High post-COVID salmon prices boost Mowi’s Q1 2022 earnings

A surge in salmon prices across all of its markets – created by strong demand and low supply – helped Mowi to achieve operational earnings before interest and taxes (EBIT) of EUR 206.7 million (USD 218.3 million) in the first quarter of 2022.

The total was EUR 97.5 million (USD 103 million) higher year-over-year. The Bergen, Norway-headquartered salmon farming company reported all-time high Q1 operational revenues of EUR 1.095 billion (USD 1.2 billion) for the opening quarter of the year, up from EUR 1.022 billion (USD 1.1 billion) in Q1 2021, while its total harvest was slightly below guidance at 96,600 metric tons (MT) gutted-weight. In Q1 2021, it harvested 125,469 MT.

Of its Q1 2022 volume, Norway was Mowi’s most-productive region, accounting for 59,424 MT of salmon, though that figure was down from 74,992 MT in Q1 2021. Of Mowi’s other farming regions, Scotland provided 10,541 MT (18,273 MT), Canada 8,759 MT (10,741 MT), Chile 16,017 MT (19,405 MT), the Faroe Islands 1,192 MT (901 MT), and Ireland 667 MT (1,157 MT).

Mowi issued updated harvest guidance for Q2 and FY 2022, at 99,000 MT and 460,000 MT, respectively.

So far, Mowi has seen the soaring salmon prices more than offset increasing input prices, it said in its Q1 2022 report. According to its analysis, salmon prices in Europe increased by 55 percent compared to Q1 2021, while in the U.S., salmon prices increased by 33 percent in Miami, 39 percent in Seattle, and 46 percent in Boston and New York.

However, it warned that high prices were taking a toll on consumers, as global salmon consumption declined by 7 percent in the quarter. A shortage in global supply in the period also contributed, it said.

“The increase in salmon prices coming out of the pandemic has been impressive. Salmon is a fantastic product with great product features and the beneficiary of strong megatrends, and I firmly believe this will continue to boost demand going forward,” Mowi CEO Ivan Vindheim said. “We expect salmon to continue to stand out versus other animal protein sources due to its substantially lower feed conversion rate and energy usage, and its superior sustainability credentials.”

Overall, Mowi achieved an operational EBIT-per-kilo of EUR 2.14 (USD 2.26), up from EUR 0.87 (USD 0.92) in Q1 2021. The operational EBIT of its salmon of Norwegian origin in the last quarter increased from EUR 0.98 (USD 1.03) to EUR 2.55 (USD 2.69) per kilogram. Its salmon of Canadian, Chilean, and Faroese origin also achieved higher per-kilo EBIT compared to a year previously – reaching EUR 2.56 (USD 2.70), EUR 1.26 (USD 1.33), and EUR 1.53 (USD 1.62), respectively. Its salmon of Scottish and Irish origin achieved lower operational EBITs of EUR 1.02 (USD 1.08) and EUR 3.71 (USD 3.92) per kilogram, respectively.

Blended farming costs increased to EUR 4.78 (USD 5.05) per kilogram due to lower seasonal volumes and higher input prices, it said.

Mowi Farming’s results improved substantially in the quarter, driven by high prices. The segment’s operational EBIT increased by EUR 112.6 million (USD 118.9 million) year-on-year to EUR 180.1 million (USD 190.2 million).

Mowi Consumer Products also delivered a good set of results in spite of record-high raw material prices, with lower operational EBIT of EUR 21.3 million (USD 22.5 million), and higher operating revenues of EUR 725.4 million (USD 766 million) in the quarter. It sold 56,414 MT of product in the three-month period, down from 61,578 MT.

“It is comforting that Mowi’s processing business continues to deliver strong results despite significantly higher raw material prices. This demonstrates the value of Mowi’s integrated value chain and the organization’s relentless quest for increased productivity and cost efficiency,” Vindheim said.

Meanwhile, Mowi Feed sold 88,184 MT of product and produced 87,762 in the quarter, compared with 93,938 MT and 100,296 MT previously. Its operational EBIT was a loss of EUR 3.5 million (USD 3.7 million), compared with a loss of EUR 3 million (USD 3.2 million) in Q1 2022.

The first quarter of the year is traditionally a low season for Mowi’s feed operations, and feed raw material prices and logistics costs increased significantly in the quarter, Mowi said in explaining the results of its feed segment.

Mowi’s board voted to pay out a quarterly dividend of NOK 1.95 (USD 0.20, EUR 0.19) per share, consisting of NOK 1.44 (USD 0.15, EUR 0.14) per share in ordinary dividend and an extraordinary dividend of NOK 0.51 (USD 0.05, EUR 0.04) per share, ascribing its decision to the company’s “strong financial position and a favorable outlook.”

Photo courtesy of Mowi