Yes. Good morning, everyone, and Welcome to the Presentation of Mowi's First Quarter Results. My name is Ivan Vindheim, and with me today to present our financials, markets, and harvest volumes, I have our CFO, Kristian Ellingsen. As usual, we start with highlights. First, profit operational EBIT, our main figure, EUR 109 million in the quarter, in line with the trading update of the 20th of April. I guess we should start describing the quarter as a very special quarter for Mowi, and I guess for the world as a whole. We started with close to record high prices at the beginning of the quarter, and as the COVID-19 pandemic escalated into a world pandemic of unprecedented character, we saw a sharp decline in prices. I think this is the sharpest decline, at least I have seen in my time in this industry.
However, despite the extensive lockdown measures we have seen, we have run our operations close to normal thanks to our fantastic 15,000 employees. I would like to take the opportunity to thank all of them making this happen. At the same time, we have managed to secure health and safety of us all, which is also very important. In Mowi, HSE is always priority number one. That being said, a lot of the external and internal measures to avoid infections, we have incurred more costs, and we are also incurring more costs right now. On a positive note, they will disappear when the world and Mowi returns to normal in not too long time, hopefully. Farming volumes of 83,000 tons, in line with our guidance for the quarter.
We saw record high volumes in consumer products of 52,000 tons, driven by a shift of volumes to retail at the expense of food service. The food service segment has, as I assume you're all aware of, taken the biggest toll of the lockdown measures. We also saw seasonal record high volumes in feed, 94,000 tons. Also, seasonal record high volumes for Norway. As you may know, we have two feed factories, one in Norway, one in Scotland. We have seen good growth in Norway during the quarter. This increased demand has also resulted in record high volumes for the Norwegian factory. The Scottish factory has started on its first full year, so that they deliver record high volumes, I guess is something we can take for granted.
As announced in the trading update of 20th of April, the board has decided to postpone the decision on the first quarter dividend until the second quarter. Over to key financials. I will not say too much about it here. Kristian, our CFO, he will walk us thoroughly through this later on in the presentation. As already said, operational profit of EUR 109 million in the quarter. Net interest-bearing debt, EUR 1.356 billion, so below our long-term debt targets. A very good cash flow in the quarter since we have untied working capital. This is the season for that. Net cash flow per share of EUR 0.19 versus underlying EPS of EUR 0.14. Harvest volumes, we have already touched the base upon. Margins, we will revert to later on when we address the various segments. I've already commented a little bit on salmon prices.
As you can see from the graph here, we started at close to record high price levels in all regions. After the beginning of the year, I think we have seen the sharpest decline, at least in recent times. A very strange quarter for Mowi, for the industry, but also for the world as a whole. In terms of price achievement, not great this quarter, I would say. For Norway, we are impacted by downgrades. Superior share of 89% in the quarter is somewhat lower than what we would like, driven by winter sores. We have seen a problem with winter sores both in Norway, Faroes, and in Canada this quarter. This have taken its toll on price achievement, unfortunately. On a positive note, we think this will improve going forward. Norway is also impacted by negative contribution from contracts in the quarter.
Those contracts will most likely give us a positive contribution in the second quarter. The Scottish price achievement, good in the quarter, 101%. Canada, 92%. 100% of the Canadian volumes are sold in the spot market. This is spot compared to spot. Winter sores is one part of the explanation, also the reference price, Urner Barry. It looked like Urner Barry lagged a little bit versus the market development in the quarter. Bear in mind that Urner Barry is not an online reference price. Urner Barry is a manual reference price with its weaknesses. I think a part of this is also because of the way we measure Urner Barry. This also go for the Chilean fish. In addition, we also had low superior quality, as you can see from numbers, 85%, driven by SRS related sores, so not winter sores, but SRS related sores.
In addition, we also sold a big proportion of our volumes to Brazil, and in the first quarter, the Brazilian spot prices were lower than in the American quarter. Far, at least in the second quarter, those prices are much more similar. Much about price achievement. Over to the operational EBIT waterfall. Farming is the big change component this time around, down EUR 83 million year-over-year. More than half of this is because of low volumes, 83,000 tons this quarter compared to over 100,000 tons last year. Also a part of it is cost. For the other segments or business areas, we have more or less a flattish development. Over to our biggest business area, our biggest segment, Farming Norway. Overall, a decent quarter, I would say. We'll come a little bit back to the spread in margins between the regions.
