Her i denne salen er det Mowi. Jeg tror mange av dere kjenner Mowi, men for sikresul er de tidligere kjent som Marine Harvest. Hovedkontor i Bergen og et av verdens aller største sjømatsselskaper. Alf-Helge Aarskog og Ivan Vindheim skal fortelle oss hvordan det gikk i andre kvartal. Vær så god! [/Foreign language]
[Foreign language] Welcome to the presentation of the second quarter 2019. Together with me to present, already introduced, but Ivan Vindheim on my right side. This one you don't need to read. We go on into the second quarter. It was a very good quarter for us, actually the best second quarter ever for the company, with an EBIT of EUR 211 million.
This is mostly backed up by higher volumes, 26% higher volumes than the corresponding quarter the year before. Also very good price achievement in the quarter, as well as strong demand for the product. If you take a look into the combination of price achieved and the volume sold, we see that consumers spent 3% more money on salmon in this quarter than the corresponding quarter before. Very good development in the business. Cost has improved from Q2 2018. Also in terms of our business, we have a feed division, and they set a record in terms of feed sales and production. We opened a new factory in Scotland in this quarter that has contributed to that result.
I have to say that the Norwegian operation in Bjugn has delivered fantastic in the second quarter and is really a machine for feed production, a really good plant. The board decided to rebuild the smokehouse in Kritsen. That's the smokehouse that burned down in July last year. We will launch the next Mowi launch, the brand launch. We started with Poland in the first quarter, the next one will come in France second half. We go to high-end restaurants in France, we go to retail after introduction into restaurants. Mowi has been very well received in the market in Poland. We are in most of the supermarkets down there and also in very high-end restaurants. An excellent product. We bought a company called K. Strømmen in Bremanger in this quarter.
We paid EUR 790 million for that company, EUR 150 million per license, because there was a lot of fish in the company and equipment, as well as four really good locations. For us, the location was the most important part, because then we have control in a very important area for Mowi, and Nordfjord, in terms of fish health and production, is key for us. Board has decided on a quarterly dividend of NOK 2.6 per share. This is to be paid out for the lucky shareholders in Q3 2019. A little bit about financials. Ivan will go more thorough through this later on. Important top line growth in the quarter, 15% compared to the same quarter last year. Now over EUR 1 billion in sales in Q2, a record for us. Operational EBIT are up even more, 21% up, very strong performance operationally.
Volume-wise, 26% up to 98,000 tons. A quarter where most of the divisions or most of the business units delivered good numbers, and I'll get back to that a little bit later. If you see on the EBIT per kilo here, how much we make per kilo produced in the different production countries. Scotland was the best in the quarter with almost EUR 3, EUR 2.92 per kilo. Norway at EUR 2.45, you can see the rest of the numbers. Ireland, small operation for us at EUR 2.66, almost only organic salmon produced and sold at a very good price. This is the spot price development in the quarter. Through the second quarter, we saw a falling price in most markets, from 10%-15% in the different markets where we sell.
Lately, we have seen increased price, especially the Canadian price on the West Coast, with almost EUR 1 a kilo up in price over the last few weeks. Obviously, on the Norwegian side, it's low prices in August. That's normally it, or lower prices in August. When you see through that and see into next year and an increase in volumes of about 4%, I think the fundamentals are very much in place in this business. This is price achievement for the different or the biggest units we have. The Norwegian operation achieved 100% compared to 91% last year. You see Scotland, 108% compared to 97%, and so it goes. Canada is all spot, and Chile is also 31% on contracts. Superior is the quality of our fish, 90% in Norway, 96% in Scotland, 92% in Canada and 90% in Chile.
If you say that the spot price is 100%, quality will then drag the price achievement a little bit down, and long-term contracts will drag it up. This is how we account for, in a simple way, how contracts and how our contracts perform compared to the spot price. To explain the improvement in results from Q2 last year, EUR 175 million. Feed improved, not a lot, but EUR 2.2 million. Remember, we are in a construction phase or commissioning phase in the Scottish factory. That took the results somewhat down but still improved from last year. Farming, on the back of, for the most part, volumes up EUR 35 million, market EUR 7.6 million up. That's sale of whole fish and into markets. Consumer products down EUR 7.1 million on the back of fish competition, especially in some European markets.
