Costs and lice dampen Mowi Scotland Q4 performance

ALTHOUGH Mowi Scotland achieved record harvests last year due to smolt stocking, the financial performance was dampened by higher costs and challenging biological issues, the company said today as it published results for the fourth quarter of 2019.

As reported last month, Scotland’s Q4 harvest rose by more than 2,000 tonnes to just over 14,000 tonnes.

The full Scotland harvest for 2019 is 65,400 tonnes and the expected full year 2020 harvest figure is 67,000 tonnes.

Mowi Scotland’s operational EBIT totalled €17.4 million euros, down by almost €10 million from €27.3 million in Q4 2018.

This represents an equivalent of €1.24 per kg (€2.32 per kg in 2018). The full financial EBIT dropped from €39.4 million in Q4 2018 to €27.6 million last year.

The company said the benefits of an increased harvest were offset by higher costs and lower prices and allocated margin from Sales & Marketing compared with Q4 in 2018.

But the contribution from contracts relative to the reference price was positive. The contract share in the final quarter was 60 per cent, down from 68 per cent in 2018.

The statement added: ‘The biological situation in our Scottish farming operations was challenging in the fourth quarter.

‘Seawater temperatures declined slower than usual due to the mild weather, and sea lice levels were higher compared with the fourth quarter of 2018. Several farms experienced biological issues.

‘The incident based mortality losses amounted to €10.7 million related to Pasteurella skyensis, PD [pancreatic disease] and treatment losses (€0.4 million in the fourth quarter of 2018). Production has been lower than in the fourth quarter of 2018 due to early harvest.’

Record high

Globally, Mowi has reported a high record high turnover of €1,112 million (€1,074 million) in Q4 2019.

But again the operational EBIT was lower, down from €213 million in 2018 to €166 million. The full year turnover is €4,135 million with an operational EBIT of €721 million.

The global full year harvest was 436,000 tonnes, up from 375,000 tonnes, and the Q4 harvest 116,000 tonnes (106,000 tonnes).

Mowi Consumer Products reported an operational EBIT of €15.1 million (€38.4 million), while Mowi Feed reported an operational EBIT of €13.8 million (€5.8 million).

Feed volumes in the quarter were at an all-time high, with 112,277 tonnes (91,583 tonnes), of which 19,779 tonnes came from Mowi’s new feed plant in Scotland.

Volumes sold in the fourth quarter reached 130,034 tonnes (109,850 tonnes), of which 23,391 came from Scotland.

The volume delivered from Mowi Feed accounted for 95 per cent of total feed delivered to Mowi Norway, compared with 96 per cent in the fourth quarter of 2018.

In Scotland, the volume delivered from Mowi Feed accounted for 91 per cent of total feed delivered to the company’s farms.

New CEO Ivan Vindheim said that 2019 ‘was another good year financially for Mowi’.

‘Record high full-year volumes in all business areas, good salmon prices and relatively stable costs resulted in strong earnings and dividend distributions. I am very proud of the way my 15,000 colleagues have contributed to the great results.

‘The salmon prices increased significantly in all markets during the quarter and in January on strong demand and tighter supply.

‘Notwithstanding the current issues with the coronavirus, the medium and long term outlook for Mowi remains strong.’

He added: ‘It is very encouraging to see the large interest in the market to financing Mowi as a company producing healthy and sustainable products.’

Salmon of Norwegian origin achieved an operational EBIT per kilo of €2.12 (€2.44 in Q4 2019) in the fourth quarter, while salmon of Scottish and Canadian origin reported operational EBIT per kilo of €1.24 and  minus €-0.53 respectively (€2.32 and €1.42).

Salmon of Chilean origin reported operational EBIT per kilo of €0.79 in the quarter (€ 1.25). Faroese salmon were €1.63 (€1.62), and salmon of Irish origin were €3.32 (€2.45) per kg.

The board of directors has resolved to pay a quarterly dividend of NOK 2.60 per share.