I think it's right to say that the biology and production in the quarter has been good. What we are measuring here is what we call RFS, released from cost stock. The major part of that cost is related to 2019, and 2019 was a very challenging year for us biological-wise. Particularly the generation we have been harvested from, 18G S0, have been troublesome for us. This has resulted in low volumes, high cost of stock, and also a lack of economies of scale. Production-wise, a good quarter, I would say, but in terms of recognized RFS volumes, et cetera, not satisfactory, but driven first and foremost by a challenging 2019 production. We hope that if the production we have now continue going forward, this will lead to improvements in RFS cost for the Norwegian production, particularly for the second half.
It goes without saying that COVID-19 has taken its toll on the Norwegian prices. In terms of price achievement, we have already commented duly on that, somewhat low because of problem with winter sores. Over to the regions. Not a big spread this time around. North, EUR 1.77, EUR 1.72 in South, and EUR 1.54 in Mid. Having said that, bear in mind, the lion's share of volumes in North was in March. March was the month, as you may know, with the lowest price. Adjusted for that, North would have been above EUR 2 in margin. We had a reasonably good quarter for North, although the margin here indicates differently. Again, timing of volumes was not great for North this time. South, EUR 1.72, I think is a good margin in this region. South is a much more challenging region than North and also Mid.
In terms of the margin for Mid, EUR 1.54 is not something we are satisfied with. It should deliver better. The main explanation is the generation we are harvesting from, low volumes. Again, 2019 was a challenging year for our Norwegian operations, particularly for region Mid. Hopefully, this will improve going forward. At least the start of the year has been good. Over to our contract portfolio for Norway. Contracts these days are absolutely very important with the decline we have seen in the spot prices. A stable contract volume portfolio also for the second quarter and third quarter. We saw a drop in prices from the fourth quarter into the first quarter, EUR 0.5, so EUR 0.5. Going into the second quarter and third quarter, we have stable contract prices. Scotland. Scotland have been through a prolonged period of challenging biology.
We had algal bloom last September, we also have struggled with Pasteurella and Sea lice. RFS cost for Scotland in the second quarter is very high and far too high. On a positive note, it looks better now. It looks like biology is improving. The fish has started to grow. We are expecting improved cost numbers for Scotland going forward. Positive contribution from sales contracts. The Scottish market is, to a large extent, a contract market, contrary to most of the other markets in the salmon world. Over to Canada. Low volumes this quarter, 8,000 tons. Volumes will increase going forward. Normally, that leads to improved costs, more economies of scale, et cetera. We had a very challenging year for Canada last year. If you remember, we had the mass mortality in Canada East, lost a lot of fish.
We also were struggling with the biology in the west. These numbers are obviously highly impacted by low volumes and RFS numbers for Canada is impacted by the 2019 biology. With higher volumes, with our normalization in east going forward, we are expecting a better RFS development in the time ahead. This will come gradually, so don't put too much expectations into next quarter. It's also very encouraging to see that we have gotten the 10 licenses that were temporarily suspended last year back. This is very encouraging and very important with regard to our growth strategy in Canada East. It's of utmost importance that we have support from the government. We have all the time claimed that we did anything wrong. This was caused by mother nature, I think the review, which have been carried out, has proven that to be right.
Again, very encouraging to get this news. The last bullet point, harvest volume to increase for the remainder of the year, as already said. That should help with regard to both cost and operational performance on land. Over to Chile. Relatively good results, I would say, driven by high contribution from consumer products. EUR 1.2 is good in the quarter, and I think it's a long time since I've seen such a low spread between the Chilean margin and the Norwegian margin. We have negative scale effects on cost due to low volumes. Almost 20,000 tons last year as against below 14,000 tons this year. That takes a toll on cost. It always do. Biology in Chile is stable, and we are not carrying any frozen inventory.
