Good day. Welcome to the Mowi Q4 2018 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to you, Kim Galtung Døsvig . Please go ahead, sir.
Yes, thank you. Good afternoon, everyone. I'm the Investor Relations Officer in Mowi, and I'm here to present the Q4 results, and there will be a Q and A session at the end. I will refer to the presentation, which has been distributed and disclosed on our website today. Going into the presentation on page three, the highlights. The highlights of the quarter was an operational EBIT of NOK 213 million in the quarter. We have seen high prices in all markets. Prices in Europe were up by 12% year-over-year. Prices in the Americas were up by about 7% year-over-year. Our feed division had a seasonal very good set of results. Record high feed sales for the year. We also initiated a new Global Cost-Saving Program of NOK 30 million, which also includes Procurement Improvement Program.
This comes on top of the program which we announced last year, and the EUR 61 million we achieved in 2018. We'll do another savings program this year. We also launched the brand strategy, as communicated at our capital markets day in November, and the company name changed on the 1st of January from Marine Harvest to Mowi. The board yesterday resolved a quarterly dividend of NOK 2.6 for the quarter, and that's to be paid now in the early parts of March. Moving on to page six, key financials. Operational revenue reached almost NOK 1.1 billion in the quarter, up 6% year-over-year. For the financial year 2018, revenues rose to NOK 3.8 billion, which was up 4% compared to 2017. Operational EBIT up 18% year-over-year, despite harvesting volumes down 6% year-over-year, at 106,000 tonnes.
For 2018, harvest volumes was 375,000 tonnes, which is up by 1% compared to last year. In the quarter, we made EUR 2.01 per kilo. You see the breakdown at the bottom parts of the charts, all regions contributing positively to the results. Page five, salmon prices. Salmon prices were good in the quarter and as mentioned, increased in all markets. Here shown in Norway, in Miami for Chilean salmon, and also on both coasts in the U.S. for Canadian salmon. Page six, price achievement. It was a good quarter for Mowi in terms of price achievement, above 100% in Norway, very good in Scotland on the back of contracts in both of those markets. In Canada, everything is spot, hence price achievement tends to be just below 100%, so as normal in Canada.
In Chile, it was 106% on the back of a contract share of 19% with a decent superior share. Good price achievement in the quarter. If you move on to page seven, you see the EBIT bridge versus Q4 last year. Feed contributed positively to the results. Farming is the main positive contributor and mostly explained by price. Higher price achievement and also both higher spot prices for salmon and also contract prices. Volumes, as I mentioned, were more or less stable, and costs have also been stable year-over-year. Markets and consumer products, in total, are more or less the same, and other is slightly negative. That's corporate cost. Moving on to Norway as the key farming region, where we produce and harvest most of our volumes and that generates most of the profit.
In Norway, we delivered a profit of EUR 143 million in the quarter, which is up year-over-year. You see the breakdown in the chart, higher prices, slightly lower volumes, and costs, more or less stable. Good results in Region North. The biology there is good. In Region Mid, good results but some biological challenges, as was the case last quarter. In Region South, we harvested low volumes on the back of a challenging 2017 seed generation. Going into Q1 2019, we expect that costs should increase somewhat sequentially compared to Q4 2018. The contract portfolio on page nine. In Q4, contracts were as guided, about 25,000 tons. In Q1 and Q2, that share will be reduced to about 20,000-21,000 tons, which is more or less the same as in the same period in 2018. The contract portfolio is stable.
The regional differences, you can see on page 10. I will not go into the details on that. Page 11, Scotland. Scotland had a good set of results, and as you see on the chart, prices increased. High contract share which contributed to the positive results, despite volumes being down by about 1,000 tons. We see that costs in Scotland were reduced on improved biology, so less incident-based mortalities and also a slightly better sea lice situation in Scotland. We've had good growth in Scotland. The biomass in sea is substantially higher year-over-year, hence we expect to harvest much more in Scotland in 2019 compared to 2018. In Canada, page 12. They delivered a result of EUR 17 million compared to EUR 10 last quarter, so improved results on higher prices and also higher volumes.
