It just posted its best set of financial results in its history, but Mowi remains concerned by what the future might bring in its native Norway.
In his presentation of the salmon-farming giant’s fourth-quarter 2022 results in Oslo, Norway, on 15 February, 2023, Mowi CEO Ivan Vindheim said the government’s controversial aquaculture resource tax proposal is “hanging over us all and casting a dark cloud over the prospects for the Norwegian salmon industry going forward.”
Mowi’s Q4 2022 revenue reached a record level for the period at more than EUR 1.36 billion (USD 1.5 billion), compared with EUR 1.15 billion (USD 1.2 billion) previously. At the same time, its operational earnings before interest and taxes (EBIT) climbed EUR 93 million (USD 99.5 million) to EUR 238.9 million (USD 255.7 million), with Vindheim pointing to seasonally strong prices, driven by “reasonably good demand” and a global supply contraction of 2 percent year-on-year.
The company’s revenues reached EUR 4.9 billion (USD 5.2 billion) for FY 2022, up 18 percent on 2021 and a new record, while its 2022 operational EBIT passed the EUR 1 billion mark for the first time in its near-60-year history to reach EUR 1.005 billion (USD 1.1 billion).
“This is an historic moment for us,” Vindheim said. “There are tens of thousands of hours of hard work behind this achievement and I must say thank you to my 11,500 colleagues in 25 countries who have made it happen.”
But he described the Norwegian government’s proposal, delivered on 28 September, 2022, as a “cataclysmic event,” and warned it could create an effective tax level of 62 percent for the Norwegian salmon-farming industry – up from the current 22 percent. Factoring in Norway’s wealth tax, that could drive Mowi’s effective tax rate up to 80 percent. Vindheim said the proposal threatens the country’s entire salmon-farming industry and the 60,000 people it employs in coastal areas.
“Notwithstanding all these records, not everything is rosy in the salmon universe; not in the Norwegian part of it, at least,” Vindheim said. “Such a tax level is completely unprecedented in the global aquaculture industry and will impose major limitations on the future growth and development of the Norwegian salmon industry if it’s put in action. It would create major limitations on growth and cause irreparable damage to jobs in their thousands.”
The public consultation response process for the proposal ended on 4 January. Vindheim said he hopes Norway’s government will listen to the negative outcry from industry and representatives of coastal communities that will be impacted by the tax and choose a different rate and a model that is less devastating.
“As many as eight out of 10 are against it – from professors to small farmers along the Norwegian coastline, so there’s no lack of warning about the negative consequences of this tax proposal,” he said. “Now the political process has started, and we continue to work and meet at all levels of politics and associations to try and turn this proposal into a viable framework for a salmon industry going forward.”
Mowi doesn’t expect the salmon industry to have formal clarification on the tax until after Easter, and most likely it will have to wait until closer to the summer, Vindheim said.
Meanwhile, according to Mowi’s Q4 report, its harvest volume in the closing three months of last year increased by 15,509 metric tons (MT) year-on-year to 130,549 MT gutted-weight salmon. Its total production was 463,635 MT in 2022, which was 1,965 MT less than in 2021.
In Norway, Mowi’s base of production, it produced a record-high 293,700 MT of salmon in 2022, while its operations in Scotland contributed 48,400 MT, Chile 65,700 MT, Canada 41,100 MT, Ireland 6,800 MT, and the Faroes 7,900 MT.
Mowi’s harvest volume guidance of 484,000 MT for 2023 represents an all-time high level and includes volumes from its newest subsidiary, Arctic Fish in Iceland, with the acquisition of a 51.28 percent completed in December 2022.
Mowi said that with this, it will achieve approximately 109,000 MT of volume growth over a five-year period.
The report also confirmed that its downstream business, Mowi Consumer Products, delivered its best Q4 and full-year, with operational EBITs of EUR 42.5 million (USD 45.5 million) and EUR 112.1 million (USD 120 million), respectively, on sales of 229,000 MT of products.
Also recording its best year to date, Mowi Feed reported an operational EBIT of EUR 17.4 million (USD 18.6 million) in Q4, with 148,810 MT sold. Feed production reached 515,000 MT for the full-year, an increase of 7 percent from 2021, and Mowi said it anticipates further growth this year.
Looking ahead, Vindheim said 2023 has started off on “a good note,” with seasonally strong prices continuing, alongside solid demand and modest supply.
“How this will develop further on the demand side, no one really knows for sure, but salmon tends to fare well in challenging economic times,” he said. “The supply side looks supportive with a global supply growth of around 2 percent.”
Photo courtesy of Mowi
