Investment banks expecting major cost cuts at Mowi

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The last six months’ low salmon prices place higher demands on cost efficiency.

At the end of August, Mowi CEO Ivan Vindheim announced cost reduction and downsizing goals. In the company’s Q420 trading update, in plain text, the need for cost cuts appeared: The company lost money in three out of six production regions.

In the wake of the current trading update, Carnegie writes that the consensus for 2021-2022 assumes significant cost improvements and that today’s figures provide limited comfort. This will undoubtedly be the focus of the fourth quarter report as the brokerage firm believes consensus seems to be too high, reported TDN Direkt.

Mowi reported that the company has production costs per kilo of harvested fish of EUR 4.28. This is in line with the spot price for salmon so far in 2021.

Analysts expect Mowi will not pay a dividend for Q4, but that the company will re-introduce dividends from the first quarter of 2021. Sparebank 1 Markets is in with a dividend of NOK 2 per share in the first quarter.

Pareto Securities will reduce its 2021 estimates by around four per-cent after the report, to reflect on the weaker margins in the Americas and Norway.

“We are also lowering the salmon farming margin for Norway in the first half of the year, due to higher costs per kilo. We are making limited changes to 2022 estimates, as we still expect the company to improve margins going forward,” the investment bank wrote.

Mowi’s share price fell 0.7 per-cent, on a marginally negative Stock Exchange, on Monday morning.