Good morning, everyone, both in the room and online. Thank you very much for joining us this morning in connection with the release and the presentation of Mowi's third-quarter results of 2025. My name is Ivan Vindheim, and I'm the CEO of Mowi. 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. After the presentation, our analyst, Ole Petter Urheim, will 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 mowi.com for the necessary details. Disclaimer is both long and extensive, so I think we leave it for self-study.
With that out of the way, I think we are ready for the highlights of the quarter. To begin with, and on a general note, I think it's fair to say that the third quarter was like previous quarters this year, characterized by soft prices following well-supplied markets. In the third quarter, with prices even below industry costs. For our part, this translated into EUR 1.39 billion in operating revenues and an operational profit of EUR 112 million. On record high harvest volumes of 166,000 tons, the latter slightly above our guidance. Otherwise, the third quarter is typically the more challenging time of year biologically, and this third quarter was no exception to the rule. Despite this, our weighted realized production cost of EUR 5.42 per kilo for seven farming countries was stable quarter-over-quarter and down by 5% year-over-year.
All else being equal, our P&L cost in the third quarter is down by EUR 50 million year-over-year and EUR 126 million year- to- date, which are both considerable amounts. Furthermore, our standing biomass cost continues to develop well on lower feed prices, which bodes well for our P&L cost next year. In the third quarter, however, we expect a stable realized production cost quarter-over-quarter. Otherwise, our acquisition of Nova Sea was approved and closed in October, so now we are in full swing with the integration, chasing EUR 34 million in synergies, among other things. For the sake of this entity, we'll be fully consolidated as from the fourth quarter. Carrying on to other divisions, consumer products and feed, they delivered another strong quarter, I think it's fair to say, with record high earnings to mention some.
In terms of our strategic review of the feed division, it's progressing, and we expect to reach our conclusion before year-end. Finally, as the last bullet point reads, our board of directors has decided to distribute a quarterly dividend of NOK 1.50 per share after the third quarter. I think that does it for the highlights of the quarter, so then we. Move on to our farming volume guidance. As we can see from the chart here, we have upped it since last time we reported, once again, now from 545,000 tons- 554,000 tons, primarily due to the consolidation of Nova Sea as from the fourth quarter. This is equivalent to a growth of as high as 10.5% year-over-year. Next year, we expect to harvest 605,000 tons in Mowi, and that translates to a further 9.2% growth year-over-year.
And finally, we reaffirm our 2029 organic farming volume target of at least 650,000 tons. This we will achieve through, among other things, increased smolt stocking and by means of post-smolt. We have still unutilized license capacity in Mowi in several of the 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. Further on that note, this is a picture of Kjellvika, which will be a 6,000 tons state-of-the-art post-smolt grass facility on the coast of Helgeland when finished, and which came in with the Nova Sea acquisition. And in October, we will order four new closed containment systems for post-smolt production in Region West in the wake of the new environmental licensing scheme in Norway and the return of previously revoked licenses under the traffic light system.
Altogether, this increases our post-smolt volumes in Norway from 30 million post-smolt- 40 million post-smolt and to 50 million post-smolt on group level in the 500 grams- 1.2 kilograms range. Mowi's farming volume growth continues unabated after the rather quiet 2010s and is now surpassing that of the wider industry by a large margin, cementing our number one position in the market for the Atlantic salmon. Then from the grand scheme of things, to more specifically about the third quarter. First here, key financial figures. There are a lot of numbers on this slide, so I think we will have to focus on the most important ones now and leave the rest for later in Kristian's session.
As we have just been through turnover profit, I think we skip them here and go straight to cash and net interest- bearing debt, which stood at EUR 1.76 billion at the end of the quarter. When Nova Sea fully consolidated and paid for, it would have been EUR 2.51 billion with a corresponding equity ratio of 46%. The latter is indicating a sustainable debt level and a solid balance sheet also post-closing. Having said that, we will revert to our new and exact debt target after the fourth quarter when the budget for next year has been set. Furthermore, underlying earnings per share was EUR 0.13 in the quarter, whilst annualized return on capital employed was 7.5%. Both affected by the soft prices in the quarter.
