Mowi remains committed to opposing Norway’s recently imposed aquaculture resource rent tax, according to CEO Ivan Vindheim.
Delivering an otherwise bullish presentation on Mowi’s Q2 2023 results in Oslo, Norway, on 23 August, Vindheim voiced the company’s disappointment with the parliament’s decision, saying it has already proved costly, with investments worth NOK 40 billion (USD 3.7 billion, EUR 3.5 billion) across the industry now on hold due to the tax.
Vindheim said that Mowi hasn’t given up on undoing the tax, which he called a “last-minute compromise with the least possible majority.” Vindheim said he hopes to influence Norway’s 2025 elections, which he hopes will result in a “new government with a more business-friendly policy.”
The company will also pursue legal lines of opposition in due course, according to Vindheim.
The 25 percent tax on salmon farming, made effective at the beginning of 2023 and applicable to the seawater growth phase, levies a marginal 47 percent tax when added to corporate taxes on Mowi and other large salmon-farming firms. The tax is solely applicable to a portion of the value chain – mainly the biomass in sea cages – so in response, Bergen, Norway-headquartered Mowi is currently running a tax optimization project to mitigate its impacts.
Pending this work and the final details from the authorities on the tax’s regulations, Mowi CFO Kristian Ellingsen said it’s “highly uncertain” what effect it will have on H1 earnings overall. As such, the company did not include an estimate in its Q2 results. However, Ellingsen said the underlying impact of the resource tax on earnings per share reached EUR 0.06 (USD 0.07) in Q2.
Despite the tax, a strong market and solid operational performance in all business areas helped Mowi haul in an all-time high quarterly revenue of EUR 1.365 billion (USD 1.5 billion), up 11 percent year over year on the EUR 1.232 billion (USD 1.3 billion) posted for the corresponding quarter of 2022.
Its operational earnings before interest and taxes (EBIT) were also strong at EUR 299.5 million (USD 323.8 million), compared to EUR 320 million (USD 345.9 million) in Q2 2022. While 6 percent lower than a year previously, it is the third-highest to date, and if measured by valuation in the weakening Norwegian kroner, it would be 9 percent higher, Vindheim said.
Mowi harvested 107,500 metric tons (MT) of salmon in the quarter, above its previous predictions of 104,500 MT. In Norway – Mowi’s largest and most important farming region – it produced 61,469 MT of salmon in Q2; while its operations in Scotland contributed 18,273 MT, its Chilean farms produced 13,797 MT, its farms in Canada contributed 9,352 MT, its Irish production totaled 1,646 MT, its farms in the Faroe Islands produced 2,840 MT, and Iceland – its newest region stemming from its controlling stake purchase of Arctic Fish – totaled 100 MT.
Its full-year harvest estimates for 2023 remain unchanged at an all-time high 484,000 MT. This would be equal to a growth of 4.4 percent year over year if it comes to fruition. Mowi said that total is above projected industry growth of 0.6 percent, continuing a growth trajectory that has surpassed the industry at large since 2019.
“Our growth in harvest volumes in recent years is encouraging. In the second quarter, biological performance was positively impacted by improved production and survival rates compared with one year ago,” Vindheim said.
Mowi’s downstream business, Mowi Consumer Products, delivered a seasonally record-high quarter, with an operational EBIT of EUR 37.1 million (USD 40.1 million) and an operating revenue of EUR 885.8 million (USD 957.6 million). The division sold 54,099 MT of products in the quarter on solid consumer demand, improved volumes, and higher average prices.
Vindheim said the company continues to capture market share, with the Mowi brand having established a truly global footprint in 18 markets.
“Demand continues to be good in the third quarter notwithstanding the economic slowdown that we are facing globally,” he said. “Normally, salmon fares well in challenging economic times … I am impressed by the level of robustness seen in the market so far.”
Mowi’s feed division also had a strong quarter, recording its best-ever second quarter earnings of EUR 9.7 million (USD 10.5 million), with sales totaling 115,513 MT and revenues reaching EUR 233 million (USD 251.9 million).
Photo courtesy of Mowi
