Salmon mortalities in Canada cause Q4 earnings drop for Mowi

Bergen-Norway based salmon farmer Mowi achieved operational earnings before interest and taxes (EBIT) of approximately EUR 146 million (USD 166.7 million) in the fourth quarter of 2021, down from 2020, but up EUR 97 million (USD 110.8 million) on the corresponding period of 2019.

According to the firm’s latest trading update, the total volume harvested in Q4 2021 was 115,000 metric tons (MT) gutted-weight equivalent (GWE), a reduction from 127,000 MT in Q4 2020, but up on its guided forecast for the three-month period of 104,000 MT.

Its total harvested volume in the period comprised 71,000 MT from Norway (78,500 MT in Q4 2020), 12,000 MT from Scotland (13,000 MT in Q4 2020), 10,000 MT from Canada (12,500 in Q4 2020), 16,500 MT from Chile (20,500 MT in Q4 2020), 1,500 MT from Ireland (up 500 MT on Q4 2020), and 4,000 MT from the Faroes (1,500 MT in Q4 2020).

For the full year 2021, 466,000 MT of salmon was harvested, with 273,000 coming from Norway, 66,000 from Chile, 64,500 MT from Scotland, 45,500 MT from Canada, 10,000 MT from the Faroes, and 7,000 MT from Ireland.

Mowi’s operational EBIT of salmon of Norwegian origin in Q4 2021 climbed to EUR 1.75 (USD 2.00) per kilogram from EUR 0.75 (USD 0.86) a year previously. Operational EBIT improvements were also seen in its salmon of Canadian and Faroese origin, which amounted to EUR 0.05 (USD 0.06) and EUR 1.40 (USD 1.60) per kilogram, respectively. Mowi also highlighted that the operational EBIT of its Canada West segment was EUR 1.05 (USD 1.20) per kilogram.

Meanwhile, the operational EBIT for salmon of Scottish and Irish origin decreased to EUR 0.60 (USD 0.67) and EUR 0.95 (USD 1.08) per kilogram, respectively. The blended farming cost per kilogram harvested was EUR 4.62 (USD 5.28), up from EUR 4.28 (USD 4.89) in Q4 2020. In the third quarter of last year, the blended farming cost was EUR 4.59 (USD 5.24) per kilogram.

Operational EBIT in its Consumer Products segment in Q4 2020 was EUR 26 million (USD 29.7 million), and EUR 8 million for its Feed division. These were down from Q4 2020’s EUR 35 million (USD 40 million) and EUR 14 million (USD 16 million), respectively.

Its reported financial net interest-bearing debt (NIBD) was approximately EUR 1.26 billion (USD 1.4 billion) at the end of the quarter.

Mowi’s complete Q4 2021 report will be released on 16 February, 2022.

Mowi said the operational EBIT was negatively impacted by EUR 8 million (USD 9.1 million) related to extraordinary mortalities in Canada East. This affected total margin in the quarter by EUR 0.07 (USD 0.08) per kilogram. An update from the company on 14 January revealed it lost more than 1.7 million fish in Eastern Canada in 2021, including 570,238 Atlantic salmon from its Deep Water Point site and 184,598 Atlantic salmon from the Little Burdock Cove site, as a result of a combination of sea lice pressure, treatments, and prolonged rough weather at site.

Separately, a die-off at a Marine Harvest Atlantic Canada site killed 489,000 fish at its Gorge farm in Newfoundland in September 2021, and in October, its farming sites in Little Bay, Chaleur Bay, and Friar Cove experienced mortalities of more than 210,000 salmon. Collectively, these issues – and the resulting “disappointing” quarter it faced financially – pushed the company to delay a planned expansion of its salmon farming in Newfoundland.

In Western Canada, the company has also struggled to maintain operations as a result of the provincial government of British Columbia’s December 2020 decision to cancel salmon-farming licenses in the Discovery Islands. Mowi said the move eliminated 30 percent of its production in the area and forced it to shutter its Dalrymple salmon hatchery near Sayward, British Columbia. On Monday, 17 January, Mowi Canada West announced it will close its fish-processing plant in Surrey, British Columbia, as a further result of the Discovery Islands permit cancelation. The 23,000-square-foot value-added processing plant, which opened in 2017 and employs approximately 80 people, will close in late March 2022, Mowi said.

“This is what happens when politics overrides science-based evidence,” Mowi Canada West Human Resources Manager Rupinder Dadwan said in a press release. “At the beginning of the pandemic, we were deemed an essential service providing our country affordable and healthy food, and now we’re forced to close our doors. Our federal government doesn’t have to do this – it can choose fairness and engagement over divisiveness and exclusion.”

Mowi said it will continue to perform primary processing for all its salmon grown in British Columbia at its plant in Port Hardy, Canada, and that it will supply its customers’ orders for value-added seafoods through its facilities located in the United States “until business certainty is restored in British Columbia.”

Photo courtesy of Mowi