The same goes for our region margins for the value chain, which we will get back to in detail shortly when we go through the different business entities. First, some more about the prices in the quarter, which we have characterized as soft a few times already, following well-supplied markets in the third quarter like previous quarters this year, and in the third quarter with prices even below industry costs. On a positive note, however, industry supply growth has now normalized after unprecedented growth earlier this year and is now hovering around 0%, which under normal circumstances should pave the way for better prices going forward.
Then our own price performance in the quarter, which I would say was strong in relative terms as it was 15% 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 contract share of 21% in the quarter and contract prices above the prevailing spot price, in addition to reasonably good harvest weights and the high quality of our fish. With that, I think we can start to drill down into the different business entities. We begin, as usual, with Mowi Norway, our largest and most important entity by far and the locomotive of our business model. And if you take the numbers first, operational profit was EUR 111 million for Mowi Norway in the quarter, whilst margin was EUR 1.12 per kilo and harvest volumes 99,500 tons.
In a rather challenging quarter for Mowi Norway, I think it's fair to say, given the season, but still a decent quarter with cost down year-over-year, as we can see from the chart here, on quite neutral harvest volumes, but unfortunately more than outweighed by lower prices year-over-year, which is where the shoe pinches this year. And these comments also apply to the different regions in Mowi Norway in the quarter and to some more than others, with a margin slam dunk by Region North this time around on good biology and on very low cost. We struggled somewhat more in the other regions, but still a decent quarter for Mowi Norway, I would say, all in all, given the prevailing prices.
Then the volume guidance for Mowi Norway, which we have upped since last time we reported, from 320,000 tons- 329,000 tons due to primarily the consolidation of Nova Sea as from the fourth quarter. And this is equivalent to a growth of 8.4% year-over-year. Next year, we expect to harvest 380,000 tons in Mowi Norway, and that translates to a further growth of 15.5% year-over-year. The short-term goal on these assets is still 400,000 tons, which we hope to reach in the not- too- distant future and which would be the next milestone in Mowi Norway. The last slide on Mowi Norway, our sales contract portfolio. Counter share was 19% for Mowi Norway in the quarter and was with that spot on our guidance. These contracts contributed positively to our earnings, as I said earlier this morning.
As for the fourth quarter, we expect our counter share in Norway to be about 23% with relatively stable contract prices quarter-over-quarter. This counter share is including Nova Sea. Finally, as to next year, as we are negotiating new contracts as we speak, we cannot say much about that today other than to refer to the fourth quarter release. In the meantime, we must keep our cards close to our chest for natural reasons. That concludes Mowi Norway. We can have a look at our six other farming countries, and we start with Mowi Scotland. Mowi Scotland was a margin winner in the third quarter, only beaten by Region North in Norway, thanks partly to the highest contract share in the group in the quarter.
This resulted in a margin of EUR 1.54 per kilo for our 17,000 tons harvest volumes in Scotland, which in turn translated into an operational profit of EUR 27 million, which is a strong result, I would say, on reasonably good biology. I guess I could add to that. Otherwise, this is a picture of our new broodstock facility at Odessa, which will supply us with high-quality eggs in Mowi Scotland going forward. As you all know, it also starts with high-quality eggs in this industry, as genetics trumps most things for all living beings, and even more so for the salmon, as the environment in the sea is much tougher than on land. Speaking of the sea, overseas to Chile.
Mowi Chile posted an operational profit of EUR 12 million in the third quarter by means of a margin of EUR 0.55 per kilo on 22,000 tons harvest volumes, which is a decent result, I would say, given the prevailing prices, thanks once again to the lowest cost in the group in the quarter. Finally, biology was also once again strong in Chile in the third quarter. That was unfortunately not the case in Canada in the quarter, where we suffered a loss of EUR 31 million due to very challenging biology, particularly in the east, following a prolonged period with very high sea temperatures, which led to several low DO incidents and significant issues with sea lice, with all that entails. On the positive side, biology has now recovered, so hopefully we have put this behind us, knock on wood.
