The fourth quarter concluded another record year for Mowi, which closed in 2023 with records in harvest volumes, revenues, and operating profits.
Photo: Mowi.
The results of Q3 and its latest trading update already pointed to this, and it has come true. "The fourth quarter concluded another record-breaking year for Mowi." The Norwegian salmon giant's first record has been harvest volumes: Mowi harvested 475,000 tons last year. Following on from that, it also posted record revenues of EUR 5.5 billion (USD 5.9 billion) - of which EUR 1.43 billion (USD 1.53 billion) in Q4 - and finally, the company also posted a record operating profit of EUR 1.02 billion (USD 1.1 billion), despite a 15% drop in EBIT in the last quarter of the year compared to 2022.
Pleased with these historic results, Mowi CEO Ivan Vindheim recognized the value of the work of all the company's employees in achieving them. "I am extremely grateful for the hard work and dedication of my 11,500 colleagues around the world that has led to record results and stellar performance in Mowi’s three business areas – farming, consumer products and feed – in 2023," he stated.
Norwegian salmon farmer recognizes that volume growth throughout the value chain is one of its strategic pillars. As mentioned, 2023 marked another good year for them with record-high harvest volumes of 475,000 tons of salmon (129,234 tons in Q4). This figure represents growth of 2.4% for Mowi while global supply is contracting by 2.5%.
"As recently as 2018, harvest volumes were 375,000 tonnes, hence we will have grown our farming volumes by as much as 125,000 tonnes by 2024. This is equivalent to annual growth of 4.9% versus a projected growth rate for the industry of 2.9%. This is mainly organic growth, and Mowi still has further organic growth initiatives that are expected to contribute to additional volume growth, of which the most important one is perhaps the post-smolt programme we launched at our Capital Markets Day in 2021, " Vindheim said.
The company, which maintains its forecast harvest volume for 2024 at 500,000 tons, noted that by the end of 2024, its post-smolt capacity will be almost 40 million, equivalent to approximately 25% of the group's total smolt. Specifically in Norway, its share of post-smolt will be approximately 50% if the naturally more resilient Northern Region is excluded from the equation. The company expects this to increase license utilization and further enhance its sustainability credentials through reduced offshore production time and improved survival rate.
Regarding sustainability, in 2023 Mowi was ranked as the 'most sustainable animal protein producer' in Coller FAIRR Protein Producer Index for the fifth time. At today's results presentation, when asked about the specific situation in Iceland - where the company owns a subsidiary, Arctic Fish, and a large part of the population is against salmon farming in open net pens because they consider it is not sustainable production -, the CEO was not concerned.
"We think what we do is making the world better, you are powering the green shift so, at the end of the day, I believe reason will prevail everywhere, also in Iceland. So, personally, I'm not afraid of that," he stated.
The general increase in costs and seasonal biological problems, aggravated by El Niño, have caused the farming segment to show mixed results in Mowi's various operations.
Photo: Mowi.
In terms of revenues, Mowi broke its own record in 2023. As noted above, they reached EUR 5.5 billion (USD 5.9 billion). In the fourth quarter, revenues were EUR 1.43 billion (USD 1.53 billion) compared to EUR 1.36 billion (USD 1.45 billion) in the same quarter of 2022. Full-year operating profit also set a record at EUR 1.02 billion (USD 1.1 billion), however, the company suffered a slight setback in its Q4 EBIT, which was EUR 203 million (USD 217 million), compared to EUR 238 million (USD 255 million) last year, a decline of 15%.
The company justified this by the general increase in costs and seasonal biological problems, aggravated by El Niño, which have caused the farming segment to show mixed results in the company's various operations in Norway, Scotland, Chile, Canada, Ireland, Faroe Islands, and Iceland. Moreover, in the specific case of Norway, it acknowledged that the weakness of the Norwegian krone continues to weigh on profits.
Furthermore, apart from the currency effect, in Q4 in Norway, Mowi faced the culling of 2.1 million small fish in the Northern region due to the detection of pancreas disease, which had an impact of EUR 13 million (USD 13.94 million). Fish health problems also affected Scotland, where both biological and financial results for the quarter were negatively impacted by gill health issues following El Niño, record temperatures in the southwest, and water quality problems. Harvest was minimal, although by the end of the year an improvement was seen, and mortality and growth levels returned to normal.
On the contrary, in Chile the quarter was strong from a biological point of view and record volumes were achieved. "Come out well so far on seasonal harmful algae blooms," the company noted in its results presentation. Despite all this, weak prices caused a decline in operating EBIT in the South American country. This also affected Canada, although in this case, the price weakness was compounded by low volumes. Nevertheless, it was a good quarter from a biological point of view for both Canada West and Canada East.
Likewise, Mowi reported there was virtually no harvest in Ireland, although also noted the biology is reasonably good again. Last one was "a recovery year after a biologically challenging 2022." Meanwhile, in the Faroe Islands, the company declares 2023 as "a very good year for Mowi Faroes," where profits improved thanks to strong biology, higher volumes, higher prices, and a year-on-year improvement in costs.
Finally, on its Icelandic subsidiary, Arctic Fish, the company said that both operating results for the quarter and the year were affected by a difficult autumn with sea lice problems. Mowi is already looking ahead to 2024, where it intends to focus on "establishing a streamlined and profitable operation." So far this year, the biology has improved and there is reasonably good growth at sea.
Mowi corner in the Spanish supermarket El Corte Inglés. 2023 was also a record year in terms of consumer products for the Norwegian salmon farmer.
Photo: Mowi.
With regard to consumer products, Q4 was once again a solid quarter for Mowi, which in its results presentation speaks of "an outstanding 2023." Thanks to strong consumer demand the company was able to set new records both operational - volumes of 232,000 tonnes of product weight - and financial - EUR 152 million (USD 163 million) -.
"These are impressive results, and I think it is fair to say that Consumer Products’ relentless focus on operational excellence over the past few years has really started to pay off," said Ivan Vindheim.
Similarly, Mowi Feed also performed well in the fourth quarter and can celebrate its best year to date with an operating EBITDA of EUR 52 million (USD 55.8 million). "Volumes produced in Norway reached the impressive milestone of 405,000 tonnes for the full year following strong growth in sea and consequently good feed demand," CEO said. The total amount of feed sold in 2023 reached 523,000 tons.
Mowi, which in the presentation remarked last year it fulfilled its three operational pillars - volume growth, cost competitiveness, and sustainability - has also announced that, following these good results, the Board of Directors has decided to pay a quarterly dividend of NOK 1.90 per share (EUR 0.16 - USD 0.17). The scheduled payment date is March 4, 2024.
