The world's largest salmon producer Mowi reported a fall in fourth quarter earnings, as it was challenged by a mass mortality event at its Canadian farms and lower realized prices in many of its markets.

Operational earnings before interest and tax fell 22 percent to €165.7 million ($180 million) in the quarter, despite rising revenues and record harvests.

Operational revenue and other income came in at €1.1 billion ($1.2 billion) in the three months to Dec. 31, a 4 percent increase on the prior year. Harvest volume was 10 percent higher at 116,314 metric tons gutted whole weight.

Of its six farming regions, its small, organic Irish operations reported the highest EBIT per kilo at €3.34 ($3.64), followed by Norway at €2.12 ($2.31), the Faroes at €1.63 ($1.78), Scotland at €1.24 ($1.35), Chile at €0.79 ($0.86) and Canada at a loss of €0.53 ($0.58) because of the mass mortality incident in the third quarter.

Costs are expected to increase in Norway and Chile in the first quarter of this year, while other regions are expected to remain relatively stable, said the company in its fourth quarter presentation.

Harvest guidance for 2020 is maintained at 450,000 metric tons.

"The salmon prices increased significantly in all markets during the quarter and in January on strong demand and tighter supply," said Mowi CEO Ivan Vindheim. "Notwithstanding the current issues with the coronavirus, the medium and long-term outlook for Mowi remains strong."

'Fierce competition in VAP'

Mowi's consumer products division saw record high volumes sold in the quarter, up 14 percent to 55,293 metric tons, with strong consumption rates in key European and US markets, and operating revenues rising almost 5 percent to €674.3 million ($736 million).

Operational EBIT, however, more than halved to €15.1 million ($16.4 million) on margin pressure in the European value-added market. Results in the first quarter are expected to be negatively impacted by high salmon prices and continued fierce competition.

Healthy returns on feed

The company's feed division took a step towards self-sufficiency in the quarter with its new feed plant in Scotland nearing the end of its commissioning phase.

The division sold record high volumes in the quarter, up 18 percent to 130,034 metric tons. Feed volume produced also grew 23 percent to 112,277 metric tons.

Earnings almost tripled, meanwhile, to €13.8 million ($15 million) in the quarter, with revenues coming in 30 percent higher at €170.8 million ($186 million).

Finance

Canadian salmon die-off drags down Mowi's Q4 earnings