"More salmon means more raw material for our 20 secondary processing plants around the world," said Mowi's CEO. In the picture, Mowi salmon ready for the Spanish market.
Photo: Mowi.
The world's largest salmon producer wants to stay that way. At its Capital Markets Day yesterday, Mowi presented its plans for continued volume growth of 20% in its farming division - from 500,000 tons to 600,000 tons - as well as further cost improvements in the order of EUR 300-400 million (USD 334-446 million). And it aims to achieve this by 2029, over the next five years.
"After reaching a milestone 500,000 tonnes of salmon harvested in 2024, we are now looking ahead to the next milestone of 600,000 tonnes which we aim to fulfil in 2029," said Ivan Vindheim, CEO of Mowi, who added: "It is imperative for Mowi to be the cost leader throughout the value chain."
Its strategy involves heavy investment in post-smolt, but also the digitalization and automation of its operations. The company said it is closely watching the development of new technologies and will adopt them in due course. Moreover, the salmon giant also does not rule out growth through selective acquisitions that fit into its operating strategy.
From the 375,000 tons of salmon it produced in 2018, Mowi has moved to an expected 500,000 tons in 2024, an increase of 33%. Now, it plans to continue that trend and, according to its CEO, it will do so by better-utilizing licensing capacity, while improving productivity and biological performance of existing production through its investment in post-smolt.
"We have grown faster than the rest of the industry in recent years, and our goal is to continue to do so in the future. By releasing more smolt and increasing our use of post-smolt we will be able to harvest 600,000 tonnes of salmon in 2029 thereby reinforcing our position as the world’s top producer of Atlantic salmon," Vindheim explained.
The company claimed the continued growth of its farming operations will in turn drive growth in its other two divisions, Consumer Products and Feed. As Vindheim continued explaining, the rest of the supply chain will grow in line with farming going forward.
"To produce more salmon we need more feed, and more salmon means more raw material for our 20 secondary processing plants around the world," he continued. Some have already started to increase their capacity, such as the one in Zaragoza, Spain.
As part of its Capital Markets Day, Mowi also said that over the next five years, it estimates revenue growth of 7-8% per year, resulting in revenues of EUR 8.5 billion (USD 9.4 billion) in 2029, compared with EUR 5.5 billion (USD 6.1 billion) in 2023.
While it is and will continue to be focused on sea-based salmon farming and related technology, the company has acknowledged that it is closely watching developments in other technologies and is prepared to adopt them "as and when the time is right and they show themselves to be profitable." Likewise, as long as they fit into its operating strategy, Mowi is also looking to grow through selective acquisitions.
After volume growth, cost reduction is the second pillar of Mowi's strategy for the next five years. Its ambitious cost improvement plan to reduce costs by EUR 300-400 million (USD 334-446 million) will continue the one it already launched in 2018.
Since then, the company has already saved more than EUR 300 million (USD 334 million) through 1,700 different initiatives, but as mentioned above, its CEO considers it imperative that the company be the cost leader throughout the value chain.
"Today we are best or second best on cost in all the regions where we farm salmon, and we are also ahead in our downstream operations. However, in a world where our input costs are always increasing, and more and more is being demanded of us, we cannot rest on our laurels – cost improvements are more important than ever. We therefore plan to strengthen our position through a series of new measures, both biological and more general, through which we will cut EUR 300-400 million in the next five years," said Ivan Vindheim.
In addition to the company's investment in post-smolt and the improvements in biological performance this brings, Mowi's digitalization and automation strategy is also central to its plans, as it has been in recent years.
"We launched Mowi 4.0 in 2021 and since then have invested heavily in a range of measures to introduce greater efficiency and automation across our value chain," Vindheim explained. "We are already seeing the positive impact this has had on sustainability, productivity and cost reduction, and we expect to reap further benefits in the years to come."
Sustainability is the third and final pillar of Mowi's strategy. Ranked as the world's most sustainable animal protein producer for the fifth consecutive year in the prestigious Coller FAIRR Protein Producer Index, earlier this year TIME magazine also listed Mowi as one of the 500 Most Sustainable Companies by 2024, highlighting its corporate responsibility and sustainable practices.
"Sustainability is a central theme all across Mowi's value chain. That said, there is a particular focus on fish health and conditions in sea at this time. Mowi is investing heavily in post-smolt and Smart Farming solutions to improve fish health and survival rates," Vindheim said.
Norway's salmon giant explained that the release of larger smolt to the sea leads to increased productivity, higher survival rates, and generally better fish welfare. Next year, 25% of Mowi smolts will be post-smolt. In the relevant regions in Norway, as many as 50% of all smolt released will be post-smolt in 2025, rising to 75% by 2029.
"All indications are that releasing larger and more robust smolt to sea can increase survival rates by up to 50%, and reduce the number of lice treatments in certain areas by 40%," Mowi's CEO explained. Ivan Vindheim added that so-called Smart Farming also has a positive effect on fish welfare.
"We are continuing to roll out our Smart Farming concept in Norway, meaning we are able to monitor far more closely each salmon's behaviour and wellbeing, and can implement more targeted measures much faster than in the past. With the large numbers of sensors now installed at our many farming sites up and down the coast, we now have enormous quantities of data at our fingertips giving us growing insight and knowledge of our salmon and the conditions in sea in real time," he added.
Mowi's CEO acknowledged that one of the factors underpinning the industry's success has been and will continue to be the high consumer demand for salmon. Although some analysts such as Norwegian Seafood Council seafood analyst Paul Aandahl believe that, speaking specifically about Norway's salmon exports, the market trend is uncertain, from its global perspective, Mowi expects demand growth to continue to outpace supply growth over the next five years.
"The megatrends that in part are driving demand are stronger than ever. The trend for healthy living, increasing demand for sustainable proteins and not least the unique universal appeal of salmon make our product the natural choice for a steadily growing number of consumers," Ivan Vindheim said.
"We constantly strive to improve and develop our products to keep up with consumers' changing habits and tastes. Through our MOWI brand we aim to transform the way salmon is sold," he added.
At the same time, Mowi's CEO also acknowledged that salmon is still sold primarily as a commodity in a highly competitive market, so it is essential for the company to be a cost leader in a potential downstream market as well.
"Our Smart Factory concept is therefore extremely important for our more than 30 factories worldwide. Our target is to cut EUR 60 million (USD 67 million) of costs in this part of the value chain in the coming years," Vindheim concluded.