I see there is a lot about frozen inventory in Chile in the media right now amidst this COVID-19 situation we have, and for good reasons. Mowi, we do not hold any significant frozen inventory in Chile. We are in a good position in that regards. Over to Ireland and Faroes. We didn't harvest in Ireland in the quarter, but we had good biology, good growth. I think things are running well in Ireland right now and also improved situation year-over-year. With regard to the Faroes operations, we are harvesting from our best site in the Faroes right now, Eiðsfjørður. A great margin as you can see, almost EUR 2.8, which is great, although superiority is low, 80%, driven by, as we already have addressed a few times, winter sores. Very good results in our Faroe operations in the quarter.
Over to consumer products. As stated in the highlights, record high volumes sold in our first quarter. Unfortunately, the contracts we entered into during the fall of 2019, they are not good. I'm talking about Europe, where we have our biggest lag. Those contracts, they take its toll on the overall margin. Consumer products in U.S. is really good in the quarter. Very good numbers. Asia, okay. Europe is the disappointing part. On a positive note, we see a shift towards more and more in retail, led by the COVID-19 situation we have. That helps for our European operation. We are expecting better earnings in consumer products going forward. I also think we should say that we didn't get any help from Easter season this year. Normally, when we have Easter, we have a peak season. Only the Christmas season is better.
This time, unfortunately, there was no help from Easter season because of the obvious reasons. On to feed. First quarter is a low quarter for feed. That's the part of the year the salmon grows the least because of seawater temperatures. Despite that, we had a good quarter, record high volumes, as we already have said. Particularly impressing in Norway, driven by good demand and good growth in our Norwegian farming operation. 95% self-sufficiency rate in the quarter is also very satisfactory. That means that we are producing and consuming the feed we produce ourselves. With that, Kristian, the floor is yours. You can walk us through the financials, markets, and harvest volumes. Thank you.
Thank you for that, Ivan. Good morning to everybody. We'll take a look at the financials, markets, and harvest volumes. As usual, we have the quarterly material with all the details. Please take a look at that as well, and you will find more information in addition to what we say here in the presentation. We start with the overview of profit and loss, where the top line shows operational revenue of EUR 885 million, which is 10% down from the comparable quarter, mainly due to lower volumes. We see that harvest volumes are 20% down. Sales volumes are somewhat lower down than that. This is mainly driven by volumes. The effect of lower volumes is partially offset by higher achieved prices in our markets segment and also in consumer products.
We take a look at the operational EBIT, EUR 109 million, down 44% from Q1 2019, again, mainly driven by the volume decrease. Also, as Ivan commented, higher costs and also lower earnings in consumer products. We have the items between operational EBIT and financial EBIT, this time we have a negative fair value adjustment of biomass of EUR 159 million, which is mainly due to lower prices at the end of the quarter. Associated companies, EUR 2 million. This is mainly Nova Sea. Translated into operational earnings per kilo, this was as much as EUR 2.96 per kilo on 9,300 tons. Another very good quarter for Nova Sea. This is an impressive margin on good operational performance and also good timing of sales. Net financial items, EUR 40 million negative, this time impacted by unrealized currency effects, mainly due to the weakening of the Norwegian kroner.
The key figures listed here, underlying EPS, net cash flow per share, margin, and return on capital employed, they are impacted by the lower operational earnings. The dividend paid is the Q4 dividend paid in the beginning of March. We move on to the financial position. As we see here, the financial position is solid, as demonstrated in these figures. We also see that the figures are relatively stable from year-end 2019. Non-current assets, EUR 3.2 billion, very stable. Current assets we see are down approximately EUR 340 million, where around EUR 170 million of that is explained by release of receivables and around EUR 160 million is then the net reduction in fair value adjustment on biomass. That are the main explanations. If we move on to the other side of the balance sheet, we have the debt side.
