Mowi Asa

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Good morning everyone, both in the room and online, and thank you very much for joining us this morning in connection with the release and the presentation of MoE's second quarter results of 2025. My name is Ivan Windheim and I'm the CEO of MoE and together with our CFO Kristian Ellingsen. I will take you through the numbers and the fundamentals this morning and to the best of my and our ability add a few appropriate comments to them. And after the presentation, our IRO Kim Nøsvik will routinely host a Q&A session. For those of you who are following the presentation online, you can submit your questions or comments in advance or as we go along by email. Please refer to the website at movi.com for the necessary details. Disclaimer, I think we leave for self-study. So the pleasantries, the practicalities, and the disclaimer out of the way. I think we're ready for the highlights of the quarter. And to begin with, and on a general note, I think it's fair to say that the second quarter was like the first quarter characterized by well-supplied markets across the industry both in the northern and southern hemisphere driven by strong biology which led to seasonal record high industry supply in the quarter and an industry supply growth of as high as 18 percent year over year It is a number we haven't seen in many years. I think we have to go back to 2012 to see something similar. And this put, of course, pressure on the prices in the quarter. For MAUI, however, wrestling with prices was partly offset by seasonally record high harvest volumes of 133,000 tonnes in the quarter, which is up by as much as 21% year-over-year for our part, translating into seasonally record high sales of 1.39 billion euro and operation profit of 189 million euro. Further on that note, lower realized blended farming costs, i.e. weighted farming costs for seven farming countries, was significantly down in the quarter and contributed 49 million euro to earnings in the quarter and 67 million euro to earnings year to date, following the positive cost trend we have seen over the past few quarters. A measuring kilogram down by 45 euro cent year-over-year and 50 euro cent quarter-over-quarter to 5.39 euro per kilo in realized production costs in the second quarter. And an expectation of continued good cost performance in the third quarter on economies of scale in addition to improved biological metrics and lower feed costs in outstanding biomass. So all in all, another strong operational quarter for Mowi Farming, I would say, at least when it comes to the things we control ourselves, which are most definitely not the prices, which is where the shoe pinches this year. Carrying on are two other divisions, consumer products and feed. They also delivered strong quarters, I would say, with seasonally record high results. And in terms of our previously announced strategic review of the feed division, it's progressing, but beyond that, we will not comment any further on this this morning out of respect for the integrity of the process. And finally, as the last bullet point here reads, our board of directors has decided to distribute a quarterly dividend of 1.45 NOK per share after the second quarter. I think that does it for the highlights of the quarter. So then we move on to our farming volume guidance, which we have upped since last time we reported from 530,000 tonnes to now 545 tonnes. which is up from the 520,000 tonnes we guided for originally when we started this year. And this is equivalent to a growth of as high as 8.7% year over year. And next year, with NOVA-C on board, we expect to harvest at least 600,000 tonnes, and that translates to another 10% growth year over year. And finally, reaffirm our 2029 organic farming volume target of at least 650,000 tons. And this we will achieve through increased smolt stocking and by means of post-smolt. Because we have still unutilized license capacity in MoE and several other countries where we operate, and with post-smolt we can increase the productivity on licenses already in operation, which are to be set into operation. So, MoE's idiosyncratic growth continues unabated after the rather quiet 2010s, as for the latter due to a confluence of factors, which will not break up again today. So now, our farming volume growth is surpassing that of the wider industry and our listed peers by a large margin. Cementing our number one position in the market for the Atlantic is salmon. Then from the grand scheme of things to more specifically about the third, sorry, the second quarter and first tier key financial figures. Christian will go through all these numbers in depth and more later this morning. So it's not to be too repetitive. We will just touch briefly upon the most important ones now. And tournament profits, I think we skip as we have just been through them. So let's start with cash and net interest bearing debt. It stood at 1.90 billion euro at the end of the quarter. And we now see on board it would have been 2.48 billion euro with a corresponding performance equity ratio of 45%, indicating a sustainable debt level also post-closing of this transaction, which is pending the approval by the European competition authorities, which we expect to have in place sometime in the second half of this year. But as we have said previously, we will work with a new long-term debt target for Mowi post-closing of Nova the Sea. Furthermore, online earnings per share was €0.25 in the quarter, whilst annualized return on capital employed was 13.3%. And in terms of regional margins through the value chain, we will get back to every single one shortly, when we go through the different business entities. So I think we'll leave it at that for now. And instead, we'll move on to prices, which is the elephant in the room this morning. Because as we said initially this morning, the second quarter was like the first quarter, characterized by well-supplied markets following strong biology across the industry, both in the northern and southern hemisphere, which led to a seasonally record high industry supply in the quarter and industry supply growth of as high as 18% year over year. which is a number we haven't seen in many, many years, putting, of course, pressure on the prices in the quarter. And we're now at the time of year where high sea temperatures are translating into even higher industry supply, and hence putting further pressure on the prices. On a positive note, however, the number of individuals in C is now relatively stable year over year, indicating a normalization of industry supply growth next year, at a modest 1% according to our latest figures, which is down from 8% this year, and which under normal circumstances should pave the way for better prices. So now 2025 is just an anomaly and an exception to the limited supply growth we have seen in recent years and which we expect to see for a long time to come. And in which our entire growth strategy is grounded, I think it's fair to say. Then our own price performance in the quarter, which I will characterize as strong, as it was 11% above the reference price, which is the standard we like to hold ourselves to internally and against which we measure ourselves, as you can hear. positively impacted by a counter share of 24% in the quarter and counter prices above