All in all, up to EUR 211 million in the quarter. Norway, by far our biggest unit. Out of the EUR 211 million made, EUR 126 million was made in Norway. Overall, a good result. Region South had a huge progress compared to the corresponding quarter the year before. We'll look at that a little bit later on. They were harvesting from very good sites. We harvested in Region South from basically mostly in Agder and Rogaland, where fish farming has good conditions in general. It's typical that obviously when we go back to Hordaland, sorry to say when you are in Hordaland, but then results fall down a little bit more. That has to do with fish health and, for the most part, the mortality rates on the fish. That can be fixed. Region Mid, impacted by harvesting of smaller fish.
We had to take out a few sites because of PD, and that's forced harvest in that region. You harvest out fish at 1-3 kilo, takes your cost up and your price down and impact your results negatively. Region North, stable, good result, and a good performance in the quarter. What we have seen over time now is that Region North performed very well. A little bit to the biology. Sea lice, a little bit increasing in Region South and Region Mid, Region North is stable, and this is obviously a key for how growth is given out in, or not given out, bought, and we have to buy it very costly in Norway. In Q3, we see we have two ISA sites that we're going to harvest from. We'll see somewhat lower harvest weights in Q3.
As I said, higher costs because of that. Unfortunate, but that is biology for you. Norway sales. Contract portfolio, very stable, I would say, around 22,000, 23,000 ton in Q3. If you see, compare a little bit up from Q3 2018, but not a lot. This is contracts on good prices and to stable customers going forward. It kind of sets a good, stable floor for our business. Q4, up. Q4 is obviously the season for smoked in Europe, and we have normally higher contract share. You can see compared to Q4 2018, the contract share is slightly up in Q4 2019. To the regions. I won't go a lot in details here, but you can see the improvement in Region South is tremendous. It's from EUR 1.1 to EUR 2.57 or EUR 2.6, if you round up.
As I said, this is for the most part because we have been harvesting from very good sites in Agder and Rogaland for the most part in that quarter. Region Mid goes the other way around, from EUR 2.63 down to EUR 1.88, on the back of what I explained before, harvest out PD fish and for the most part that, then some challenge with sea lice pressure in the area, so we have to take out smaller fish. Region North making EUR 2.97, which is a very good result in this quarter. All in all, EUR 2.56 against EUR 2.45. EUR 2.45 this year against EUR 2.56. On to the other regions. Scotland, actually our best performing region in this quarter. Increased volumes from almost 9,000 tons of fish in the quarter in 2018 to 16. Not quite a doubling, but close. That has a profound effect on the result.
At the same time, harvesting from very good sites in areas, good production, good price achievements, or slightly down from quarter before, but offset by higher volumes and much, much better cost. Very good contribution from Scotland in this quarter, EUR 46.5 million. We're very satisfied with the Scottish operation. On to next one, which is Canada. We are both on the east coast and west coast of Canada, so out of Campbell River, north of Vancouver, on the west coast, and Newfoundland, New Brunswick on the east coast. Here we had better volumes than corresponding quarter, driven by that we bought the company on the east coast in 2018, which harvested some fish at least. What we saw in this quarter was a price decline, or a price achievement wasn't that good in the second quarter.
As I said, this has recovered during Q3. Cost reduced year-over-year, however, Canada is still at a high level, we have much more work to do there to get this into the cost level where we are satisfied. Chile. Chilean operation, another good result. EUR 28.2 million in result compared to EUR 18 million in 2018. Increased volumes as well in Chile from almost 10,000 tons to 15, and around the same contribution per kilo. You see price went down on Chilean fish in the quarter, but cost improved. All in all, a good quarter. If you look at Chile as we speak, I have to say that there has been stocked a lot more fish. There are some challenges when it comes to resistance toward some medicine against sea lice.
