Scotland shines through in Mowi Q3 results

Mowi Scotland more than doubled its operating profits and harvest volumes during the third quarter of this year, company Q3 results show today.

Mowi’s Scottish division delivered an operational EBIT of 26.2 million euros, compared to €12.3 million for Q3 2018.

As reported earlier this month, harvest volume were up by 27 per cent to a record high of 19,634 tonnes (9.034 tonnes in 2018).

The company said that record high volumes and lower biological costs more than offset dealing with increased mortality and the lower prices that hit the salmon industry during the three-month period between July and September.

It added: ‘The overall price achieved was 20 per cent above the reference price in the quarter.’

But the report makes it clear that rising sea temperatures could present serious biological challenges ahead for Scotland.

Globally, Mowi achieved a record high Q3 turnover of €1,023 million (€990 million) and all-time high volumes of 116,989 tonnes (109,896 tonnes).

But the sharp drop in prices this summer meant that the operational EBIT or profit was down. The figure emerged at €148 million, more or less in line with earlier predictions, compared to €207 million last year.

In Scotland, the higher harvest volumes, said the report, were due to increased opening biomass and improved performance of the harvested generation compared with the third quarter of 2018.

The report continued: ‘Full cost per kg decreased by 13 per cent on cost dilution from improved volumes and improved biological performance of the harvested fish.

‘Biological costs per kg decreased by 19 per cent, particularly related to feed costs and health costs. However, non-seawater costs increased due to mortality events.’

But problems lie ahead. Mowi said: ‘The biological situation in our Scottish farming operations has become more challenging during the third quarter.

‘This development has coincided with significantly increased seawater temperatures. Several farms are facing biological issues.

‘Incident based mortality losses were high in the third quarter, and amounted to €8.8 million related to an algal bloom and fish health issues (€1.2 million in the third quarter of 2018).

‘Sea lice levels at the end of the quarter were higher than at the end of the corresponding quarter of 2018.

‘Production has been higher than in the third quarter of 2018 on increased opening biomass. Costs are expected to increase in the fourth quarter on lower volumes and more challenging biological conditions.’

CEO Alf-Helge Aarskog said of Mowi worldwide: ‘In the quarter, we achieved the highest volumes ever both in farming, sales and feed produced.

‘This resulted in the highest turnover we have ever had in a third quarter. We are aiming at further growth next year, with a harvest volume forecast of 450 000 tonnes, up from this year’s 430 000 tonnes.

‘Due to lower prices and higher farming costs, driven by biological issues, the results are lower in the quarter than they were in the same quarter last year.

‘The third quarter has been more challenging than normal for our farming organisation. I would therefore like to recognise the hard work from all of my colleagues.’

But he told a shareholders presentation this morning that the overall outlook was good and
that he expected a better supply/demand balance next year.

The company was also experiencing rising market growth in Europe, the UK, and in the United States and China.

Mowi’s board of directors plan to pay a quarterly dividend of NOK 2.60 per share, ‘supported by the results, a strong market outlook, and a solid financial position’.