Mowi Q1 profits, revenues fall but operations “running close to normal” during pandemic
Increased costs and lower volumes led Mowi to post first-quarter operational earnings before interest and taxes (EBIT) of EUR 109 million (USD 118.2 million) in the first quarter of 2020, representing a decline of EUR 87 million (USD 94.3 million) on the corresponding period of last year.
The Bergen, Norway-headquartered salmon farming company reported lower operational revenues of EUR 885 million (USD 959.7 million) in the last quarter, down from EUR 979 million (USD 1.1 billion) in Q1 2019, while the total harvest decreased by almost 21,000 metric tons (MT) but remained in line with guidance at 83,119 MT gutted weight.
Of this volume, Norway contributed 50,492 MT (56,135 MT in Q1 2019), Scotland provided 9,036 MT (15,787 MT), Canada 8,066 MT (9,838 MT), Chile 13,669 MT (19,810 MT), and the Faroe Islands 1,851 MT (1,126 MT). There was no salmon harvested in Ireland in the quarter.
The harvest guidance for the full year 2020 remains unchanged at 450,000 MT.
Delivering its results, Mowi said Q1 had been impacted by falling prices brought by the escalation of COVID-19 into “a world-spanning pandemic with extensive lockdown measures in most countries.” It also highlighted significant disruption to trade flows, logistics and distribution.
At the same time, the foodservice segment was particularly affected by measures imposed to contain the spread of the virus, although this trade was partially offset by increased sales through the retail channel.
“Despite COVID-19 currently causing substantial market and logistical disruptions, our operations are running close to normal," Mowi CEO Ivan Vindheim said. "At the same time, we are maintaining the safety and well-being of our employees. We will do whatever we can to keep operations running without compromising health and safety. I am extremely proud of all Mowi’s employees for making this possible."
Overall, Mowi achieved an operational EBIT-per-kilogram of EUR 1.31 (USD 1.42), down from EUR 1.88 (USD 2.04) in Q1 2019. The operational EBIT of its salmon of Norwegian origin in the last quarter decreased from EUR 2.07 (USD 2.24) to EUR 1.66 (USD 1.80) per kilogram. Declines were also confirmed in its salmon of Scottish, Canadian and Chilean origin compared to a year previously – reaching EUR 0.63 (USD 0.68), EUR 0.91 (USD 0.99), and EUR 1.21 (USD 1.31) per kilogram, respectively. Its salmon of Faroese origin achieved a higher operational EBIT of EUR 2.79 (USD 3.03) per kilogram.
Farming costs increased by EUR 0.22 (USD 0.24) per kilogram from Q4 2019, largely due to the 29 percent lower harvest volume.
Despite the difficult quarter, both Mowi Consumer Products and Mowi Feed delivered their highest volumes for a first quarter, with 52,093 MT and 99,370 MT, respectively.
“Our integrated value chain has demonstrated resilience in these challenging times, and we have continued to produce value-added products at our many factories. We have been able to capitalize on long-term relationships with retailers globally, and have sold an increased share of production through retail,” Vindheim said. “We have started to see easing of lockdown measures in some countries and signs of increased demand as a result. I strongly believe the demand for salmon will recover to pre-COVID-19 levels as the foodservice segment gradually reopens as a result of this.”
In its outlook statement, the company’s board of directors said that Mowi’s branding footprint expanded in the quarter. As well as the sales of products in the Polish retail segment, MOWI branded products were also launched on the Amazon Fresh e-commerce platform in the United States.
“The branded products were unveiled across social media platforms in order to build brand awareness. However, COVID-19 caused a difficult market situation and the launch will be reinvigorated when the market situation improves,” the company said. “In France, the MOWI brand was introduced to French retailers at the largest food fair in France (the Salon International de l’Agriculture in Paris), however, the actual retail launch has been postponed due to COVID-19.”
Mowi said in light of heightened uncertainty due to pandemic, its board decided to postpone the awarding of a dividend to shareholders until the second quarter.
According to Mowi’s Q1 report, the global harvest of Atlantic salmon amounted to 547,600 MT in the first quarter, an increase of 2 percent compared with the same quarter in 2019.
Photo courtesy of Mowi