That needs to be handled, and we have a plan in place, but if there's anything that is a concern for the industry in Chile. In the same way, almost like the Norwegian industry, I would have to say. Cost expected to increase somewhat in Q3 versus Q2. Not a lot, but a little bit on the back of what I said with sea lice and somewhat more SRS. Those diseases and sea lice, they go together. If you have control on sea lice, then your operation usually goes very well. On to our two small, but nice operations. We have one in Ireland and one in the Faroe Islands, both over time delivering very good numbers. Ireland, as I said, organic, special Irish salmon for special markets, achieve a very good price.
Has the highest cost in our operation, is branded and sold at very good money. Making EUR 2.66 per kilo, up from EUR 2.21 last year. Faroe Islands down a little bit. We have only three sites in the Faroe Islands, so we don't even harvest the whole year. Okay result in this quarter as well. On to our biggest division when it comes to number of people working there. There are some people that believe that Norwegian fish farming is kind of founded on we could do all our value-added in Norway, bring all the employment back to Norway, and this will go just fine. These people that's working in our plants in Europe, in Asia, in the U.S., they are the one actually laying the foundation for the good results in Norwegian fish farming.
If it wasn't for these people developing new products close to market, aligned with what the customer want, we wouldn't be able to supply. People want fresh fish, and they want it their way. You get the order in the morning at 7:00 A.M., and you have to deliver the same day, and you cannot do it from Norway. A lot of Norwegian politician doesn't seem to get that fully out, I think. It's very important to state this because obviously we, in Mowi, we are the company actually value-adding the most fish in Norway. We fillet it, and then we take the fillets down. The final value added, with the exception of frozen products, has to be done close to market.
Maybe we are not making a whole lot of money in this division this quarter, but they're really driving the development in the business. We're happy with that. It's a very tough business to be in. We have smokehouses in Poland, in France, in U.K., in U.S., as a starter, and a lot of small factories that is making sushi and sashimi slices and so on into the markets. They are, as we said, creating demand, and we see increased consumption, but the competition here is fierce. As you can see, we're not making a whole lot of money here. EUR 4.9 million, down from EUR 12 million, but we are going at it, and we want obviously to improve it, and we will. We have factories that is doing fantastically well. A few mentioned here.
Pieters is in Belgium, Rosyth in Scotland, Sterk in Holland, and Miami and Dallas as well. Really good improvement. We had tough competition in our factories, especially in Poland and France. Especially in the smoked segment. That is the world we are living in. At the same time, they're securing a good price for Norwegian salmon and the development of a very healthy and good product. It's easy to be taken into this election that's just coming up, that everything has to come back to Norway. I just have to warn you against that because it can backfire big time. Fish feed is something we do in the market, in the place where we operate. We built a fantastic factory in Bjugn. I guess windmills is off the chart and everybody doesn't like windmills anymore.
Here we are running a factory on windmills and nobody's complaining. It's very clean energy, we combine it, if you see the tanks out there on the side, we combine it with LNG, which is one also fairly clean source of energy. We have built a factory employing in this division, 150 people between Scotland, Norway. Maybe not a lot, but extremely important for the society in Bjugn and in Kyleakin and in Skye, where the lowest plant is delivered. Delivered a good result, or decent result, EUR 3 million. We want more. The Norwegian unit was close to 7%, we are in commissioning in Scotland, that was on the negative side in this quarter. At the same time, we see that when we are getting this plant in Scotland to start up, we see that we can produce even more.
The capacity was at 170. I think we can do 240 when we have debottlenecked the whole plant. This is important for us. The same we did in Norway when we built, we are a little bit cautious. We had the capacity in Bjugn at 220 when we started, and last year we did at 350,000 tons. The Bjugn plant's been operating for five years, produced 1.5 million tons in those five years, and was paid back in three years. You see that we can really develop industry also in the rural areas. I wouldn't put my value-added sushi factory in that place. On to financials. Ivan, you know much more about this than me, and also he will comment on markets, volumes going forward.
