Mowi’s Q1 costs increase due to COVID-19, less salmon harvested

Published on
April 20, 2020

“Extensive” measures implemented by Mowi to address the COVID-19 pandemic led to an increase in costs for the firm of EUR 0.22 (USD 0.24) per kilogram in the first quarter of this year compared with the final quarter of 2019, while the harvest volume was 29 percent lower.

In the Bergen, Norway-headquartered salmon producer’s latest trading update, it said that the pandemic situation was challenging for all, and that Mowi was no exception.

“While our operations have continued to run more or less normally so far, we are incurring more costs than usual due to extensive measures implemented internally and externally. We are monitoring the situation closely and are ready to take further measures if needed,” the company stated.

Mowi achieved operational earnings before interest and taxes (EBIT) of approximately EUR 107 million (USD 116.5 million) in the first quarter of this year, representing a decrease of EUR 89 million (USD 96.9 million) compared to the corresponding period of 2019.

Its farming segment’s operational EBIT amounted to EUR 101 million (USD 110 million), while the sales and marketing segment's EBIT was EUR 14 million (USD 15.2 million) and the feed segment registered a negative EBIT of EUR 1 million (USD 1.1 million).

The operational EBIT of its salmon of Norwegian origin in the last quarter was EUR 1.65 (USD 1.80) per kilogram – down from EUR 2.05 (USD 2.23) in Q1 2019. Similarly, EBIT decreases were seen in its salmon of Scottish, Canadian, Chilean, and Faroe Islands origin compared to a year previously – amounting to EUR 0.65 (USD 0.71), EUR 0.90 (USD 0.98), EUR 1.20 (USD 1.31) and EUR 2.80 (USD 3.05) decreases, respectively.

There was no harvest by Mowi’s Irish operations in the first quarter.

The total volume harvested by the group in Q1 2020 was 83,000 metric tons (MT) gutted weight equivalent (GWE), down by 21,000 MT from a year previously and 1,000 MT less than forecast earlier in the year.

Its total volume in the last quarter comprised 50,500 MT from Norway, 9,000 MT from Scotland, 8,000 MT from Canada, 14,000 MT from Chile and 1,500 MT from the Faroes.

Reported net interest-bearing debt (NIBD) was approximately EUR 1.36 billion (USD 1.5 billion) at the end of Q1 2020, up from EUR 1.02 billion (USD 1.1 billion) a year previously.

According to the update, Mowi’s board has decided to postpone the decision on a first-quarter dividend until the second-quarter in light of COVID-19.

“The board considers it essential to maintain a strong financial position amid the heightened uncertainty caused by COVID-19,” it said.

Mowi’s complete Q1 2020 report will be released on 13 May. 

In a separate public filing on 20 April, Mowi disclosed its CEO, Ivan Vindheim, purchased 6,000 shares in Mowi ASA at a price of NOK 169.80 (USD 16.37, EUR 15.06) per share. Following the transaction, Vindheim owns 7,248 shares and 462,614 unexercised options in Mowi ASA. 

Photo courtesy of Mowi

Contributing Editor reporting from London, UK

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