the prevailing spot price, unfortunately, in addition to good harvest weights and a high quality of our fish across the board, which are also important elements for good price performance. With that, I think we are ready to drill down into the different business entities, and we start as usual with Moe Norway, the locomotive of our business model. And if you take the numbers first, operation profit was 139 million euro for Moe Norway in the quarter, whilst margin was 1.91 euro per kilo, and harvest volumes almost 73,000 tons. In another strong quarter for Norway, I would say, the lower cost year-over-year, as we can see from the chart here, and harvest volumes reaching a seasonally record high, to mention some. But unfortunately, outweighed by lower prices year-over-year, which is the shoe pinches this year, as we said just a few minutes ago. These comments apply more or less to all the regions in Norway in the quarter, including region mid, whose margin on this chart is reflective of past sins. Because if we go behind the numbers for region mid in the quarter, we see that the second quarter was like the first quarter, a reasonably good quarter biologically, suggesting that we could have something going on in this region if we can manage to stay on this course. Otherwise, I have to say it's very encouraging to see that region south, region west and now also region north continue to deliver industry leading margins. And it's also very satisfying to see that NOVA SEA is closing in on MAUI in Norway, margin wise, after a rather soft first quarter to be done and soon to be us, hopefully. Then our volume guidance for Mowi Norway, which we have upped since the first quarter from 315,000 tonnes to now 320,000 tonnes. And we now have a sea on board and its 50-odd-thousand-tonne harvest volumes are now in a good position to reach the next harvest volume milestone for Mowi Norway of 400,000 tonnes in the not too distant future. Then our last slide on Movi Norway, our sales contract portfolio. Contract share was 23% for Movi Norway in the quarter. It was the red spot on our guidance. And these contracts contributed positively to our earnings in the quarter. As for the third quarter, contract level is relatively stable, as we can see from the chart here. Relatively stable contract prices, a quarter of a quarter. So with that, I think we can have a look at our six over-farming countries. Let me start, as usual, with Mowi, Scotland. Like Moe in Norway, Moe in Scotland leaves behind another strong operational quarter, I would say, with strong biological results, and this manifested itself in operational profit of €31 million for Scottish operation, and a margin of €1.29 per kilo on quarterly record high harvest volumes of 24,000 tonnes. And like MAUI Norway, MAUI Scotland can point to improvements on oil fronts in the quarter apart from price achievement, which is down year-over-year following lower spot prices. Then overseas to Chile, Moe Chile posted an operation profit of 18 million euro in the second quarter, which is substantially better than the 12.5 million euro we posted in the second quarter last year, notwithstanding much lower prices. In large parts due to lower cost year over year. And further on that note, Movi Kille was our best cost performer in the second quarter, both in terms of cost to stock and in terms of realized cost or released from stock cost. Their child has many names. So second to none. It can also be mentioned that somewhat higher harvest volumes of 15,500 tons contributed positively to improved earnings in Chile year over year. That was not the case for Mowi, Canada, where relatively stable costs and volumes did not offset lower prices, reducing operation profit from 7 million euro in the second quarter last year to 2 million euro in this quarter. Bulgy was, however, good in Canada in the quarter, both in the west and in the east. But over the summer, we have encountered some seasonal issues with algae in British Columbia, and we had one low DO incident at one of our farms in Newfoundland, which combined will impact our third quarter numbers by approximately 5 million euro, all else being equal. Which brings us to our two smallest farming entities, Mowi Ireland and Mowi Faroes. And if you take Mowi Ireland first, our Irish operation was close to break even in the second quarter with its one million euro in operational profit following soft prices because cost was relatively stable in Ireland in the quarter year over year and harvest volumes reached quarterly record high 5,000 tons. And these comments apply more or less to more Faroes as well in the quarter. We saw a drop in operation profit from 10.5 million euro in the second quarter last year to 4 million euro in this quarter, despite almost a doubling of harvest volumes from 2.5 thousand tons to 4.5 thousand tons. Bulgy was, however, once again strong in the Faroes in the quarter, whilst it was more of a mixed bag in Ireland. Then our last farming entity this morning, Arctic fish, our Atlantic operation. Arctic fish lives behind a reasonably good quarter biologically, I would say. Very low harvest volumes of 2,000 tons and soft prices took the toll on our profits in Iceland in the quarter and dragged it into negative territory of minus 5 million euro. On the positive side, however, our cost-cutting measures in Iceland run their course and paired with more harvest volumes, we still believe we will get the cost level down to a sustainable level in Iceland, as we have it in all other regions in MoE. So with that, I think we can conclude MoE farming and move on to consumer products of downstream business. The consumer has made an operation profit of 52 million euro in the second quarter, which is a seasonally record high, and more than a doubling of the 25 million euro we made in the second quarter last year. Thanks to strong operation performance, of course, but also thanks to lower raw material cost. which is a novel confirmation of the hedge between Mowi Farming and Mowi Consumer Products, where low prices to farming lead to lower raw material costs for consumer products and hence better earnings. Which is one of the positive things that comes with being vertically integrated, in addition to being a good business in itself. Otherwise, we continue to see good demand for our products, although high industry supply is weighing on prices to farming currently. Then our last business entity this morning, Mowi Feed. The second quarter is like the first quarter low season for our feed operation, but all that in tails, following sea temperatures and feed demand from farming. But adjusted for that, I would say the second quarter was another strong quarter for our feed operation, with records left and right. Because operation EBITDA of 40 million euro is seasonally record high, And so are soil volumes of 135,000 tonnes. And our feed performance was evidently strong in the quarter. And finally, as we said earlier this morning, our strategic review of this division is progressing. But beyond that, we will not comment any further. this morning out of respect for the integrity of the process. So please bear that in mind when we come to the Q&A session after that presentation. So with that, Christian, the floor is all yours. You can take us through the financial figures and the fundamentals. Thank you so far.

