Good morning, everyone. My name is Ivan Windheim and I'm the CEO of MoVI. It's a great pleasure I wish you all welcome to the presentation of MoVI's 2nd quarter results of 2021. Also this time around, 100% digitally. With me today to walk us our financial figures and fundamentals, I have as usual our CFO, Christian Ellingsen.
And after presentation, our IRO, Kim Dursvik will facilitate a Q and A session via e mail where you can submit your questions in advance or as we go along. Please refer to our website at moVI.com for the necessary details. The disclaimer, I think we leave for self study. Then highlights. Overall, I would say the Q2 turned out to become a reasonably good quarter for Moi, both operationally and financially.
Despite the still ongoing pandemic, We have with minor exceptions managed to keep up more than 200 farms and 35 factories in 25 countries learning normally by means of maintaining the strictest biosecurity measures all across of our operations. At the same time, we have also managed to keep our people safe. So yet again, a big thank you to all of our 12,000 employees who have made that happen. It's much appreciated. Last time we met, we said we were expecting increasing prices in the Q2 on lower seasonal supply and strong demand partly driven by easing of COVID-nineteen restrictions in many markets.
This scenario unfolded and it's therefore encouraging to record the highest operation EBIT since the start of the pandemic of 137 €1,000,000 particularly taking into consideration a global supply growth year over year of as high as 9% when we factor in release of frozen inventory in Chile. That's evidently a clear indication of a very strong underlying salmon market, notwithstanding the still ongoing pandemic and the market disruptions it brings about. For the sake, the operation EBIT of €137,000,000 is also in line with our trading update of the 14th July. The increase in profit year over year from €99,000,000 is as already indicated, mainly explained by higher spot prices year over year, up by 18% in Europe and close to 50% in Americas. Farming volumes of 108,000 tons were stable.
The same goes for blended farming cost of €4.50 per kilo. However, adjusted for extraordinary costs in Canada East related to harvesting out ice fish in Newfoundland, Blended cost is actually down by €0.15 year over year to €4.35 per kilo. Other than that, I would describe biology as generally good in the quarter with good growth conditions and thereby good growth. It's no secret that we over time have not been satisfied with our financial and operational performance in our by far largest farming Snitz Norway Region Mid. And this year has been no exception in that regards.
So to address this, We have decided to split region mid into 2 new regions, West and Mid. The purpose of the split is to strengthen focus and Leadership Resources and adapt an even more hands on approach than previously. 1 cannot ignore the fact that fish Farming. Still it's very much about the details and craftsmanship that call for a great deal of micromanagement, particularly in the more biologically challenging areas. New Region West will cover Production Area 45 in Norway and New Region Mid with Cobre Production Area 6.
Harvest volumes in 2021 or approximately equally distributed between the two regions. So much about farming for now. For Consumer Products part, we had yet another good quarter with record high volumes for our 2nd quarter of 58,000 tons product weight. Earnings were reasonably good in the quarter as well, although increasing raw material costs owing to The soaring spot prices resulted in lower operational EBIT year over year, though still the 2nd best quarter for the 2nd best Q2 for Consumer Products to date. Feed And FEED numbers on the other hand were impacted by low season in the second quarter with reduced volumes and reduced earnings.
However, that said, the FEED itself performed very well in the quarter, which is maybe the most important factor for the Moi Group. Another important factor for MoE is sound and good financing. Therefore, it's a great pleasure we have Recently enter into a new green 5 year €1,800,000,000 facility with our bank consortium at very attractive terms. Sustainability is deeply ingrained in the MoWizz culture and at the heart of everything we do. So it's very encouraging to have reached 85% financing with this facility.
Last but not least, the Board of Directors has declared an ordinary quarterly dividend of NOK 0.96 per share, equivalent to 50% of underlying earnings per share. In addition, the Board of Directors has decided to pay out an extraordinary quarterly dividend this time around of NOK 1 per share supported by our strong financial position and a favorable outlook. So in our words, in total NOK 1.96 in quarterly dividend to be paid out after the Q2. Then over to key financials. Christian will go in-depth on financial figures under his session.