This brings us to our two smallest farming entities, Mowi Ireland and Mowi Faroes. If you take Mowi Ireland first, our Irish operation has also been through a few challenging months biologically this summer and autumn. In light of that, I would say an operational profit of EUR 1 million in Ireland in the quarter is respectable. The same I would say about Mowi Faroes' margin of EUR 0.55 in the quarter. Considering that we have 100% spot price exposure in the Faroes. This translated into an operational profit of EUR 1 million for Mowi Faroes in the third quarter on almost 2,500 tons harvest volumes. Biological metrics were also once again strong in the Faroes in the quarter. Further out into the Atlantic Ocean and to Iceland and our Atlantic farming operation, Arctic Fish.
Arctic Fish wrestled with both low prices and high costs in the quarter, and this resulted in a loss of EUR 6 million in Iceland in the third quarter. Biology continues to develop reasonably well, and combined with our cost measures in Iceland, we still believe we will get the cost level down to a sustainable level. I think that concludes Mowi farming, so we can move on to consumer products, our downstream business. Low prices for farming mean low raw material costs for consumer products and therefore higher profits. This relationship proved to be true also in the third quarter, as we posted a quarterly record high operational EBIT of EUR 66 million, which is up by more than 50% year-over-year, on salt volumes at record high levels. The latter is also demonstrating a strong demand for our products. Last one out this morning, Mowi Feed.
The third quarter is high season for our feed operation, as it follows the sea temperatures in the Northern Hemisphere and the growth in sea for Mowi farming. This translated into a quarterly record high operational EBITDA of EUR 26 million in the quarter. Otherwise, our feed continues to perform well, and in terms of our strategic review of this division, as we said earlier this morning, it is progressing, and we expect to reach our conclusion before year-end. Beyond that, we do not have any further comments on this this morning. Please bear that in mind when we come to the Q&A session. Kristian, 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. Hope you are doing well. As usual, we start with the overview of profit and loss, which shows record- high year-to-date volumes and revenues. While quarterly revenue was stable from Q2, operational EBIT was down from Q3 2024 on lower spot prices, partly offset by lower cost and higher volumes. And with regards to the items between operational EBIT and financial EBIT, this was mainly related to the net fair value adjustment of biomass, which was positive this time around on higher salmon prices, including forward prices versus the end of the second quarter. Income from associated companies was mainly related to Nova Sea, with an operational profit of EUR 0.87 per kilo in the quarter, and Nova Sea will be consolidated into the group figures from Q4. Net financial items were relatively stable, as lower interest cost was offset by other movements. Earnings translated into an underlying earnings per share of EUR 0.13.
While the cash flow per share was good at EUR 0.39. Return on capital employed year-to-date was 12.6%. Slightly above the minimum target level, and this reflects a year with high supply and pressure on prices. We then move on to the financial position, the balance sheet, which was relatively stable from Q3 2024, as we see here in the table. Mowi has a strong financial position. And including the effects of the acquisition of Nova Sea, equity ratio would be 46% or 49% measured on the Covenant methodology. There was a good cash generation in the quarter, and net interest-bearing debt ended at EUR 1.76 billion. Working capital release contributed positively. This includes the effect of lower biomass cost, which was down 5% from last year and 4% sequentially from Q2.
On taxes and CapEx, the comparison figures in Q3 2024 were impacted by some special effects, such as tax refunds in Canada and traffic light auction in Norway on CapEx. So adjusted for these effects, tax and CapEx were in practice quite stable. Interest payments are down, as reflected here. Our long-term net interest-bearing debt target will be then updated after Q4, when the budget for 2026 has been set. Yes. So o ur cash flow guidance for 2025 has been updated related to the inclusion of effects for Nova Sea in Q4. And in brackets, we have listed the previously indicated figures. So working capital tie-up is estimated to EUR 75 million. On CapEx, we expect EUR 355 million. Nova Sea has ongoing construction projects related to freshwater expansion and a new processing facility.
