Work taking place at a Mowi site in Scotland. The Scottish operation harvested more fish in Q4 2019 than in the same period the year before, but lower prices and biological costs lowered operational EBIT by around €10m. Photo: Mowi.

€10.7m mortality loss dents Mowi Scotland earnings

Mowi Scotland had an increased harvest in the final quarter of last year compared to the same period in 2018, but lower prices and costs associated with biological problems reduced earnings.

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Higher smolt stocking and early harvesting led to a harvest of 14,003 gutted weight tonnes of salmon in the quarter (Q4 2018: 11,771 gwt), the company said in its Q4 2019 report.

However, operational EBIT was €17.4 million (€27.3m) and EBIT was €27.6m (€39.4). Operational EBIT per kilo dropped to €1.24 from €2.32.

Seawater temperatures

Mowi said the effect of higher harvest volumes was offset by higher costs and lower prices and allocated margins from sales and marketing compared for Q4 2018.

“The biological situation in our Scottish farming operations was challenging in the fourth quarter,” stated Mowi. “Seawater temperatures declined slower than usual due to the mild weather and sea lice levels were higher compared with the fourth quarter of 2018.

“Several farms experienced biological issues. Incident based mortality losses amounted to €10.7m related to Pasteurella Skyensis, PD and treatment losses (€0.4 million in the fourth quarter of 2018). Production has been lower than in the fourth quarter of 2018 due to early harvest.”

Mowi made an operating EBIT of -€8.7m in Canada in Q4. Graphic: Mowi.

Lower prices

In Canada, Mowi reported an operating EBIT of -€8.7m (€17.4m), the equivalent of -€0.53 per kilo (€1.42 per kg).

The loss occurred despite an increased Q4 harvest of 16,246 gwt (12,239 gwt).

Mowi blamed significantly reduced prices and costs 9% higher than in Q4 2018 for the disappointing results.

Maturity issues

“The combined price achievement for our Canadian operations was 15% below the reference price in the fourth quarter of 2019 (2% below in the comparable quarter),” said Mowi.

“Price achievement was negatively impacted by biological challenges in Canada East and some maturity issues in Canada West.”

In Canada West, incident-based mortality costs of €1.4m were recognised in relation to an escape caused by an electrical fire (€0.9m in Q4 2018).

In Canada East, costs per kg increased significantly on harvesting from sites with a high cost level and negative scale effects from lower volumes following the mass morality incident on Newfoundland in the third quarter, when 2.6 million fish died in unusually warm conditions.

Production in Canada West was at the same level as in Q4 2018, but production in Canada East was negatively impacted by lower seawater volumes.

Mowi Ireland's Q4 results. Graphic: Mowi.

Lower harvest

In Ireland, which produces organic salmon, operational EBIT per kilo jumped from €2.45 in Q4 2018 to €3.34 in the same period last year, although reduced a harvest volume of 1,127 gwt (1,615 gwt) meant operational EBIT fell slightly from €4m to €3.8m.

In the Faroes operational EBIT amounted to €3.8m (€7.1m), which was €1.63 per kg (€1.62 per kg). The main reason for reduced operational EBIT was a lower harvest volume of 2,345 gwt (4,356 gwt).

Globally, Mowi’s turnover and harvest volumes in Q4 and for 2019 were record highs for both a fourth quarter and a full year.

Harvest volume in Q4 reached 116,314 gwt, and the volume for 2019 was 435,904 tonnes.

Operational EBIT in Q4 was €165.7m (€213m) and operational EBIT for 2019 was €4,135.4m (€3,814.5m).