So to not disrupt the course of events, we will just touch briefly upon the most important ones now. Turnover of EUR 1,000,000,000 was the 2nd highest recorded turnover for a second sorry, the highest recorded second quarter turnover ever for Mowy, equivalent to 10% increase year over year. This is explained by, as already said, 1st and foremost, higher spot prices year over year. Volumes were quite stable. Operational EBIT of EUR 137,000,000 we have already commented on.
Underlying earnings per share in the quarter was EUR 0.19 and annualized return on capital employed was 13.6%, above the long term target of 12%. In terms of regional margins through the value chain, they were reasonably good in the quarter apart from Canada and more precisely Canada East, which was yet again loss making. We will revert to Canada and Canada East shortly when we address the various business entities. But first, prices. As already said, it was as expected an encouraging second quarter price wise With soaring spot prices in all markets on lower season supply and strong demand partly driven by less restrictive COVID-nineteen measures in many markets.
We also expect good prices going forward adjusted for normal seasonal patterns. And I guess I should add provided that the pandemic does not make a U-turn. Christian will elaborate more on prices and supply demand under his session. Then over to our own relative price performance. Overall, it was 4% below the spot price in the quarter, largely explained by contract prices lower than the soaring spot prices in the quarter.
For a summary of Norwegian origin, knock on effects from issues with winter source earlier this year and result in downgrading played an additional role which resulted in achievement of 8% below the spot price in the quarter. In Scotland, it was the other way around with price achievement 5% above the spot price, driven by good contracts. Relative price performance for salmon of Chilean region was 4% below the spot price, driven by a mix of soaring spot prices versus contracts, sales to Brazil and quality issues after our troublesome summer and fall season this year. Price achievement for fish of Canadian origin was also below the spot price with 5% for daypart, heavily impacted by harvesting out ISO fish in Newfoundland. Price achievement in Canada West was actually 3% above the spot price in the quarter.
Then briefly about EBIT waterfall. Overall, operational EBIT increased from €99,000,000 to €137,000,000 year over year. This was in its entirety driven by increased earnings in farming as a result of the already mentioned higher spot prices. Both farming volumes and farming production cost, we are stable year over year. The other business entities on the other hand contributed with €16,000,000 less in the quarter.
Then it's time to address the various business entities and as usual, we start with the largest and most important one, MoVI Norway. Operational EBIT was €93,000,000 in the quarter, up from €60,000,000 in a comparable quarter last year. EBIT margin was EUR 1.66 versus EUR 1.06 last year, I. E. An improvement of 57% year over year.
As the graph clearly demonstrates, this is caused by both higher prices and lower costs, 2 third and 1 third respectively. Volumes of 56,000 tons in the quarter were stable. As already said under the walk through of the relative price achievement for Norway, it was negatively impacted by contracts and knock on effects from downgrading related to Wintersource earlier this year. In terms of biology and growth, they were reasonably good in the quarter. Then the different regions in Norway.
Margin wise, it was a mixed bag also this time around. Region North stands yet again out as the margin winner with EUR 2.26 per kilo on very low cost. Region South achieved a margin of EUR 1.37 per kilo, which is substantially up from last year on higher volumes and a better performing year class. Region Mids margin, however, of EUR 1.07 per kilo was highly impacted by very low volumes. We have deliberately chosen to prioritize biomass growth of harvesting in region mid in the quarter following our troublesome Q1 with respect to gill issues and winter source that heavily weighed on standing biomass.
On that note and as already said, Region Mids financial and operational performance have over time not been satisfactory. So the split we have decided to do of region mid into 2 new regions will hopefully enable us and equip equip us to improve our performance in this very important farming area for MoVI in the future. Then our Norwegian sales contract portfolio. Due to our positive market view last fall, we decided to Have relatively low contract share for Norwegian volumes this year, I. E.
67,000 tons on a full year basis or approximately 26% of our total volumes as we speak, of which 27% is in the second half. In the Q2, the contract share was 29%. So far, this has truly been a successful strategy, But for order sake, we reserve the right to change this if we find it opportune. In terms of prices, for the reminder of the volumes of 2021, They are in line with recognized contract prices in the second quarter. So much about Norway, then over to Scotland.