And the estimate on interest payments has been increased to EUR 95 million, while the updated tax estimate is now EUR 170 million. This overview on our financing is unchanged from the previous quarter, so we then leave this for self-study. We then give some words here on the cost development, which definitely goes in the right direction, as also shown here on the graph. As guided, the realized P&L cost in Q3 of EUR 5.42 per kilo was stable from EUR 5.39 in Q2. And the realized cost is also expected to be stable on this 5.4 level in Q4, based on current information. The cost reduction in Q3 2024 was EUR 50 million, and the year-to-date effect is EUR 126 million. The cost reductions are driven by lower feed prices, with feed prices being down 13% versus Q3 last year.
But our various cost measures, operational improvements, have also helped. So the cash cost has come down. And the cost at stock per kilo standing biomass is down 5%, as mentioned, from last year. And we expect realized P&L cost in 2026 to be reduced versus 2025. And it is, of course, very positive that our different cost measures are now visible in our numbers. And since 2020, the cost focus in Mowi has been significantly increased. Cost has been emphasized as one of our strategic pillars. Operational improvements throughout the value chain and the cost-saving program in recent years, with almost 2,000 different initiatives, have given results. We have a very good starting point for our cost work, as we are now the number one or number two performer in the various regions. The three-year average shows that we are all.
We are now also number one in Norway, as shown here on the graph. But we are not finished here. We have identified a potential for EUR 300 million-EUR 400 million savings in the next five years through post-smolt, Mowi 4.0, yield, automation, and of course, the cost-saving and productivity programs. And that is a nice segue into the next slide, which shows productivity and FTEs. Salary and personnel costs, that's the second largest cost item after feed. Since we initiated this productivity program back in 2020, we have reduced close to 3,500 FTEs, as shown here on the graph, on a like-for-like basis. If you also look at nominal FTEs, they are down 7% in a time with a significant volume increase for Mowi. So productivity has really improved significantly. We make sure that all of our measures do not negatively impact operations or HSE.
This has been achieved through automation, right-sizing, natural turnover, less overtime, less contracted labor, retirement, etc. This slide here shows some of our achievement on productivity, including preliminary 2026 figures. In Mowi farming, we see that we have a 38% increase on tons per employee. In Norway, we started on a higher productivity level, but productivity is still up 20%. In downstream, we have a 30% productivity improvement. This has been achieved through a combination of automation, digitalization, general focus on cost, focus on FTEs, looking through the value chain, challenging the business units, the departments. A solid work. We then move on to market fundamentals, starting with supply. Supply growth was, as already mentioned, record high, also in the third quarter, with 12% more volumes than Q3 2024, driven by Norway.
The biological improvements earlier in 2025, combined with seasonal challenges in Q3, led to this growth, which came after three years with zero growth for the industry. We estimate 5% demand growth in the quarter, with 12% higher consumption, partially offset by lower prices. In Europe, consumption increased by 7% year-on-year on strong retail performance. Promotional activity and lower shelf prices have had a positive effect on demand. In the U.S., consumption increased by 13%, with the pre-packed segment driving good retail volumes. And, Asia has seen a 34% volume increase with strong growth in all regions. And lower price points and more large-sized salmon were more available this quarter, and that has helped. China has been particularly strong at 40% growth, as we see here in the numbers. While demand has been good at 5% growth, the high supply in the market has taken its toll on prices.
And we saw an inflection point on supply in September and a good price response from that. If you take a look at industry supply growth estimates for Q4, we expect negative volume growth year-on-year in Europe, but positive in Chile. Also for 2026, the situation is a bit different in Europe versus Chile. If you look at the total based on overall biomass statistics and current trends, we estimate 1% global industry supply growth versus as high as 9% done for 2025. Mowi's own volume guidance has been increased to record high 554,000 tons for 2025. That is up 10.5% year-on-year. And for 2026, we then estimate a further increase up to 605,000 tons, up 9.2%, supported by biomass in sea, up 10.9%. Then we are ready for some comments from Ivan on the outlook.
