The consensus estimate amongst the investment banks is an EBIT of €149 million for the salmon giant in the recently concluded third quarter. Pareto Securities is somewhat below consensus, with its estimate of €136 million.
“We expect good volumes and a decent margin in Norway, but a weaker result in the UK and a new weak quarter in Canada will contribute negatively,” wrote analyst Carl-Emil Kjølås Johannessen in a ‘preview analysis’ sent to Pareto’s customers on Thursday morning.
High costs
“We expect an all-inclusive margin of €1.2/kg, with Norway contributing a margin of €1.4/kg, but weaker margins of €0.9/kg in the UK and €0.5/kg in Canada will adversely affect. Higher cost on harvested sites is the reason for the weaker UK result, while the extraordinary mortality in Canada will lead to another weak margin in this region,” he continued.
“Longer term we continue to expect improvements in Canada, especially for the Newfoundland operation. We are currently in line with consensus on 21e and 22e EBIT.”
Improvement
The Pareto analyst therefore expects a sharp improvement in operating profit. On an annual basis, a trebling of EBIT is expected from 2020 levels by 2023. Similarly, a quadrupling is expected, from €0.49 to €1.06 in annual cash dividend per share over the same period.
Good news notwithstanding; Pareto thinks the share is close to full price, and has a Hold recommendation with a price target of NOK 225.
On Thursday morning, Mowi shares are trading at NOK 221.