Thank you, Alf-Helge, good morning, everyone. As usual, we start with the P&L. As Alf-Helge correctly said, our second-best quarter ever. Also in terms of turnover, more than EUR 1 billion in the second quarter and just exactly EUR 2 billion the first half. Yeah, a good first half year for us and particularly a good second quarter. Operation EBIT, EUR 211 million. If we go further down in the P&L, no biomass adjustment this time around. Restructuring costs of EUR 90 million, that is related to the Kritsen fire and restructuring of that factory. As some of you are aware of, the board decided to rebuild the factory, announced in our stock release in the quarter. The EUR 90 million amount is fully aligned with the message we gave back then. Income from associated companies, that is first and foremost Nova Sea, a very good farmer in Nordland, where we own 48%.
They had EBIT per kilo of as much as EUR 3.15 this time around. It's really good. I haven't seen anyone manage to compete with that so far. We are very happy with our ownership in NovaSea, in general, but particularly this quarter, obviously. For net financial items, quite stable or normal this time, EUR 12 million negative. Underlying earnings per share, EUR 0.29. Volumes, 98,000 tonnes, up as much as 26% year-over-year. Of course, the big driver of the results we achieved in the quarter. Return on capital employed or return on invested capital annualized, close to 22%. Over to the balance sheet or what we call the financial position these days. The total balance sheet now amounts to EUR 5.6 billion. We are growing.
You can see up EUR 1 billion year over year, driven by both acquisitively and, I would say, first and foremost, organic growth. You have close to 27,000 tons more biomass in sea year over year. We have bought licenses in last year auction. We also have invested heavily in various greenfield projects. We acquired Northern Harvest last year, and recently we have acquired Kystreggen, but Kystreggen doesn't impact these numbers. We have a growth strategy, and I think the numbers, they are quite evidently there. Net interest paying debt, EUR 1.1 billion. Yeah, somewhat below our long-term target, but in line with at least our internal forecast for this quarter. Equity ratio of solid 53%. Over to the cash flow. We started the quarter with a net interest-bearing debt of EUR 1.0 billion. We made EUR 248 million in operational EBITDA.
We tied up some working capital, a raft increase in biomass. We paid taxes of as much as EUR 82 million. Yeah, the lion's share of the taxes this year is now paid. Net CapEx in line with our budget and the forecast to the market, EUR 69 million. Of the investments and dividends received, EUR 70 million is related to dividend from the associated company, Nova Sea, which we have just talked about. Net interest expenses paid in the quarter, around EUR 15 million, so quite normal. Dividend is the dividend the board decided to distribute after the first quarter. All in all, net interest-bearing debt at the end of the quarter of EUR 1.1 billion. As you can see from more or less the footnote, this is euro. We are a euro company, and 50% of the salmon is sold in euro.
Cash flow guidance, no changes since the 1st quarter, apart from taxes paid. It is now EUR 160 million for the year, up from EUR 140 due to higher earnings. You could argue for the right purposes. A quick overview of our financing. We are very proud of this financing, particularly me and my team. We have a bank facility with the best banks out there according to us, and I guess also according to them, DNB, Nordea, ABN, Rabo. The two last ones, they are Dutch, Danske Bank and SEB. We also have a senior unsecured bond of EUR 200 million, five years tenor and a Euribor of 2.15%. This is unsecured money and Euribor, as you are aware of, is negative, so very attractive terms. A senior unsecured Schuldscheindarlehen. I guess not many of you are aware of this.
This is a loan in the German private market. It's first and foremost banks and insurance companies investing in this. 7 years tenor and a Euribor of as low as 1.70%. This is also unsecured money, really cheap financing and extremely important to us. That's why we always take every opportunity to bother the audience through it. Long-term debt target, EUR 1.4 billion, unchanged. Much about the financials. Over to the fundamentals. First, supply development in the quarter. In the upper bound of our forecasts, 8% year-over-year. Our forecast or expectation was in the range of 3%-7%. We have had more growth in Norway than expected, also the algal bloom drove the volumes in Norway in the quarter. This was in the northern part of Norway, as I guess most of you are aware of, it resulted in advanced harvesting. Chile in line.