Thank you, Kristian. Much appreciated. It is time to conclude with some closing remarks before we wrap up the Q&A session hosted by our analyst, Ole Petter Urheim. To begin with, on a general note, as I said earlier this morning, the third quarter was like previous quarters this year, characterized by soft prices following well-supplied markets. In the third quarter, the price is even below industry cost. On a positive note, however, industry supply growth has now normalized after unprecedented growth earlier this year and is now hovering around 0%, which under normal circumstances should pave the way for better prices going forward. Otherwise, we continue to see strong demand for our products, demonstrated by sold volumes at record high levels in consumer products in the Q4. Our standing biomass cost in sea continues to develop well on lower feed prices, which bodes well for our P&L cost next year.
In the fourth quarter, however, we expect a stable realized production cost quarter over Q4. The only outstanding piece of the puzzle is our farming volumes and our volume guidance, which we have increased since last time we reported for this year, once again, now from 545,000 tons- 554,000 tons. This is equivalent to a growth of as high as 10.5% year-over-year. Next year, we expect to have 605,000 tons in Mowi. That translates to a further 9.2% growth year-over-year. Mowi's farming volume growth continues unabated and is surpassing that of the body industry and our listed peers by a large margin, as we saw earlier this morning. Once again, a big thank you to all of my colleagues who have made it happen. It is, of course, much, much appreciated. With this short summary, Ole Petter and Kristian, I think we are ready for the Q&A session.
If Kristian can please join me on the stage and help me out with answering the questions, then you, Ole Petter, can administer the questions from the audience and the web.
Yes, and I think we will start with the questions here from the audience.
Christian Nordby, Arctic Securities. We've seen in Chile quite a build-up in overall biomass. What's your view on biology in Chile based on this higher biomass there? And do you fear that this could backlash into worse productivity later?
That's a good question, Christian. Biology in Chile has been really good this year, and I will also say last year. As I said during the presentation this morning, the lowest cost in Mowi is in Chile. That is also a proof, and so and we expect a continued good biology going forward.
Thank you. You're now going into closed-cage post-smolt production. Is it the same design for all the ones you're ordering, or is it different, or have you done this before at that design? Can you give some insight into it?
Yeah, this we have done in Mowi for a long, long time. We started in 2013. So when we ordered the four new ones here, we go from 6- 10 closed containment systems for post-smolt production. We use the same technology. We use it for post-smolt, as you said, and it works also financially. The reason why we ordered the four last ones here was because of the new environmental licensing scheme in Norway, which makes this viable from a financial point of view.
Thank you.
Welcome.
Henrik Knutsen, Pareto Securities. You mentioned biomass close to 11% higher year-over-year. Do you have a comparable figure if you were to include or exclude Nova Sea?
That we can take after the Q&A session.
Okay. And how much more biomass do you have in sea in Norway? Again, including or excluding Nova Sea?
Again, that we take after the Q&A session.
Martin Kahland, ABG Sundal Collier. Have you seen or experienced any impact from the tariffs in the U.S. on prices to end consumers, consumption, or trade flows?
That's a really good question. So far, so good, but of course there is impact here, but nothing that has been dramatic so far. Let's see how this develops.
And then, did you mention CapEx for the closed containment systems and the volume potential you expect from it?
We don't. As I said, we will order this month, right? We are a little bit ahead of the curve when we start to talk about the CapEx amount, etc., so that we have to revert to at a later stage. Again, it's financially viable with the new environmental licensing scheme. We use licenses we have, which will be returned to us.
Thank you.
Welcome. There was a silent audience today. Do we have any questions from the web, Ole Petter?
Yes, we have. We have received a question from the web on how demand in China is given the strong developments in recent quarters.
