In Mowi’s Q3 trading update, released on Wednesday, the company’s Norwegian farming assets performed strongly, offsetting weaker results in Chile, Canada, and Iceland.
The salmon farming giant recorded operational EBIT for the quarter of €203 million, and a total harvest came in at 135,000 metric tons, slightly below expectations, primarily due to softer margins outside of Norway.
Should these weaker areas be cause for concern?
SalmonBusiness spoke to Pareto Securities analyst Sander Lie to find out.
With an EBIT per kilo of €0.15, Iceland represented one of the least profitable regions for the Norwegian company. Nevertheless, the analyst expressed optimism about Iceland’s operations.
“Despite delivering results below expectations today, little has changed to the long-term story,” Lie told SalmonBusiness. “Harvest volumes are moving in the right direction and we expect costs to decrease as you get some scale on the operations.”
The Pareto Securities analyst pointed out that any higher costs in Iceland were likely non-recurring and associated with the start-up of a new harvesting facility. Meanwhile, the potential for growth within the North Atlantic country remains strong, especially when compared to more mature markets elsewhere such as Chile and Norway.
“Iceland is one of the few farming countries you can get some volume growth the coming years,” said Lie. “We see great potential in salmon farming in Iceland and argue that it might become an important export industry for the country.”
Lie also had positive expectations for Canada, anticipating improved performance in the coming quarter and into 2024.
“Over the summer, temperatures have been high and biology challenging,” Lie told SalmonBusiness. “Some issues with algae-blooms affected the results today, both through lower harvest and at high costs. We do, however, believe this will improve already in Q4 and moving into 2024.”
The analyst concluded by stating that while Mowi’s Q3 results fell below expectations, he saw no significant changes to the company’s long-term outlook.