Prices, a lot of negative figures this time. We are not used to that. Remember that last year we were at a record high level, so we are down 10% from a very high level in Europe and 30%, 40% in Americas from also a very high level. If you blend this with the contracts according to our calculator, the value of the market still increased by approximately 3% year-over-year. The underlying demand, the way we see it, is still very healthy. Over to the demand or the consumption of the fish produced. As you can see from the first line here, EU increased by as much as 8%, so this is the main market for the salmon. Accounts for almost half of the market. Very important to the European farmers, but also to all global farmers in general.
A very good development in Europe, and all countries are increasing. We're very happy with, again, the development in Europe. Russia is challenging, has been challenging for a long time due to political issues. This has turned from a fresh market to a frozen market, and we think that will be the case as long as the situation is that it is in Europe. Down 11% this quarter because of the Chilean fish was redistributed to the fresh market in Brazil. Selling fish fresh is always more profitable, and as you know, it's much shorter to ship or truck the fish to Brazil than to ship it to Russia as froze. Very good development in Americas in general, 6.5% increase. Brazil stands out, as just mentioned. USA this time, 3%. USA is the biggest single market for the salmon.
Close to 500,000 tons, and almost now half of the European market. The U.S. is extremely important to us. The footprint we have on the farming side, both in Canada, but I would also argue in Chile. It's very important to us in order to have the right raw material to continue to develop this market. I would also like to add that our growth in the quarter was higher than this 3%. China, Hong Kong, 0% this quarter, I guess a little bit disappointing. China is actually up by 5%, but Hong Kong is down. We can still tell that there are things going on there that also impact our business. In general, issues, political or others, are never good for trade, and salmon is a very global market, and product. Yeah, each time such things happen, it's in general not good for us.
Japan is a mature market, hasn't grown for years. 1.7%, I would argue, is just as expected. South Korea, Taiwan, 6% plus, it's okay. 5% in Asia in general, also okay. The demand, as we see it, is still very good. Over to the supply outlook. The fundamentals going forward, I guess as an investor, this is what really matters, maybe not this year, but next year and the years to come. For the remainder of the year, we expect a growth of 3%-7%. For the year as a whole, 47%. I think the consensus is 6%. If we look into next year, which is closing in, Kontali expects 4%, and our internal take is so far also the same. The fundamentals for next year look good for the market balance.
We are aware that there is some seasonality at the moment, but again, looking into the fundamentals for next year and also the years to come, we still have good belief in this. Over to our own volumes. No changes this time, so it's not much to say, really. We are still comfortable with achieving 430,000 tons in total. A big increase or growth compared to last year from 375. That being said, bear in mind that we have been at these levels before, so I would still like to use the word recovery. Again, we are comfortable with the numbers. I would like to say thank you and leave the word to Alf-Helge, and he can wrap this up with walking us through the outlook. Thank you.
I guess you can just stay, Ivan. We'll shortly open up for questions. Just to sum up, Ivan just said it, the fundamentals look strong. We don't see any oversupply in salmon going forward. Kontali estimates 4% next year, that's not more than the market needs. At the same time, Fish Pool prices, forward prices at EUR 5.9, a very decent price level. For us, organic growth throughout our value chain. The feed plant in Scotland, we continue to fine-tune. Farming side, we have ample opportunities to grow in Newfoundland. We have opportunity to grow in Chile, in Norway, Scotland as well. Slightly worse in the Faroe Islands and Ireland, they are small. In terms of downstream on the market side, our branding effort continues with full speed going ahead. To grow this company going forward, fantastic opportunity.