Yeah, China has been very good in recent years. We see now that China is around 6% of the global consumption for salmon. The position has been increased. We see in China, of course, positive responses from lower prices. We also see a growing middle class. We see that logistics has improved and various restrictions have improved. We also see that there are some interesting trends on sales channels in China. We see that there is an interesting mix of e-commerce and home delivery solutions, etc.
The take from the Norwegian Seafood Council is that the home consumption for salmon in China is higher than we have perhaps previously estimated. It is actually around 60%, according to them, on the total consumption. And if you take that home consumption, it is actually tilted a little bit towards various e-commerce solutions than more traditional retail that we know from, for example, Europe. There are some interesting developments, some interesting trends. Again, the positive effects on prices are there. We believe also that you know should salmon prices improve, there are some structural things that also have happened here on the demand side. At least this is partly sticky. So with the growing middle class, I think there is still a good potential in China.
Yes, and we have a question from Alexander Sloane from Barclays. Can you quantify expected farming costs decline in 2026 as you see it today?
We choose not to be that specific, but let's say it like this. We have indicated, of course, the cost level in Q3, Q4. It is around a 5.4 level. We will see that there is a potential versus that, to put it like that, i.e. lower than that. Apart from that, I think the best indication is what we have already said on the biomass cost at stock reductions, you know, 4% quarter- over- quarter and 5% year-on-year. Of course, there is always a question of how much inflation will contribute on the other side. Will there be any surprises on the biology, etc.? That is why it is always very difficult for us to give any numbers on these kind of estimates. But I think those, you know, looking at the biomass cost at stock, the current cost level and down from there, at least those are some indication.
I could also just add that we, of course, have talked a lot about feed prices here today and the effects of that. If you look at the cost year-to-date in farming and the reduction there, it is actually between 75%-80% that is related to feed. That also means that there are some other elements that are also down, like health cost, like productivity helps, more volumes helps, of course, on dilution, but also repair and maintenance costs down. We see that it helps to work with our cost base and to realize reduction also in other areas.
Another question from Alexander Sloane. With your 1% global supply growth forecast for 2026, what do you see as key upside and downside risks?
Yeah.
Maybe I can start. No, internally. We see more downside risks than upside risks. They say less is more when you answer questions. That is at least the start of the question. Maybe you have some more bits and pieces you want to add, Kristian.
No, I think that is a good summary. Of course, Ivan has also mentioned the two-way division of the market. That could be expected on the current composition of the biomass, etc. I definitely agree that there is on the downside risk.
Maybe I could add this to the question. No one has better biological KPIs, metrics, or cost than the Chilean farmers. So bear that in mind, all of you. We are not world champions in Norway, although we like to think we are.
Okay. Last question from Alexander Sloane here. What impact do you think the Peru-reduced quota could have on fish oil and fish meal prices? Any risk we see repeat of 2023 spike?
I think it is important to say that there has been such a provisional quota so far on anchovy fishery in Peru. There is an ongoing research fishery to determine this quota, what that will be now in the end. There are some rumors that stocks have, that there has been some migration done from the northern part to the more southern part. Usually, it is the northern fishery that is the most important in Peru. But of course, we have to look at both the quotas for the northern fishery and also the southern fishery, should there be any movements here on the stocks. So it is a little bit early to give any more information on that. Let's wait for the final quota information, etc.
Yes. And then it seems to be the last question from Knut Ivar Bakken, SpareBank 1 Markets. Mowi will invest in four closed containment systems to restore 2.6 licenses in Region West. In addition, you already operate other closed containment systems. Should we expect that Mowi will invest in more closed containment systems in 2026 and 2027 to restore all of the 10.5 withdrawn licenses?
It depends. It depends. So let's revert to that at a later stage.
Okay. I do think we can conclude the Q&A.
Thank you. Then it only remains for me to thank everyone for the attention. We hope to see you back already in February at our fourth quarter release, if not before. So in the meantime, please take care and have a great day ahead. Thank you.