The latter is mostly reflected off the acquisition of Northern Harvest, which was the company we bought on the east coast of Canada during the summer of 2018. Costs have remained high in Canada, and they also are expected to be higher, to increase in Q1 versus Q4 on slightly lower volumes. Chile on page 13. Very good results from Chile. The biology is improved in Chile. We have utilized a new vaccine, which has had a direct effect on SRS. SRS is a bacteria in Chile, and it's the main cause of the usage of antibiotics in recent years in Chile. This new vaccine has proven to be effective as mortality rates are down and average weights are up. This has a positive effect on costs. The result in Chile for the quarter and also for 2018 was encouraging.
Moving on to page 14, Ireland and Faroes. In Ireland, we made a good profit despite lower volumes. The market for organic salmon, this is salmon farmed off the coasts in Ireland. That market continues to be very good. The prices are good, also costs for organic salmon is higher than traditional salmon. We saw that costs increased in the fourth quarter as previously guided. In Faroes was a mixed bag. Profits were impacted by higher costs, slightly reduced superior share, which impacts price achievement, and also a slightly reduced premium for Faroes salmon. Moving on to page 15, consumer products. They had record high revenues, record high results. You see the product weights sold was up by more than 10% year-over-year. Positive developments in many markets, many of the key big European markets, and also in the U.S.
We are selling more value-added products from our manufacturers in Europe and the U.S. and also Asia. The profits were good in the quarter, and they will also impact EUR 10 million insurance income related to the fire we had at Kritsen during the summer last year. We do see that the competition has tightened in this segment, particularly in the chilled European segment. The profit in Q1 will be impacted both by this fierce competition and also the fact that Easter is in Q2 this year compared to Q1 last year. Easter is a very important season for this division. Q1 results will be impacted by these two factors. Feed on page 16. Another good operational quarter with record high feed sales and also for the year. The feed factory in Norway produced close to 350,000 tons, which is a new record. Very good operational results.
The feed factory in Scotland is nearing completion and is expected to start out production in Q2. At this point, the full utilization will be self-sufficient with feed in Europe. Of course, with the new all-time high production in Norway and also our new feed factory in Scotland coming on stream, we see that there is enough supply of feed in the market. Hence, the competition in the feed market has tightened a lot. This will continue to put pressure on margins going into 2019. The Global Cost and Procurement Improvement Program on page 17. I mentioned the realized savings of NOK 61 million in 2018. This will gradually filter through our cost of stock and biomass in 2019, supportive of lower costs. We have also initiated another program, a new program, with a target of EUR 30 million split in two.
The first part is along the same lines, a cost improvement program of NOK 15 million. The second part is professionalizing procurement of NOK 15 million. Standardizing procurement, buying equipment in a more professional and standardized way compared to in the past. This should also contribute positively to the target savings in 2019. Okay. That was the operations. Going into the financial section and market section on page 19, the P&L. I mentioned the revenues and EBIT. If we go down the P&L, we see net fair value adjustment being positive, NOK 11.8. This is mainly the cost of higher volumes in C. Our biomass year-over-year is up significantly. Also from the previous quarter result, hence the positive fair value adjustment. Income from associated companies, that's Nova Sea, our Norwegian associated company.
They delivered also a positive result hence the NOK 13 million income on that line. If you go down the P&L, net financial items being impacted by the market or fair value adjustment or fair value effect of the convertible bond of EUR 26 million, and also mark-to-market effects of FX. NOK, the Norwegian kroner depreciated versus Euro towards the year-end causing this negative mark-to-market valuation. Most of that effect was reversed in January as the NOK strengthened. In the quarter, we made EUR 0.01. I'll come back to the cash flow items. EBIT margin of close to 20% in the quarter, and the return on capital employed, which is very good at 26% for the quarter and almost 25% for the year. A very good year for the company. The balance sheet on page 20.
You see that the assets is up significantly year-over-year, that's mainly driven by three factors. The biomass in sea is up a lot on increased volumes in sea, and also the associated market values, about NOK 350 million higher biomass. The net CapEx exceeding depreciation for the year. We also bought new licenses in Norway, farming licenses in Norway in 2018, contributing about NOK 100 million. The acquisition of Northern Harvest was about NOK 200 million. Those were the key factors impacting the increase in the balance sheet. Adjusted equity ratio of 54%. With the new leasing standard IFRS 16 commencing in 2019, that ratio will be impacted by some 4 percentage points. It's dropping from 54% to 50% as lease debt increases by about EUR 350 million. Next page, 21. Cash flow was more or less as we guided.