I think we are one of the bigger companies in Norway today, and we should stay that way. In terms of the acquisition, Kostrønnen, we expect to finalize this in Q3 2019, just in a few days, actually. That will bring us stability in Nordfjord, where we have a big part of our operation. Feed plant, already said, but we see we can increase the capacity from 170 to 240. That's always a good sign, and we need the feed for the future. As already stated, quarterly dividend, NOK 260 per share, paid out as ordinary dividend in the third quarter. With that, we open up for questions. Both Ivan and myself are able to answer at least some of them, we hope.
Kim, I don't know how you do it with the microphones and stuff, or if you have anything coming in on your computer.
One question regarding the feed plant. When do you expect it to be up and running at least close to full capacity, and what do you expect to do with the additional volumes that you are able to produce? At least your own operation in U.K., I guess, doesn't support such high volumes.
No, the plan for this plant is we do freshwater feed for all of Europe, so small feed. We also do specialized feed, organic feed for Ireland and any kind of specialized feed for Europe. We will do wrasse feed as well for our lumpsuckers and our ballan wrasse. Obviously, if we have excess feed, we have a fantastic feed, so obviously we can sell into the market going forward.
You expect to be running maybe not full capacity, but at least at high capacity next year?
Sorry, I'm not answering your question fully. Second half, we are already tuning in on good speed. That's why we are stating the numbers we are. Second half, we will be close to peak capacity. Next year, we should close in on our 240.
One question regarding organic growth in Norway. You have several of these development licenses approved. None of them, to my understanding, have been built yet or started to being built. What's your thought around these new technologies and how do you approach that?
Yeah. We have one, the doughnut, which is just waiting for a license or a location in northern part of Norway. That is closing in. We were rejected on the egg. We got only six licenses. We applied for 14. This was a big project. The government, unfortunately, scaled it down. We applied to build it in steel because steel is stronger, it's easier to decommission, and there is a secondhand market if we break it down. They said, no, it was too cheap to build it in steel. It's strange because Norway is very dependent upon reducing farming costs, not increasing it. It should be smart to build cheap, but that was not the case. That project we are evaluating will come with a conclusion during the third quarter. We have a few projects where we have not succeeded.
Storm Havbruk was rejected. That was offshore project where we're planning to produce underwater outside of the coastline, a really offshore project. They said no. Maybe we haven't succeeded fully on that, but some are in process and some are coming and some are gone.
Thank you.
Okay, we have one question from the web. It's from Christian Nordby at Kepler. He's asking, Regions South in Norway has strong development due to Agder and Rogaland. Should we expect EBIT per kilo to drop into the next quarter as we start to harvest in Hordaland?
I guess we guided on that, and I think it's fair to say that is the case based on what we now see.
Alexander from DNB. Could you shed some more light on the sea lice situation in Chile? You mentioned you have a plan. What is that plan? Secondly, your consumer products, you have a fairly low margin at the moment. It's a bit surprising to see Grieg Seafood report 2.5% operating margin in what I believe to be the same market. Is it just the market or is there cost issues as well?
First question. Remind me again. The first one was?
The plan in Chile.
Yeah, the plan in Chile. Caligus in Chile is a sea lice that is smaller than the one we have in Norway. The Norwegian sea lice has about 800 larvae going into the ocean. The Chilean has 200. What we see is resistance towards medication. That is to be expected over time. The plan is the best solution as we see it now is freshwater. Then there is demand for more wellboats, but we are getting there. We can also treat in different ways. Use freshwater against the issue. The second one was you referred to one of our competitors, obviously we have to look at the total number when you compare, there is competition in the marketplace.
We do very well and have good margins in some markets, but especially in some of the bigger markets like smoked in France, the margin is low to a certain extent, smoked in Germany as well. The cost level is actually down in our production. Because of higher volume, cost is going and the production efficiency is really good, but the price is not good enough. It's a big room, so now it's time. Okay. If not, do you have more questions on your computer, Kim?
No.
I would just like to say thank you. It's very close to time as well. Thank you for listening in, and have a great day. Thanks.