Thank you very much, Ivan. Good morning, everyone. I hope you are doing well. And as usual, we start with the overview of profit and loss, which shows a top line of 1.39 billion euro, which is a record high level for a second quarter and an increase from last year on strong volumes. Despite lower costs and higher volumes, there was a negative development in operational EBIT from Q2 last year due to lower prices. Earnings translated into an underlying earnings per share of €0.25. Return on capital employed was 13.3% and return on equity 15.1%. And net cash flow per share improved to 11 euro cent from 6 euro cent in Q2 2024. When it comes to the difference between operational EBIT and financial EBIT, this was for the most part explained by the net fair value adjustment on biomass, which was negative this time around related to the price development. With regards to associated companies, this was mainly related to Nova C and the operational result was 1.67 euro per kilo in Q2. And we still expect competition clearance sometime in the second half. And from that point, Nova C will be consolidated into the group figures. We then move on to the balance sheet, which was stable compared with Q2 24. Moe's financial position is strong with an equity ratio of 47%. Perform a covenant equity ratio, including the effects of NovaSea acquisition would have been 45% or 49% measured on the covenant methodology. Net interest-bearing debt was quite stable during the quarter. Working capital was neutral, with the effect of lower cash cost in farming being offset by other working capital fluctuations. Tax payments lower than last year. And while capex was somewhat up, interest payments have decreased as expected with lower interest rates on our Euro-based financing. And with regards to net interest bearing debt, we will come back with an updated long term target after closing of the NOVA SEA transaction. We maintain the guidance on the cash flow items listed here for the full year of 2025. So we leave the details here for self study. On the financing side, we have refinanced the bank facility, which is our main source of external financing. The previous 2 billion euro facility, which was maturing in 2026, is replaced by a 2.6 billion euro facility maturing in 2030. The covenant structure is maintained with only a 35% equity covenant. There is a 400 million euro accordion option and the lenders are D&B, Nordea, ABN Amro, Rabobank, Danske Bank, SEB and KD AGK. And we are glad to cooperate with renowned banks that have good faith in our company and in our business. In addition to the credit facility, we have two green bonds and also a shul shine. And when the latter is refinanced, we will get to 100% green financing. A low financing cost is important, and the same goes for the costs related to our main operations. And here we have some positive messages today. As shown in the graph above here, we see that the blended farming costs across our regions has of course increased in recent years, driven by feed prices and high inflation. But on a positive note, feed prices decreased in 2024. This has continued in 2025. And we have had a lot of cost measures, which also contribute to lower cost. So the cash cost has come down and the cost per kilo standing biomass in sea has been reduced. And this has also started to show in the realized cost figures, as we also see here from the graph. Q2 cost was down to 5.39 euro per kilo blended. That was the lowest level since 2022. In euro terms, this is a saving of 49 million euro and the corresponding year-to-date figure was 67 million euro. If you look more closely at the feed prices, these are down 8% from due to last year. And the cost at stock for standing biomass is down with the same magnitude. We have expectations of continued decline in feed prices due to positive raw material price developments. And we expect this to contribute to further reductions in cash cost and in P&L cost. We see the P&L cost down in 2025 and further down in 2026. When it comes to the Q3 P&L cost, we see currently that this is relatively stable from Q2. It is very positive that our various cost measures are showing in our numbers. Since 2020, the cost focus has been significantly increased in MoE, including clearly stating cost as one of our strategic pillars. Operational improvements across the value chain and the cost-saving programs in recent years, with almost 2,000 different initiatives, that has, of course, given results. And we have a very good starting point for our cost work, as we are the number one or the number two performer in the various regions we operate, as shown in the graph below. On a positive note, the three-year average shows that we are now number one also in Norway. But we are by no means finished with our cost work. We have