Mowi drops dividend: “Our earnings are impacted by falling prices as a result of lower net demand”

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Salmon giant’s results in the third quarter were largely impacted by Covid-19 restrictions and seasonal high volumes. Global supply growth in 2021 is expected to be 1 per-cent.

Last month it was reported that Mowi’s Q3 EBIT was down 45 per-cent, EUR 80 million compared with EUR 148 million to the corresponding quarter.

Pandemic still impacts
“Our operations have been running close to normal despite further Covid-19 restrictions in the quarter. However, the pandemic still impacts out of home consumption to a large degree, and although retail sales are strong, our earnings are impacted by falling prices as a result of lower net demand,” said Mowi CEO Ivan Vindheim in an Oslo Stock Exchange announcement.

Mowi reported operational revenues of EUR 958 million (EUR 1 023 million) in Q3. Total harvest volume in the quarter of 125,773 tonnes compared to 116,989), which was in line with guidance. Full-year harvest guidance for 2020 is unchanged at 442,000 tonnes. Harvest guidance for 2021 is 445,000 tonnes.

Lagging

“I am very pleased that both Farming, Feed, and Consumer Products delivered all-time high quarterly volumes. Mowi’s integrated value chain has yet again demonstrated its strength during these unprecedented times. It is also encouraging to see that farming production cost has improved,” said Vindheim.

“Mowi’s farming volumes have over the past few years been subject to significant growth. However, over time the company has been lagging somewhat behind the industry’s farming volume growth trajectory. Accordingly, Mowi will put even more focus on growing farming volumes going forward. Further to this, Mowi will arrange a Capital Markets Day on 17 March 2021 where this will be addressed in detail,” wrote Mowi.

Preserve cash
“Global supply growth in 2021 is expected to be 1 per-cent and would under normal circumstances be very supportive of strong salmon prices. Whilst Covid-19 has significantly impacted the salmon market and prices in the short-term, we still strongly believe in the positive long-term outlook for the industry, and for Mowi in particular,” added Vindheim.

Mowi wrote that “distributing dividends to its shareholders is an essential part” of its financial strategy.

“At the same time, the board considers it of utmost importance to preserve cash and maintain a strong financial position, particularly in light of the ongoing Covid-19 pandemic. Hence, under the prevailing circumstances the Board has not found it appropriate to distribute a quarterly dividend for the third quarter,” it added.