We have a net interest-bearing debt of EUR 1.4 million, EUR 1.356 million, so still a little bit below the target. We have the equity with a healthy equity ratio of 51% adjusted. A solid financial position for Mowi. This table shows the cash flow in the quarter. Cash flow from operations, as commented also by Ivan, includes a large seasonal release of working capital, EUR 76 million. This is mainly related to release of receivables in the sales and marketing. As you know, they have the high season in the fourth quarter, we get the payments now in Q1. We didn't have the tie-up effect related to the Easter sales this year. The total effect is higher than last year. Tax payment is stable from Q1 2019. Other adjustments, EUR 12 million. That includes insurance payment for the factory in Kritsen.
Net CapEx, EUR 73 million, includes EUR 18 million related to purchase of MAB growth in Norway. The fixed price growth, 1% growth. The payment came now in the first quarter. This is the 1.49 licenses we acquired there in that fixed price purchase. We have the net interest and financial items paid, EUR 17 million this time. This is impacted by fixed interest rate swaps, and also fees related to the new green bond we had in January. Going forward, this item is expected to be reduced on lower swaps, and we don't have a fee effect. The payment will be around EUR 10 million going forward in the next quarters. Yeah, the dividend we've already commented upon. Accordingly, good cash flow. NIBD, pretty stable. Moved from 1337 to 1357 during the quarter, so still below the target level.
If you look at the cash flow guidance for this year, we maintain the working capital buildup of EUR 90 million. We are growing this company. We have extra volumes in farming. We are also growing in downstream. This ties up capital. With regards to the CapEx guidance, we maintain the EUR 265 million figure. That is excluding the effects from the traffic light system. We, as I said, already paid EUR 18 million related to this. Already we have 265 + 18 = 283 for the year. The authorities have announced an auction for the remainder of the growth, which will also come. If you look at this EUR 265 million figure, this includes investments in equipment, but also more complex building projects like the freshwater investments and the new plant in Kritsen, for instance.
Of course, due to COVID-19, there may be some delays in these projects. It's a little bit too early to assess all the potential consequences with regards to that. The risk is on the downside, i.e. underspend. No delays impacting smolt output or volumes going forward. Interest paid and taxes paid, there we have the guidance maintained for those items. We can take a look at the financing. It's very important these days with the elevated uncertainty across the world. We have a very solid balance sheet. We have a good financing. We have ample liquidity, around EUR 580 million in cash and undrawn lines. As also stated here, a total committed financing, almost EUR 2 billion. We have the long-term net target of EUR 1.4 billion.
I would say that the maturity schedule for our interest-bearing debt is favorable with regards to the elevated uncertainty regarding COVID-19. We issued a green bond, as you know, in January, just before the market turmoil started. We have no interest bearing debt maturing before the second quarter of 2022. The bank facility is the backbone of our funding, where the lenders are DNB, Nordea, ABN Amro, Rabobank, Danske Bank, and SEB, all of which we have a very good relationship with. We have the EUR 200 million unsecured bond maturing in 2023, the green bond in 2025, and the Schuldschein loan in 2026. We move from financials over to the more fundamentals in the market during the quarter. We start with the supply side. Supply growth globally was around 2%, as we see here. That was in the high end of expectations. Norway increased more than expected.
We had good growth conditions and a higher number of fish harvested. Scotland, however, they decreased 17%, as we see here. That was lower volumes than guided. They had a challenging biology in 2019 for the Scottish players, including us, and that was prolonged into the first quarter, combined with unusually harsh weather in Scotland. The weather also impacted Scotland sorry, Faroes down 20%. Many winter storms, also distribution challenges to Russia and China for the Faroes, for the industry. Chile increased 9%. That was more than expected. Expectation was 3%-8%. We had a higher number of fish harvested, particularly in January and February. That was a delay from the end of 2019, when we had the social unrest issues in Chile. Consequently, we had much larger volumes in the beginning of 2020.
March, however, was impacted by COVID-19. Lower harvesting in March in Chile. And then, we can take a new look at the prices. Ivan has already given some comments. Year-over-year prices increased in Europe, as we see here, 6%. Also in Canada, they were lower in Chile. Prices, they started at very good levels, second-highest levels ever in January. That is due, of course, to the reduced supply after the autumn of 2019, where we had the early harvesting in 2019, a lot of volumes on the market, prices fell accordingly. Volumes were lower, demand very strong, so we had a big increase in prices. We started in January at high levels. Then, of course, COVID-19 caused the prices to fall during the quarter, the lockdown measures, which impacted food service and the volumes normally going to that segment in the market.
