Record Q3 volumes and turnover for Mowi, but higher costs and lower prices hit profit
Mowi has posted operational earnings before interest and taxes (EBIT) of EUR 148 million (USD 164.6 million) for the third quarter of 2019, down from the record EUR 207.1 million (USD 230.3 million) achieved a year previously. In its Q3 2019 results statement, the Bergen, Norway-headquartered salmon producer attributed the lower results to reduced prices and higher farming costs, driven by biological issues.
“The third quarter has been more challenging than normal for our farming organization. I would therefore like to recognize the hard work from all of my colleagues,” Mowi CEO Alf-Helge Aarskog. “In the quarter, we achieved the highest volumes ever both in farming, sales, and feed produced. This resulted in the highest turnover we have ever had in a third quarter. We are aiming at further growth next year with a harvest volume forecast of 450,000 (metric tons, MT), up from this year’s 430,000 MT.”
Mowi reported record operational revenues in excess of EUR 1 billion (USD 1.1 billion) for the last quarter, up from EUR 990 million (USD 888 million) in Q3 2018. The total harvest volume for the three-month period was also a new high at 116,989 MT, up from 109,896 MT in Q3 2018.
In the third quarter, salmon of Norwegian origin achieved an operational EBIT per kilogram of EUR 1.64 (USD 1.82), down from EUR 2.25 (USD 2.50) in Q3 2018.
Salmon of Scottish origin recorded operational EBIT per kilogram of EUR 1.34 (USD 1.49), while Mowi's Canadian operations recorded a negative operational EBIT per kilogram of EUR 0.01 (USD 0.01), with the Scottish EBIT down from EUR 1.36 (USD 1.51) and Canada’s down from EUR 1.05 (USD 1.17) per kilogram. Salmon of Chilean origin recorded operational EBIT of EUR 1.32 (USD 1.47) per kilogram in the quarter, a decline from EUR 1.28 (USD 1.42) a year previously.
The operational EBITs of its salmon from Irish and Faroese origin in Q3 2019 fell to EUR 1.11 (USD 1.23) and EUR 1.42 (USD 1.58) respectively, with both locations experiencing higher costs.
Mowi said the full costs per kilogram of fish harvested in Norway increased by 4 percent compared to Q3 2018, mainly due to higher feed and health costs.
In Scotland, the full costs decreased by 13 percent year-on-year, thanks to larger volumes and the improved biological performance of the harvested fish. But it was highlighted that the biological situation in its Scottish farming operations became more challenging during the quarter, coinciding with significantly higher seawater temperatures.
Several Scottish farms are facing biological issues, confirmed Mowi, with incident-based mortality losses in the last quarter rising to EUR 8.8 million (USD 9.8 million). Sea lice levels at the end of the quarter were also higher than at the end of the corresponding quarter of 2018. Consequently, costs are expected to increase in the fourth quarter on lower volumes and more challenging biological conditions.
For the group’s Canadian operations, the cost level per kilogram increased by 10 percent from the comparable quarter, and in the wake of previous biological issues, these costs are also expected to be at a high level in Q4.
Meanwhile, the full costs of Chile’s Q3 harvest decreased by 2 percent year-on-year, with lower non-seawater costs more than offsetting higher biological health costs. However, Chile’s Q4 costs are also expected to increase.
Mowi’s Consumer Products segment recorded an operational EBIT of EUR 12.8 million (USD 14.2 million), down from EUR 16.3 million (USD 18.1 million) in Q3 2018. In total, a record 49,869 MT of products were sold in the quarter, generating operating revenues of EUR 595.5 million (USD 662.1 million).
The Feed segment reported an operational EBIT of EUR 7.9 million (USD 8.8 million), up from EUR 7.3 million (USD 8.1 million), with its production up to a new high of 126,711 MT. This volume generated operating revenues of EUR 165.2 million (USD 183.7 million).
Photo courtesy of Mowi