Mowi reports Q2 record, but problems continue for Scotland

Mowi today became the second salmon giant to announce a “best yet” second quarter performance following Grieg’s success yesterday.

Once again, however, biological and related issues continued to affect its Scottish operations.

Driven by exceptionally high salmon prices and good operations during the April to June period, the world’s largest salmon farmer produced a record high operational profit or EBIT of €320m (£271m) on record high revenues of €1.232bn (£1.044bn)

CEO Ivan Vindheim said: “I am very pleased with our operational performance in the quarter and the way we have been able to capitalise on the high prices. I would like to thank the organisation for this achievement.”

Salmon prices reached new record levels in all markets during the quarter on strong demand and low supply. Mowi’s financial results were also driven by good harvest volumes of which 65% were sold into the spot market.

“We have never before experienced spot prices at the levels seen in the second quarter, and this shows the potential to continue to increase the value of the salmon category over time given continued supply growth,” Vindheim added.

Mowi is distributing NOK 1.2 billion in dividends to shareholders.

Mowi Scotland delivered an operational EBIT of €20.7m (£17.5m) against €29.9m (£25m) for the same period last year on lower harvests.

The harvest volume totalled 12,954 tonnes against 19,162 tonnes a year ago. The operational EBIT per kilo, however, was slightly higher at €1.60 (€1.56 in Q2 2021).

Mowi said: “Poor production on stocks grown from externally sourced eggs negatively impacted volumes and costs compared with the second quarter of 2021.

“These eggs were introduced in the absence of other options following the EU imposed export ban on Norwegian eggs in 2019. The negative effects above were partly offset by improved prices.

“As a result of the record-high spot prices, contribution from contracts relative to the reference price was negative in the second quarter of 2022 compared with a positive effect in 2021.”

The contract share for Mowi Scotland was 69% in the quarter (51%), negatively impacted by the low harvest volumes.

Low production on stocks based on externally sourced eggs, in addition to lower biomass going into the quarter compared with last year, had a negative impact on volumes.

The Mowi Scotland report added that the full cost per kg harvested increased from the comparable quarter “due to the biological issues… as well as negative scale effects from lower harvest volumes and increased feed cost.”

It went on: “Incident based mortality losses in the quarter amounted to €2.8m (€1.5m) mainly related to gill issues, treatment mortality and predators. In addition to the issues related to stocks grown from externally sourced eggs, the biological situation has been negatively impacted by gill issues, including AGD [amoebic gill disease], algae and jelly fish.

“These issues have continued into the third quarter. CMS also remains at a relatively high rate of detection. Although somewhat later than originally planned, the stocks based on external eggs were harvested out in the third quarter. We expect improvements to materialise with increased harvest weights and better cost performance in the fourth quarter.”

Mowi Ireland fared somewhat better with an operational EBIT of €9.2m (£7.8m) , up from €3.4m (£2.9m) on a higher harvest of 3,294 tonnes (1,850 tonnes).

Mowi said the increase from the comparable quarter was due to improved harvest volumes, lower cost and increased prices.

Prices were higher than in the comparable quarter, the company said, although Mowi Ireland did not benefit from the record-high spot prices as its product, organic, is to a large extent a contract market.

Ireland saw a generally improved biological situation and positive scale effects from higher harvest volumes. Mowi expects to report higher costs in the third quarter due to biological issues.

Ivan Vindheim, Mowi CEO