identified a potential for 300 to 400 million euro in the next five years in cost savings. This is related to POSMOLT, MoWay 4.0, yield, automation, in addition to the cost saving programs and the productivity program. And that keyword brings us to the next slide, productivity and FTEs. Because salary and personnel costs, that is the second largest cost item for MAUI. Since we initiated the productivity program in 2020, we have reduced close to 3,500 FTEs on a like-for-like basis. According to me, that's quite impressive. If you look at nominal FTEs, they are down 8% in a time with significant volume increase for MAUI. So productivity has improved significantly, which we will see more details on on the next slide. This has been achieved through automation, rightsizing, natural turnover through retirement, reduced overtime and reduced external contracted labor. So it has been an effort from the entire organization, and we are very glad to see that this is giving results on the FTEs, on productivity, also on the cost. And this slide shows some more details on our achievement when it comes to productivity. It also includes some 2026 estimates. And more with farming, we have a 36% improved productivity, i.e. increase on tons per employee. In Farming Norway, we started on a higher level, but we have achieved as much as a 23% productivity increase also here. And in downstream, number is impressive, 39% productivity improvement. This has been achieved through automation, digitalization, combined with a general focus on FTEs, a lot of concrete initiatives, plans for the various departments, business units, and the hard work from the organization. So a lot has happened in this area since the productivity program was launched five years ago. Almost to the day, five years ago. We then move on to the market fundamentals in the quarter. In the second quarter, there was a significant supply growth of 18%, the highest we have seen since 2012. This was driven by a strong biological performance, and 2025 is a recovery year on industry supply after three years of zero growth in practice. Supply was higher from all the major producing regions, including Norway. We see that in Norway, higher harvesting in July, lower feed sales have reduced the biomass growth for the industry to an estimated 2% year-on-year end of July, down from 13% at the end of Q1. The number of individuals for the industry in sea in Norway is down 3% year-on-year, the global biomass figures show a modest plus 1% change in the number of individuals in sea per end July. And in our view, these numbers limit the potential for further supply growth for the remainder of 2025 and into 2026 compared with the year before. Inventory buildup was immaterial and consumption increased by 17%. Global demand for salmon was good during the quarter, increased 5% year on year in value terms on significantly increased consumption. This was partially offset by lower blended prices. We have started to see declining shelf prices in retail. This is positive for demand, and we expect further drop ahead with lower spot prices and promotions. Overall market development remained good. Consumption in Europe increased by 15% from Q2 2024, supported by a strong retail performance in the major regions, Western Europe, Central Europe, including Germany, and also the UK. Consumption in the US increased by 13%, with growth mainly driven by retail. The fresh prepack category continued to be the key here, confirming solid demand in the higher value segment of the markets. The development was further supported by more strong growth in the skin pack sales, which are up 24% year on year. The online grocery segment was also solid with e-commerce volumes more than doubling compared with 24. Consumption in Asia increased by 40%. And we had strong development in all major markets, but particularly in China, with a 52% increase in consumption year on year. This was driven by better availability of large-sized fish, yeast import restrictions, and lower price points. Food service consumption also improved. And when, of course, spot prices have been impacted by temporary high supply, we have expectations of a tighter market in 2026, as we have already touched upon. That's also according to consensus. And this slide provides more detail on the industry supply situation. There was no growth in 22 to 24, and then we have 8% now in 25, is the estimate, which we expect to fall to 1% in 2026. The inflection point on year-over-year growth is now in August, and the next 12 months, the growth estimate is 1%. When it comes to around guidance, we have adjusted this up by 15,000 tons to 545,000 tons following favorable developments in sea and high harvest volumes. Then we conclude this section and we are ready for Ivan and some comments on the outlook.

