Record Q3 revenues for Mowi, but concerns remain over potential farming tax

A good farming performance and high salmon prices led Mowi to achieve its best-ever third-quarter results this year, with revenues of almost EUR 1.26 billion (USD 1.2 billion) and an operational profit of EUR 239.5 million (USD 234.7 million).

The Bergen, Norway-headquartered producer’s Q3 2022 report acknowledged that while another set of operational and financial records had been set, the period was “overshadowed” by the Norwegian government’s proposed resource rent tax of 40 percent on salmon farming, which rises to 62 percent when corporate tax is included.

“The aquaculture industry is of great importance for the future of Norway, and it is in the nation’s best interests to see it grow. However, a tax rate of 62 percent will put an end to most of the many significant investment plans along the Norwegian coast, leading not only to reduced local employment levels now and in the future, but also to a massive diversion of funds away from coastal communities,” Mowi CEO Ivan Vindheim said.

Until an agreement is reached on a more viable framework for the industry, Mowi has put all new structural investments in Norway on hold, according to Vindheim. That includes its cancelation of an acquisition of 914 MT maximum-allowed biomass for a total value of NOK 183 million (USD 16.9 million, EUR 17.3 million) in a decision announced 4 October.

“Mowi is a global company and salmon farming is not bound by geography – it can take place in sea and on land anywhere in the world, close to its major markets. If the proposal for 62 percent tax is approved by parliament, Norway stands to lose its leading position within aquaculture to other countries,” Vindheim said.

Mowi’s operational EBIT of EUR 239.5 million in the period was up on the EUR 130.5 million (USD 127.9 million) reported for the corresponding quarter of 2021, while the operational revenue was up EUR 223 million (USD 218.6 million) year-on-year.

Its total harvest volume in the quarter was 133,808 metric tons (MT) gutted-weight salmon, compared with 117,115 MT in Q3 2021, and slightly above its previous guidance of 131,000 MT.

In Norway, the group’s largest and most-important farming region, Mowi produced 87,415 MT of salmon (compared with 71,024 MT in Q3 2021), while its operations in Scotland contributed 14,494 MT, Chile 16,890 MT, Canada 11,115 MT, Ireland 2,165 MT, and the Faroes 1,730 MT.

The full-year 2022 harvest guidance is unchanged at 460,000 MT. Next year, Mowi expects to harvest 470,000 MT, despite a 16,000 MT volume reduction in Canada – partly due to the loss of licenses in Canada’s Discovery Islands as part of the Canadian government’s decision to phase out salmon farming there.

In regard to its business segments, Mowi Farming’s perfomance was good in the quarter due not only to strong prices and record-high volumes, but also because of relatively stable farming costs compared with the previous quarter, the company said. It was further helped by salmon prices in Europe rising 30 percent compared with Q3 2021. In the United States, prices varied, increasing by 1 percent in Miami and declining by 11 percent in Seattle.

“I am pleased that our farming operations experienced good growth performance in [the] sea with improved production and feed-conversion ratio, clear evidence that the organization continues to deliver good biological results. Mowi’s relentless focus on farming volume growth, cost leadership, and superior sustainability credentials continues unabated,” Vindheim said.

Mowi’s Consumer Products segment delivered a record-high operational profit of EUR 30 million (USD 29.4 million) in the quarter, based on solid operational performances across Mowi’s processing plants in Europe, the Americas, and Asia, the company said.

“Salmon normally fares well in challenging economic times and overall retail demand has so far continued to develop favorably. We expect the retail channel to continue to grow in the years ahead supported by unlocking the value potential in salmon as a value-added product,” Vindheim said.

It was also the best-ever quarter for Mowi’s Feed business, with earnings of EUR 14.9 million (USD 14.6 million), and a record-high production of 149,898 MT alongside sales of 169 484 MT.

The report also confirmed that Mowi has entered into an agreement to buy a 51.28 percent stake in Icelandic salmon farmer Arctic Fish.

“The acquisition follows our strategy to grow farming volumes and completes our geographical farming footprint. Icelandic salmon volumes are expected to grow significantly in the years to come, and Arctic Fish is well-positioned to take part in this growth journey,” Vindheim said.

Photo courtesy of Mowi