MoWizz Scotland had yet another great quarter with an operation EBIT of €30,000,000 versus €14,000,000 last year And EBIT per kilo of €1.56 versus €0.98. The more than doubling of profit in absolute terms was driven by both higher prices and volumes in addition to improved cost year over year. Both production and biology very good in the quarter. Other than that, there is not much to say about MoVI Scotland this time around. The numbers, they speak for themselves.
For the Q3, we expect somewhat higher costs on lower volumes and harvesting from sites with a higher cost level. Then Chile. MoWizz Chile turned a profit of €15,000,000 in the 2nd quarter versus 12,000,000 in the comparable quarter last year. EBIT per kilo was €0.98 in the Q2 this year versus EUR 82 last year. This was driven by higher prices, volumes were quite stable and cost was up as a result of Knock on effects from an unusual warm and dry summerfall, I would say, this year in Chile, which led to more challenges than normal with oxygen levels and algae.
However, now it's wintertime in Chile with reasonably good biology and growth for our part. For MoVI Canada's part, the Q2 was a mixed bag To put it mildly, Canada West turned a profit of €8,000,000 or €1 per kilogram, which is a huge improvement from last year's loss of €5,000,000. Cana East on the other hand made a loss of €15,000,000 in the 2nd quarter, mainly related to harvesting out ice fish in Newfoundlanders, which impacted both price, not to mention cost. The fish is now harvested out and will not impact our Q3 results of any significance. To avoid further ice issues in You have started to screen all our broodstock for HBR0, which under appropriate conditions can mutate to the pathogenic ISA virus.
And all bulldog used for the 2021 year class was 100% free of HPR 0. We are also preparing to start ISA vaccination as from 2022 stocking. On top of this, we have introduced stricter biosecurity measures all across our operations, including collaboration with neighboring companies. Canada East has been Unfortunately, we've been with biological challenges since we took over the reign in 2018, but we return our own plan ongoing and all the measures taken and to be taken. We hope and believe that financial and operational performance for this region will improve going forward.
Then time has come for MoWizz Island and MoWizz Faroes. For salmon of Irish origin, we made an operation EBIT of €3,000,000 This is substantially down from the €50,000,000 we made in the record high second quarter last year, driven mainly by significantly lower volumes by Irish standards, close to 2,000 tons this year versus 4,000 tons last year. Margin wise, it was also lower, EUR 1.84 per kilo versus EUR 3.83 due to lower price achievements and higher cost. In the Faroes, operational EBIT was slightly down year over year from EUR 7,000,000 to EUR 5,000,000 euro due to lower volumes. Margin wise, it was quite stable, EUR 1.91 per kilo versus EUR 1.89.
Higher prices were offset by higher cost as we harvested from Hallowsvik this year and our best performing sites last year in the Fjordur. So much about farming then consumer products. As touched upon initially, the Q2 was a good quarter for consumer products with record high volumes for a second quarter of 58,000 tons product weight Sultan's operational EBIT of EUR 16,000,000 However, increasing raw material costs owing to Soaring spot prices year over year resulted in EUR 7,000,000 less earnings quarter over quarter. We saw a very good development in demand in almost all markets in the quarter, partly driven by, as already said a few times, easing of COVID-nineteen restrictions, aggregated 10% higher year over year. And Provided that the pandemic does not take a U-turn, we expect this positive development to continue.
Building markets and developing products are essential in growing demand and our branding efforts continue unabated with the launch of the MoVI brand in 3 new countries in the second quarter, Belgium, Italy and Spain. You can now find the MoVI brand in the shelf in 8 countries, the U. S, U. K, France, Poland, Belgium, Italy, Spain and Japan. Then our latest addition to the MoWY family, MoWY Feed.
The Q2 is characterized by low season for MoWizz Feed, where all that entails. And the Q2 this year was no exception in that regards. Operation EBIT of EUR 3,000,000 was somewhat down compared to the EUR 6,000,000 we made last year on Lower volumes due to among others less third party sales. Ref quarterly volumes of 96,000 tons versus 110,000 tons. Overall, field production has been satisfactory in the quarter and the field performance itself has been the very best.
