Mowi ASA Earnings Call: Record Harvests Amid Challenges

Mowi ASA ((MHGVY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Mowi ASA’s recent earnings call painted a picture of strong operational achievements, tempered by some challenges. The company celebrated record harvest volumes and successful cost reduction strategies, alongside notable achievements in its Consumer and Feed divisions. However, challenges such as soft market prices and biological issues in certain regions did impact profitability. Overall, the sentiment was slightly more positive than negative, reflecting a company navigating both successes and hurdles.

Record High Harvest Volumes

Mowi achieved record high harvest volumes of 166,000 tonnes, slightly exceeding their guidance. This milestone contributed to operating revenues of EUR 1.39 billion, showcasing the company’s ability to exceed expectations and drive substantial revenue growth.

Cost Reduction Achievements

The company reported a stable weighted realized production cost quarter-over-quarter, with a 5% year-over-year decrease. This resulted in a EUR 50 million reduction in P&L costs year-over-year and EUR 126 million year-to-date, highlighting Mowi’s effective cost management strategies.

Successful Nova Sea Acquisition

Mowi completed the acquisition of Nova Sea, which is expected to generate synergies of EUR 34 million. This acquisition has led to an increase in volume guidance from 545,000 tonnes to 554,000 tonnes for the year, indicating positive growth prospects.

Strong Consumer Products and Feed Performance

The Consumer and Feed divisions delivered robust results, with Consumer Products achieving record-high earnings and the Feed division reporting a quarterly record high operational EBITDA of EUR 26 million. These performances underscore the strength of Mowi’s diversified operations.

Positive Price Performance

Mowi’s price performance was 15% above the reference price, driven by a favorable contract share and contract prices that surpassed the prevailing spot price. This positive price performance provided a buffer against the challenges of soft market prices.

Soft Market Prices

Despite the company’s successes, the quarter was marked by soft market prices, with prices falling below industry costs. This resulted in an operational profit of EUR 112 million, reflecting the impact of market conditions on profitability.

Biological Challenges in Canada

Mowi’s Canadian operations faced significant biological challenges, including high sea temperatures and sea lice issues, leading to a loss of EUR 31 million. This highlights the environmental challenges that can impact aquaculture operations.

Loss in Iceland Operations

Arctic Fish in Iceland reported a loss of EUR 6 million due to low prices and high costs, although biological conditions were developing well. This indicates potential for future improvement despite current financial setbacks.

Forward-Looking Guidance

Looking ahead, Mowi has revised its farming volume guidance to 554,000 tonnes for 2025, representing a 10.5% year-over-year growth, with a further increase to 605,000 tonnes expected in 2026. The company anticipates stable production costs and continued volume growth, supported by strategic investments and increased postsmolt production. Mowi also announced a quarterly dividend of NOK 1.50 per share, reflecting confidence in its financial position.

In summary, Mowi ASA’s earnings call highlighted a company achieving significant operational successes while navigating market and environmental challenges. With strong harvest volumes, effective cost management, and strategic acquisitions, Mowi is poised for continued growth, despite the hurdles posed by soft market prices and biological issues. The forward-looking guidance suggests optimism for future performance, supported by strategic investments and operational efficiencies.