Thank you, Kristian. Much appreciated. And it's time to conclude with some closing remarks before we wrap it all up with our Q&A session hosted by our IRO, Kim Dusvik. And to begin with, and on a general note, And as already said earlier this morning, the second quarter was characterized like the first quarter by well-supplied markets, following strong biology across the industry, both in the northern and southern hemisphere. This led to a seasonally record high industry supply and an industry supply growth of as high as 18% year-over-year in the quarter. which is a number we haven't seen in many many years and which put of course pressure on the prices in the quarter. And we know at the time of year where high sea temperatures are translating into even higher industry supply and putting further pressure on the prices. On a positive note, however, the number of individuals in C is now relatively stable year over year, indicating a normalization of industry supply growth next year at a modest 1%, as we just heard Christian say, which is down from 8% this year, and which under normal circumstances should pave the way for better prices. So in our view 2025 is just an anomaly and an exception to the limited supply growth we have seen in recent years and which we expect to see also in the coming years and in which our entire growth strategy is grounded I think is fair to say. Otherwise, we continue to see good demand for our products and with recent developments in geopolitics, it looks like we will avoid a trade war this time, which is, of course, very, very important for an international product like the salmon. So despite current headwinds in the markets, I would argue that the future still looks bright for this fantastic protein. Carrying on, our operations continue to develop positively, both on land and in the sea, I would say. Further, we have upped our farming volume guidance for this year from 530,000 tonnes since last time we reported to now 545,000 tonnes. which is up from 520,000 tonnes when we guided for this year, the first time back in November last year. And this is equivalent to a growth of as high as 8.7% year over year. The next year, we expect to harvest at least 600,000 tonnes with NOVA-C on board, and that translates to another 10% growth year over year. So Moe's idiosyncratic growth continues unabated and is now surpassing that of the wider industry and are listed peers by a large margin. And finally, I have to say it's very encouraging to see that cost has come somewhat down after a few years of unprecedented inflation. So once again, a big thank you to all of my colleagues who have made all of this happen. So with that, Christian and Kim, I think we are ready for the Q&A session. So if Christian can please join me on the stage and help me out with answering some of the questions. And then you, Kim, can administer the questions from the audience and from the web.

