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 and an operating profit of EUR230 million for the second quarter of 2024, indicating a strong financial performance.
- The company achieved seasonally record-high harvest volumes of 110,500 tonnes, aligning with their guidance and demonstrating operational efficiency.
- Mowi ASA (MHGVY) reported a decrease in realized blended farming costs, with expectations for further reductions due to higher harvest volumes and lower feed prices.
- The company is on track to achieve a milestone farming volume of 500,000 tonnes for the year, marking a significant growth of 5.3% year over year.
- Mowi ASA (MHGVY) has implemented successful cost-saving initiatives, realizing EUR22 million in annualized cost savings so far in 2024, well ahead of their target.
Negative Points
- The Canadian government's decision to ban net-pen salmon farming in British Columbia by 2029 poses a significant challenge, as this region has been a part of Mowi's operations.
- Mowi ASA (MHGVY) experienced lower price realization in the Americas due to the cost-of-living crisis, impacting salmon consumption and pricing.
- The company's net interest-bearing debt stood at EUR1.88 billion, exceeding their long-term debt target of EUR1.7 billion.
- Mowi ASA (MHGVY) faced challenges with soft prices and margins in the Americas, particularly affecting their operations in Chile and Canada.
- The company reported a decrease in operational profit for Mowi Norway due to lower price achievement, despite good biological performance.
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, seeing a turn in the cost curve. This is not a one-off but a lower cost situation driven by containing other cost items than feed. The reduction in feed prices is a main driver, and while we prefer not to specify the magnitude, we definitely see a cost reduction ahead.
Q: Can you comment on the biomass development in the quarter, particularly regarding growth in the sea?
A: Ivan Vindheim, CEO: We have never seen better growth at this time of year. July was particularly good with record-high harvest volumes and biomass. While we remain cautious due to the biological nature of the industry, the year has been positive apart from the start, and we hope to maintain this momentum.
Q: What are the implications of the Canadian government's decision to ban net-pen farming in British Columbia?
A: Ivan Vindheim, CEO: The decision is regrettable, given the sustainable history of salmon farming in the region. However, this area has not been particularly profitable for Mowi, contributing only 4% of farming volumes and 1% of total profit. We are conducting a strategic review to explore our options.
Q: How did Mowi's European and American salmon prices and margins compare in Q2?
A: Ivan Vindheim, CEO: European salmon prices and margins were strong, while American prices lagged due to muted demand from the cost-of-living crisis. We expect American salmon consumption to gradually recover as Western economies improve and retail prices fall.
Q: What is the outlook for Mowi's farming volume growth and industry supply?
A: Ivan Vindheim, CEO: We reiterate our farming volume guidance of 500,000 tonnes for the year, marking a 5.3% growth, surpassing the industry's expected 1% growth. This growth is crucial as farming volumes are the mainstay of our business model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
