Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mowi ASA (MHGVY, Financial) recorded EUR1.34 billion in operating revenues in Q2 2024, translating into an operating profit of EUR230 million.
- The company achieved seasonally record-high harvest volumes of 110,500 tonnes, in line with guidance.
- Mowi ASA (MHGVY) saw a drop in realized blended farming costs from EUR6.05 per kilo in Q1 to EUR5.84 per kilo in Q2.
- The company expects further cost reductions in Q3 due to higher harvest volumes and lower feed prices.
- Mowi ASA (MHGVY) reiterated its farming volume guidance of 500,000 tonnes for the year, marking a significant milestone.
Negative Points
- Price realization was mixed, with lagging prices in America due to the cost-of-living crisis and downgrades in Norwegian salmon.
- The Canadian government decided to ban farming in net-pens in British Columbia from July 1, 2029, impacting future operations.
- Mowi ASA (MHGVY) faced soft prices and margins in the Americas, particularly affecting Mowi Chile and Mowi Canada.
- Net interest-bearing debt stood at EUR1.88 billion, above the long-term target of EUR1.7 billion.
- Operational profit and margins for Mowi Norway were substantially down year-over-year due to lower price achievement.
Q & A Highlights
Q: Can you elaborate on the cost development in Q2 and provide comments on the outlook for cost reduction?
A: Kristian Ellingsen, CFO: We are very satisfied with the cost development. We have seen a turn in the cost curve, particularly in the cost to stock in biomass. This is driven by our ability to contain other cost items besides feed and a reduction in feed prices. While we prefer not to go into specifics, we definitely see a cost reduction ahead.
Q: Can you comment on the biomass development in the quarter?
A: Ivan Vindheim, CEO: We have seen record-high growth in biomass for this part of the year, with July being particularly strong. Despite the challenges at the start of the year, the overall biological KPIs have been good. We remain cautious and humble, as biology can be unpredictable.
Q: What is the impact of the Canadian government's decision to ban net-pen farming in British Columbia?
A: Ivan Vindheim, CEO: The decision is regrettable and driven by political agendas rather than facts and science. This region has never been particularly profitable for Mowi, contributing only 4% of farming volumes and 1% of total profit. We are undertaking a strategic review to explore our options.
Q: How did Mowi's different regions perform in Q2?
A: Ivan Vindheim, CEO: Mowi Norway had an operational profit of EUR149 million, while Mowi Scotland delivered EUR44 million. Mowi Chile and Mowi Canada faced softer prices, resulting in lower profits. Mowi Ireland and Mowi Faroes had strong quarters with good biological performance.
Q: What are the expectations for salmon consumption in the Americas?
A: Ivan Vindheim, CEO: Despite short-term headwinds, we expect salmon consumption in the Americas to gradually pick up as retail prices fall and Western economies recover. The market remains tight, and we anticipate a return to growth trends.
Q: Can you provide more details on Mowi's cost-saving initiatives?
A: Kristian Ellingsen, CFO: Since 2018, we have realized EUR307 million in total cost savings, with EUR207 million in farming. This includes initiatives in areas like boats, treatments, health, nets, automation, productivity, and procurement. We have also achieved an 18% productivity increase on FTEs since 2019.
Q: What are the key financial figures for Q2?
A: Kristian Ellingsen, CFO: Mowi recorded EUR1.34 billion in operating revenues and an operational profit of EUR230 million. Net interest-bearing debt was EUR1.88 billion, and the equity ratio was 48%. Underlying earnings per share were EUR0.30, and return on capital employed was 16%.
Q: How is Mowi addressing sustainability?
A: Kristian Ellingsen, CFO: Mowi has strong ratings from various rating agencies and has been recognized by TIME Magazine for our sustainable practices and AI-driven underwater sensing and analysis. We are committed to sustainable salmon farming and continue to make strides in this area.
Q: What is the outlook for Mowi's farming volumes?
A: Ivan Vindheim, CEO: We reiterate our farming volume guidance of 500,000 tonnes for the year, marking a 5.3% growth year-over-year. This is a milestone for Mowi and surpasses the industry's expected growth of 1%. Farming volume growth remains the mainstay of our business model.
Q: How did Mowi's consumer products and feed divisions perform in Q2?
A: Ivan Vindheim, CEO: Consumer products had an operating profit of EUR25 million, down from EUR37 million last year due to a slower market in the Americas and tighter margins in Europe. Mowi Feed had a strong quarter with seasonally record-high sold volumes of 132,000 tonnes and an operational EBITDA of EUR11 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