First, of course, related to China, then to the rest of Asia, the main hit on prices came mid-March onwards. Historically, you see in the first quarter that you always, or usually, get a little help from the Easter season, a little increase during that period of time, on a period during the year when volumes are seasonally lower. That effect was not there this year. On the contrary, prices fell almost 50% this time. A dramatic decrease in prices. In Chile, prices were down year-over-year. The supply growth was high, as I said, in the beginning of the quarter. Chilean prices did not get the same lift as the prices in Europe and Canada did. COVID-19 caused prices to fall also for that origin. The decrease in prices continued in April and also in the beginning of May.
We have had now a recent increase in prices in Europe, as some countries are gradually reopening. Very positive that several countries have now either gradually reopened or indicated that they will relax lockdown measures in the time ahead. We are now seeing improved demand in several important salmon markets, such as France, Spain, Germany, and promotional activity in the European retail segment has also picked up recently. The prices in Europe are ticking somewhat up. If you take a look at demand, then we see that consumption increased by 0.4 in the quarter versus the comparable quarter. Yeah, we have stated that already. Consumption patterns were, of course, very impacted by the extensive COVID-19 lockdown measures during the quarter, particularly food service, but also wet counters in retail being impacted. These reductions have partially been offset by increased retail sales.
Very good development in retail. Of course, probably some loyal salmon buying end customers now buying salmon in retail to a larger extent than usual, and potentially also new retail end customers, which we hopefully will keep also going forward. If you look at the different regions, you can see that the effects are somewhat connected to the time span of the COVID-19 situation. We see that Asia was the first region impacted by COVID-19. They fell 11% year-over-year. They also have a larger food service share, 75% more or less, versus 35%-40% globally. They've also experienced difficult logistics in the quarter, significantly increased air freight rates, shortages of passenger planes. Volumes are accordingly down in Asia in the quarter. It's very positive that we know over the last month have seen a very positive development in especially China and Korea.
Much of the sourcing into China and Korea are with the cargo planes. Norwegian export volumes of salmon into China have steadily improved, have actually now exceeded 2019 levels for the same weeks. South Korea develops also well, while developments in the other Asian markets is somewhat more challenging still. Europe, which was the second region hit by COVID-19. Consumption increased 2% versus Q1 2019. COVID-19 came a little bit later to the U.S. This is where, of course, as you know, the epicenter is right now. Consumption increased 5% in the Americas in the quarter with a negative impact on food service activity. Some of the shortfall has been replaced by increased sales in the retail channel. Very good demand in the U.S. for prepacked products. Of course, the cost of air freight has also impacted the trade flows to the U.S.
That means that we have a difference between supply and demand. As we see in the supply figures, more or less, 548. Here we have 538, more or less. There's a difference of 10. That is related to buildup of frozen inventories in Chile mainly, as Ivan also commented upon. Our projection of inventories in Chile are in the level of 50 to 60,000 tons. Mowi Chile carries limited frozen inventories. We have benefited from our integrated value chain in the Americas, our U.S. plants. We carry limited inventory. A bit of a mixed picture during the quarter. I think it's very important to emphasize the very positive development we are now seeing with the improved demand on the gradual reopening. As we also state here in the last bullet point, we expect this to continue going forward. Yeah.
We can take a look at the supply going forward for the industry. For 2020, we expect a modest supply growth, 2%-4% for the year, down from 7% increase back in 2019. The Norwegian figures growth estimated to 2%-4%, as we see here, which is in line with the Kontali's estimate of 3%. For Chile, we estimate the growth of 3%-5%. Kontali estimates 5%. We have more individuals of the harvest-ready generations in sea year- over- year. There are also some effects which may dampen potential volume growth in Chile going forward. We have SRS, and we also have the COVID-19 situation. For the U.K., growth estimated to -3% to +1%, also in line with the Kontali's estimate.