Change in working capital, slightly higher than guided on increased volumes. Taxes paid, in line. CapEx was lower by NOK 25 million. It's sometimes difficult to time the CapEx expenditure. As you see on the guiding for 2019, the under-investment in Q4 has been brought forward to 2019. Yes. Yeah, that concludes that slide. Interest expenses was more or less as guided. Moving on to cash flow guidance on page 22. Working capital increase of NOK 150 million. That's related to both an expectation of further biomass build in 2019, and also opening of the new feed plant in Scotland, which will tie some working capital. It's to support further organic growth. The CapEx of NOK 290, you see the details on the slide or the explanation.
It's really continuing what we've been doing the past few years, continuing to invest in our core assets, both on land and also in seawater. Building new smolt facilities in various countries. Also on the back of new farms being granted in Scotland and also in Canada and Norway, we expect to increase the seawater CapEx in those areas. Consumer products, we continue to invest downstream. Taxes paid is about the same level as in 2018. For financing, I will not go through the details. We have increased. We exercised the calling option December, we increased the bank facility by EUR 200 million. Partially refinanced the last remaining convertible bond, which was converted to equity in the period. Now our financing is very clear. It consists of bank financing, NOK 1.406 billion, and the unsecured bond of NOK 200 million.
The last point on IFRS 16, the covenant of 35% equity ratio will be adjusted for this leasing effect. No change in the, you could call it underlying equity ratio covenant. The supply development on page 24. The supply in the quarter was as expected, apart from Chile. Chile harvested more on the back of improved biology, so more fish was harvested than expected, and also the average weight was record high. Chile had a very good volumes throughput in the quarter, and the other countries were more or less in line. Prices we talked about on page 25. On page 26, we see that the global demand remains strong of 5% globally in the quarter on higher prices. Very good development overall. Europe increased its consumption. The U.S. continues to increase their consumption of salmon at higher prices.
Really the prepacked product category continues to stimulate and drive the growth in the U.S. market. Asia was a little bit disappointing this quarter. The lack of available large-sized fish and certain trade restrictions impacted temporarily the consumption in China and Hong Kong. The underlying growth in greater China and Asia remains firm. Going into page 27, the guidance outlook for the industry. We expect the industry to grow by about 5%, and the range that we put out is 3%-7%, and you see the breakdown. Slightly higher volumes in Q1. January has started high. We see on the statistics that export volumes landed from the various countries, in combination with the consumption rates per countries, has continued the year on a high note. Presumably harvesting has been high in January and will support the high harvest volumes in Q1.
It should come down slightly as we go into the remaining three quarters. Our own volume guidance for Mowi on page 28 remains unchanged. We have a record high biomass, the inventory of salmon as we refer to it in C, 300 tons, supports our guidance of 430,000 tons adjusted weight. A small increase in Norway for the year, a recovery in Scotland is growing by some 20,000 tons. Increase in Canada with Northern Harvest combined . Chile, we're harvesting more, recovering in Chile, and Ireland and Faroes are fairly stable. Rounding off the presentation. The outlook on page 29, we see a strong outlook for salmon, supported by a modest supply outlook and a Fish Pool forward price at NOK 6.3. A good price is expected for 2019 and the next 12 months.
The record biomass in C, I mentioned, that should support organic growth for Mowi in 2019 and flow some of the unutilized production potential that we have in our farming assets globally. A partial recovery of our potential. Organic growth throughout the value chain and feed. I mentioned Scotland, farming globally and also processing as we continue to invest. The new cost improvement program I mentioned, and also the fierce competition in consumer products will impact our Q1 earnings. The Mowi branding strategy implementation continues as we've changed the company name and launched our brand. More to come on that in the next quarter and years for that matter. Of course, the dividend to be paid in Q1 in March of NOK 2.6. With that, speaker, that concludes the presentation. If there are any questions, please open up the line.
Thank you, sir. And if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions. And as a reminder, if you would like to ask a question, it is star one.
I guess if there are no questions, then it concludes the call. Are there no questions?
No questions at this time, sir.
Okay. I think it concludes this earnings call. We're now going on a road show. I will meet many of you there. In the meantime, I wish you a great Wednesday, and we speak to you soon. Bye-bye.
This concludes today's conference. Thank you for your participation. You may now disconnect.