Mowi posts record profits despite cost pressure

Mowi turned in a record performance last year with an operational EBIT of just over €1bn (£883m), but cost inflation continues to cast a shadow over the salmon farming industry.

Chief Executive Ivan Vindheim told shareholders in the company’s annual report that Mowi was the best or the second best cost performer versus its peers in the regions in which the company operates.

He said: “The farming blended cost per kg has been stable since 2017, adjusted for inflation, as underlying cost pressure has been offset by cost cut initiatives.

“However, significant post-Covid inflation negatively impacted the cost level in 2022. This was first and foremost driven by feed inflation, as feed prices have increased by approx. 70% since the beginning of 2021 on significantly higher feed raw material costs.

“Accordingly, cost-cutting initiatives are important to combat the underlying pressures from not only feed prices, but also costly biological measures and more complex regulations.

“In 2022, the organisation delivered on its cost-cut targets for 2022, achieving €48m (£42m) in annualised savings.

“A total of €230m (£202m) in annualised savings have been achieved since the start of the cost savings programmes in 2018.

“Addressing cost has become ingrained in Mowi’s workflow, and the company has initiated another global cost savings programme for 2023 with a target of €25m (£22m) of savings during the year.”

CEO Vindheim said the all-time high financial results were brought about by strong operational performance across the board and good market conditions for salmon.

He went on: “Farming, relative seawater production was the best ever and harvest volumes of 463,600 GWT were close to all-time high.

“At year-end, Mowi entered Iceland, the last spot missing from our geographical footprint, with the acquisition of 51% of Arctic Fish. Consumer Products and Feed also had their best year ever.

“These achievements were only made possible by the dedication and hard work of Mowi’s employees. The financial and operational records achieved during 2022 were unfortunately overshadowed by the proposed resource rent tax on salmon farming in Norway.”

He continued: “With regards to market conditions, demand for salmon improved significantly in 2022 on Covid-19 related reopening of the foodservice segment and continued strong retail demand.

“Better demand and global market supply contraction of 1% led to all-time high spot prices, and Mowi also benefited from a reduced contract share for Norwegian origin. With improved achieved prices and volumes close to record-high levels, group revenue was the highest ever at €4,946m (£4,346m).

“Survival rates and feed conversion ratios improved from 2021 and relative growth performance in sea was at an all-time high.

“In Mowi Norway, our largest and most important farming entity, harvest volumes reached a record-high level of 293,700 tonnes.

“Towards the end of the year, we received approval for the acquisition of 51% of the shares in Icelandic salmon farmer Arctic Fish. Iceland is Mowi’s seventh farming country and was the last spot missing from our geographical footprint.”

Consumer Products delivered its best year financially with an operational EBIT of €112.1m (£98m) up from €95.5m (£83m) on strong operational performance and continued good retail demand.

Mowi’s CEO Ivan Vindheim