We see also, of course, then that the second half of the year now in 2020, volume growth is higher than the first half of the year. More individuals and higher weights for the 19G S1 generation as opposed to the 18G S0. We have been harvesting now in the first quarter and for the first half of the year. If you take a look going forward into the future, which is always difficult, of course, but we have our projections and our estimates. For 2021, we expect the growth as low as 2%. This suggests a tighter market balance given a continued COVID-19 recovery, a recovery which we have already signs of being there, starting to happen. Of course, this is related also to less individuals year-over-year for the 19G S0, the generation to be harvested in the first half of 2021.
This has support in the numbers. If you take a look at our own volume guidance, we maintain the 450,000 ton guidance for 2020. We do some minor adjustments between the regions. We stick to the total guidance. We have a higher number of individuals in sea year-over-year. We also have a favorable development in mix with an increase in Norway and a decrease in Canada. Okay, much for the markets side. I will leave the word back to Ivan to give some comments about the outlook and the road ahead for the company.
Yes. Thank you, Kristian. Thank you for a thorough walkthrough of financials, markets, and our harvest volumes. Over to outlook. The COVID-19 pandemic has undoubtedly impacted us in the short term with regard to dynamics, prices, and costs. That being said, Mowi is capitalizing on an integrated value chain to meet the shift from food service demand to retail demand. To be a little blunt, without our big downstream leg, I don't think we could have managed this. I thanked all of our employees to begin with. I also would like to thank them again for making this happening. We have been through a very challenging time, but we have done reasonable well under the prevailing circumstances. As Kristian said, we have started to see improvements in some of the markets as some of the countries have started to reopen.
First, we saw it in China, Korea, now this has moved on to Europe and most of the big markets there, although U.K. is lagging a little bit, they are a little bit behind us in this pandemic. In Americas, it's still challenging price-wise. They are low, we expect to see the same patterns also in Americas, when they start to reopen there, hopefully not in long time. Supply outlook for 2021, low 2%. With increased demand going forward and our low supply outlook, we also believe in strengthened prices. With the pattern we already have started to see signs of, that will continue. As stated by Kristian, we are maintaining our volume guidance of 450,000 tons for this year. As we said earlier in the presentation, we are harvesting from our troublesome 18G S0 generation.
Hopefully, when we gradually start to harvest from the 19 generation, we will see improvements in our RFS, released from cost stock. Increased volumes will also help. The volumes in the first quarter was very low for us, 83,000 tons. Before we wrap up, we would also like to say thank you to the government for the proposal we had yesterday, where they proposed to discard the resource tax in Norway. Norway is, as you know, our most important region. Salmon farming is also very important for Norway. We think it is of utmost importance that we, excuse my language, get rid of this resource tax. Again, thank you. This is very good news, potentially. With that, we open up for Q and A, led by our IRO, Kim Døsvig. Are there any questions coming in?
Yes, we have some questions from various analysts and investors. To start with the first one, Alexander Jones from Bank of America, he has got two questions on costs. Could you talk through how you see farming costs develop in the second quarter and for the remainder of the year?
To a large extent, we are harvesting from the same generation in all regions, more or less. 18G S0. The shift in cost, you will not see in the second quarter, although we are expecting lower costs for Scotland. The 19G S1, which is the first part of generation we start to harvest from at the end of the second quarter. The main impact we will see in the second half. As, I guess, many of you know, the summer part is an extremely important part of the year and of the growth season for the salmon. It's also very hard to give any exact numbers, but so far things look better.
His second question is regarding the recession. Given salmon's higher price than some of the other proteins, how do you think about possible impact on demand from lower global incomes going into next year following the pandemic?
Could you repeat that again, please?
Given salmon's higher price than some of the other proteins on a relative basis, how do you think about possible impact on demand for salmon due to the global incomes going down next year following the pandemic?
Well, we have been through rough times before, and the salmon normally manage very well also when you have recessions. If you go back to the financial crisis in 2008, 2009, for those of you who remember that, the salmon prices, they were extremely high in the wake of that crisis. Of course, there are limits also for the salmon, but salmon with its features and the megatrends, it really stand out in the protein world. We think we will manage this also well.
