  ranked the world’s most sustainable animal protein producer in the 2020 Coller FAIRR Protein Producer Index. Atlantic salmon is also ranked the most sustainably produced animal protein.

On cost Mowi is consistently the number one or number two performer among peers in the regions in which the company operates. However, cost is still too high in absolute terms, particularly in some regions outside Norway.

The cost variation between the regions is also too high. Thus, Vindheim said, Mowi Farming will continue unabated with its work to address cost initiatives going forward.

In Sales & Marketing Mowi said it will continue to develop new, innovative, high quality products that are easily accessible to its customers to keep pace with constantly evolving food habits.

“We will also continue in our long-term quest to de-commoditise the salmon category through our MOWI branding strategy. At the same time we must acknowledge that salmon is still mainly sold as a commodity subject to fierce competition – particularly in Europe. Thus, it is key to be a cost leader in this part of the value chain too, in order to attain a reasonable profit on our sales”, the CEO stressed.

Mowi’s CEO Ivan Vindheim