Mowi ASA ((MHGVY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Mowi ASA’s recent earnings call painted a picture of resilience and strategic foresight, marked by strong sales and profit achievements despite facing industry-wide challenges. The company demonstrated robust cost management and operational efficiency, particularly in its Consumer Products and Feed divisions. However, the quarter was not without its hurdles, as Mowi contended with price pressures due to high supply growth and operational challenges in its Canadian and Arctic operations. Nevertheless, Mowi’s increased volume guidance and cost control measures suggest a positive outlook moving forward.
Record-High Sales and Operational Profit
Mowi ASA reported seasonally record-high sales of EUR 1.39 billion and an operational profit of EUR 189 million, driven by record harvest volumes of 133,000 tonnes, marking a 21% increase year-over-year. This impressive performance underscores Mowi’s ability to capitalize on market opportunities and optimize its operational capabilities.
Strong Cost Management
The company achieved significant cost savings, contributing EUR 49 million to quarterly earnings and EUR 67 million year-to-date. Mowi’s production costs were reduced by EUR 0.45 year-over-year to EUR 5.39 per kilo, showcasing the company’s effective cost management strategies.
Impressive Performance of Consumer Products and Feed Divisions
Mowi’s Consumer Products division reported an operational profit of EUR 52 million, more than doubling from the previous year, while the Mowi Feed division achieved a seasonally record-high operational EBITDA of EUR 40 million. These results highlight the strong market demand and operational efficiency within these segments.
Increased Farming Volume Guidance
Mowi increased its farming volume guidance from 530,000 tonnes to 545,000 tonnes for the year, with expectations of harvesting at least 600,000 tonnes next year. This upward revision reflects Mowi’s confidence in its operational capabilities and market positioning.
Pressure on Prices
The industry faced seasonally record-high supply growth of 18% year-over-year, which exerted pressure on prices throughout the quarter. This challenge underscores the competitive nature of the market and the need for strategic pricing and supply management.
Challenges in Mowi Canada
Mowi Canada reported a decline in operational profit from EUR 7 million to EUR 2 million year-over-year, affected by seasonal issues such as algae and low dissolved oxygen levels. These challenges highlight the environmental and operational hurdles faced by the company in this region.
Negative Profit in Arctic Fish Operations
Arctic Fish reported a negative operational profit of EUR 5 million due to low harvest volumes and soft prices, despite reasonably good biological performance. This segment’s performance reflects the volatility and challenges in the Arctic region.
Forward-Looking Guidance
Mowi’s forward-looking guidance for fiscal year 2025 includes an anticipated 10% growth in farming volumes next year, with a target of 600,000 tonnes. The company also declared a quarterly dividend of NOK 1.45 per share and reported a net interest-bearing debt of EUR 1.90 billion. With an underlying earnings per share of EUR 0.25 and an annualized return on capital employed at 13.3%, Mowi is poised for continued growth and financial stability.
In conclusion, Mowi ASA’s earnings call reflects a company that is navigating industry challenges with strategic acumen and operational efficiency. While facing price pressures and regional operational challenges, Mowi’s strong sales, cost management, and increased volume guidance provide a positive outlook for the future.