Okay, moving on to Pareto from Karl Emil Johannessen. He is asking: you say the consumer products division is impacted negatively by contracts in the first quarter. Will this be opposite in Q2?
No, the contracts are as the contracts are, and they haven't changed. We are producing more and not all of our volumes are contracted. It's the extra volume we make money on. When you say consumer products, also bear in mind that this is Europe. In Americas, we are doing very good right now, also in the first quarter, very good earnings. The fierce competition, which we have referred to previously and also this quarter is in Europe. That's where this competition has led to much poorer margins for our contracts than what was the case back in the days.
As a follow-up, are you able to improve your margins in this division as demand for the product seem to be very high at the moment? E.g., take out higher salmon prices on retail products despite a drop on the raw material side.
We see already increased earnings in consumer products. We have only finished off one month in the second quarter. It's still early days, but again, we see improved earnings in consumer products.
Okay. Moving on to Kolbjørn Giskeødegaard from Nordea. He has also two questions. The first one on cost in Norway. Will Mowi Norway completely avoid the feed cost increase as your accounts are in euro?
Yeah, indirectly he's referring to FX, foreign exchange. Yes. Being a euro company helps us on the cost side. A small portion of the basket is Norwegian kroner. Not 100%, but not far from. What we are depending on is the market for raw materials. So far I think we are okay, but what will be the end game here is really hard to actually forecast on, because in the end, that depends on the raw material markets. As Kolbjørn knows and we know, the raw material markets, they are quoted in dollars and to some extent euro. The Norwegian krone is not important in the feed basket. That's only labor cost and, yeah, some OpEx.
Moving on to an operational question on the second quarter performance. As it looks now, what is the impact from winter sores in Norway, Canada, U.K., and Faroes in the second quarter?
It helps because of the season, rough the name winter sores. When we are approaching spring, that helps. Normally we don't have the problems we have had this year in the Northern Hemisphere. Winter sores is not of new date, but the extension we have of it, as we have seen this year, I cannot remember, I must say or admit.
Okay, moving on to a question from an investor, Andrew Benson, in Ambienta in London. He's asking on how the branded strategy and the developments are progressing in light of COVID-19.
Yeah. This is not good for COVID-19 is not good for our branding strategy and the progress. We were planning to launch the Mowi brand in retail in France during the second quarter. We also planned an extensive market campaign in the U.S. during the second quarter. They have both been postponed, but we have launched the Mowi brand in e-commerce in the U.S. and the development so far has been very good. We also see in general that the demand for retail products has gone through the roof. In the longer term, this also could be good for our branding strategy in general, if more consumption goes into retail versus food service. Let's see. Normally consumer behaviors, they take a long time to change.
I see that many people believe that many things will change a lot because of the COVID-19 situation in which we all are in. Personally, I'm not that sure really. We like our habits. Yeah. Some changes we expect.
Okay, his last question is on how the higher air freight costs have generally impacted Mowi in the first quarter and into the second quarter.
Yeah. We cannot go into details here because these prices, we are actually negotiating. We cannot stand here and say it, of course, increased air freight costs have impacted the trade flow. That goes without saying. Lack of planes in the air impacts cost of air freight for salmon. For China, I think we are at quite similar level. For China, the airfreight cost is not a problem. For all other countries, they are more or less up and also substantially up. Going into details there, we cannot, I'm afraid. Sorry.
Okay. Moving on to Lars Konrad Johnsen from Carnegie. He's got a question on cost and the cost outlook in Norway for 2020. He's asking if the costs are to remain at the current level into Q2, and how we see cost development for the 19 generation versus the previous 18 generation in terms of second half 2020 cost performance.
We don't like to go into too many details on cost because this is biology and much of this we don't know yet, the summer season, et cetera. I said numerous times already, the 18GS0 has been troublesome for Mowi. That is the generation we have been harvest from in the first quarter, and to a large extent, we will harvest from in the second quarter. On an overall level, we shouldn't expect too much on cost from the first quarter to the second quarter. Going into the second half, when we start on the new generation as he refers to, then we hope and think that we will see improvements. Again, we have to go through a summer before we are there. Let's see. At least right now things look better.