Thank you, Yvonne. So the first question is from Alexander Sloan in Barclays. He's got two questions. The first one on cost. Can you break down the expectation for stable cost outlook for H2 versus Q2? If feed costs expected to be an incremental tailwind, are you expecting more challenging biological conditions or just lower operational leverage to offset this feed tailwind?

I would say that we have a very positive message when it comes to cost here today. We see that the Q2 cost is down to 539 euro per kilo blended. I think it's fair to say that that was a larger reduction than that was expected really by the market in advance. So we are talking about a reduction down in Q3 or down in Q2 to a good level. And then we have indicated that that that level will continue to go down. We have said that we expect further reductions in 2026 and that the cost at stock is down in the biomass in C. And then of course, if you look at Q3 compared with Q2, we have to remember that they can always be phasing effects, right? And when it comes to the feed price reductions, that's not necessarily 100% smooth downwards effect all the time. Sometimes it goes a little bit stepwise. So if you look at the biomass to be harvested in a specific quarter, then we have our forecast. But I think it's important to look a little bit beyond the the phasing effects here in the P&L and look at the bigger picture. And that is that we say that the cost is going down. We expect further reductions on the feed price. That means that we also expect both cash cost and the P&L cost to come further down from this level.

Very clear, and then the second one, maybe to you Yvonne on tariffs. You had at Q1 indicated tariffs were manageable at 10%, but would be a concern if higher than that. What is the outlook at 15% for Norway?

Well, not much has really changed in my view. I think this outcome is the best outcome we could hope for. So for us, this hasn't changed anything. And we also have a relative advantage in this because of our production in America. So we source the U.S. first and foremost. from Chile and Canada. So compared to our peers, it gives us a small edge. But all in all, I don't think this is a make or break for the industry. I think this outcome was as good as we could hope for. In total, we're talking about 10% impact on demand, at least over time. And that's also something we can deal with, I think. So our take is actually positive. So let's hope this was it, because that part we don't know.

Then Knut Eva Bakkens, Sparbanken in Markets. He's got a question about contract prices. Can you comment on contract expectations for next year? Any more comments on share of contracts and also price expectations, if any?

Yeah, the short answer is no. We are negotiating as we speak, and I think we have to play the cards close to our chest. So, sorry. This we will have to revert to at a later stage.

Then Alexander Aukner, D&B. He's got a question about the supply. Are we able to build new markets with current supply boost? Any markets in particular worth mentioning?

that we have a lot of focus on on the market work in organization we are present in all the major markets and we have a big presence in the largest salmon market in the world the us where we have had a lot of yeah different developments on on products on logistics on distribution new contracts And this is really also the plan and the work we do in all the major regions. I think that it's positive that we now see, of course, also that the shelf prices are coming somewhat down. We see that in June. We are talking about around 7% reduction in shelf prices, at least in Europe, in retail. That's higher than the general reduction in shelf prices for Q2. I think we will see more of that development on promotions, on lower spot prices and that's also positive when it comes to building markets and really making this fantastic product more available and having it out there and having the good demand for this product. The higher shelf prices and delays in having these spot price reductions taking fully out in the value chain, that has had some tailwinds for, or headwinds for demand, sorry. But I think that we are now seeing the right development with some shelf prices starting to come down. And yeah, this is a big focus, of course.

So very good. No more questions.

Right. Then it only remains for me to thank everyone for the attention. We hope to see you back already in November at our third quarter release, if not before. In the meantime, take care and have a great day ahead. Thank you.