He was specifically addressing Norway and the production and growth in Norway in the first quarter was good. That's always a good start, although the first quarter isn't that important for 2019, sorry, for 2020 as a whole. We see we have a lot of snow in the mountains that help normally for the lice. We also have a cold May, that's good. If we also could have a cold summer with a lot of melted snow in ocean, that would be great for salmon, not for people that have to have their vacation over this year. If we can accept to be in-house, the salmon will thrive. Let's hope for a cold summer with a lot of rain and bad weather, not storms, but rain and cold.
Okay. His second question is in relation to Chile and the recent supply chain disruptions down there due to COVID-19. How has this situation affected Mowi and what do we see, i.e you, in terms of the current status and outlook for Chile?
Can you take the start of the question? It goes along.
There's been supply chain disruptions in Chile, with supply from Chile out of the market into the U.S. and into various markets. How has this situation affected the Mowi, and how do we see the current outlook for Chile?
Yeah. As a result of these disruptions he's referring to, we have seen a huge increase in frozen inventory Chile. As we stated during the presentation, we do not carry any substantial frozen inventory Chile. Far we have managed good because of the factories, the processing factories we have in the U.S. As the U.S. introduced lockdown measures, they closed the wet counters. All sale of fillets, the traditional Chilean product, were more or less off. You had to switch into a retail segment with prepacked portions, et cetera. This was fine by us because we have several processing factories in the U.S. which have been running at full capacity. Again, we have managed well. Without this, I think we would have been in the same position as the other farmers in Chile.
Personally, I don't know when this will change, but I assume this will follow the lockdown measures. When the U.S. start to reopen, they will also open the wet counters again, and the trade will go back to normality accordingly.
Okay. Moving on to Christian Nordby at Kepler Cheuvreux. He is also asking two questions. His first question is, will you have any processing capacity problems if the current retail demand continues as volumes ramp up in the coming quarters?
As long as we can keep people healthy and our factories open, I think we will manage well. The struggle is actually to avoid infections, to keep our factories up and running. We have seen from the meat industry in the U.S., for instance, that this has been a problem. On a positive note, the government introduced new regulation that more or less forces the meat producers to keep their production up and running. We are defined as what they say, an essential service in all countries. We also think we will get the help we need from the various authorities. Of course, there's always a risk that we run into some kind of local infections issues that could ruin this.
Touch wood, so far, we have managed well, and as long as we can, again, keep all our 41 factories up and running, then I think we will also do good going forward.
All right. His second question is on global supply outlook for 2021. 2% was referred to as the global estimate. Is Mowi likely to take market share in this environment? Which region stands out for Mowi into next year?
That's a very good question, but I think we shall revert to that when we release our third quarter results, then that's the timing of next year's guiding. It's far too early to say something certain about that.
All right. Moving on to Martin Callan from ABG. He is asking, do you think the current market environment could result in consolidation or structural changes in the VAP industry in Europe, given that profitability has been under pressure for some time?
Normally we do not share our thoughts on M&A, and I don't think we shall do that this time either. It's a good question, and in general, I would say, you normally see consolidations in many industries during such times in which we are in now. Talking specifically about value-added salmon and Mowi, that I don't think we shall.
Following up, his second question is it possible to quantify the expected improvements in earnings for consumer products in the second quarter?
No, we do not guide on earnings. Again, most of the quarter remains to be done. It wouldn't be right of us to do it either. So far, we have seen increased earnings in consumer products.
The last question from the web so far is from Nicholas Holberg. He's representing KLP. He is asking, as the HoReCa demand has been hit in the quarter, retail has surprised positively. What is your assessment from first-time buyers of the increase in volume?
Okay, the consumers that buy the salmon for the first time?
Yeah, I think that's his question. What has been the growth in retail? How much of that has been driven by first-time buyers of salmon?
We haven't any good data on this. It's a very good question. That's some of the things we are looking into. We have no data so far that give us any insight on this. Again, a very good question.
That concludes the questions.
Thank you. I would like to say thank you to all of you, and stay safe.