The latter is maybe the most important part for the Moi Group. In the Q2, we enter into the salmon's main growth season in the Northern Hemisphere and as such production and sales for Moiv Feed will increase accordingly. Thank you, Christian. The floor is all yours for walking us through our financial figures and fundamentals. Thank you so far.
Thank you for that, Ivan. Good morning, everybody. Hope everybody is doing well. We start as usual with the Profit and loss statement, where we see good figures. It demonstrates that we have Improved our performance from last year.
The top line shows revenue of EUR 1,000,000,000 which is up 10% from Q2 last year on higher prices. Operational EBIT, EUR137,000,000, up by 39% And this was €38,000,000 higher than Q2 'twenty on higher farming prices, partly offset by lower results in sales and marketing. And then a few comments to the items between operational EBIT and financial EBIT. And net fair value adjustment, positive EUR 67,000,000 this time around on higher salmon prices. We have non cash impairment losses of EUR 40,000,000 related to the turnaround of Canada East And under some of the other items are 0.
Income from associated companies, that's mainly related to our associated company, Novasi, where we own 48.7 percent of the shares and they had a good operational result of EUR 2.12 per kilo, although somewhat lower than Mowy region North in Norway. And this operational Result translates into a return on capital employed of 13.6%, above the 12% target and increased from Q2 'twenty on higher results, partly offset by somewhat higher balance sheet. Underlying earnings per share was €0.19 and the net cash flow per share €0.31 positively impacted by higher earnings and also release of working capital in the second quarter. Then we move on to the balance sheet and we see that from end Year 2020, that was relatively stable. Adjusted for IFRS 16 Leasing, the balance sheet is up EUR 60,000,000 fifty-fifty between fixed assets and current assets.
We see that covenant equity ratio is very strong, 58.1 percent and the net interest bearing debt at €1,152,000,000 which is below the target level. So we have a very healthy financial position in MoVI. Then we move on to the cash flow statement. Cash flow from operations of EUR 236,000,000 Change in working capital was released mainly related to release of accounts receivable and inventory in sales and marketing. But now we expect to tie up working capital for the remainder of the year.
Tax payments were low last year, we see, and that was due to postponement of payments related to these COVID-nineteen aid packages from the authorities, so a more normal level this year. All in all, there was a positive cash flow of EUR 122,000,000. The other items are more or less as expected. When it comes to the cash flow guidance, that's kept unchanged from the previous quarter. So we will not go into further details there this time around.
Then a few words about cost and cost development. Cost was stable Q2 'twenty one versus Q2 'twenty 20, But it would have been reduced by €15 had it not been for Canada East and ICE issues. And we see from the graph here that we have been able to keep costs relatively stable in the period from 2016 to 2021 year to date. The annual cost growth measured as CAGR, component new growth rate is 1.8%, which is less than annual inflation in the period of 2.3%. So that means that for Mowy Farming, in this period, we have actually decreased cost in real terms.
However, the cost is higher than we would like. There has been an underlying cost pressure for many years. 1st and foremost related to biology. We see that the health cost has a CAGR of 6%, mortality cost 2.9%. So these items are dragging in the wrong direction.
Other cost items such as equipment, boats also impacted. Biology is being addressed through a wide range of initiatives, which we discussed in detail in the Capital Markets Day. So we will not go further into that here. But in any case, it's clear to me that cost initiatives and cost cutting measures, they matter. These initiatives have contributed to the fact that we have had a stable cost development despite this underlying cost pressure.
And when also speaking about cost, it's worth mentioning that we are in Mowi, the number 1 or number 2 performer in the various regions. We currently see a strong cost pressure in the industry and I guess in many industries, not just in salmon farming, including feed raw materials, boxes, packaging, equipment, salary pressures in many regions. So there is still very much an underlying cost pressure. And that means that it's very important to have a continued cost focus, which we do. It's necessary to combat the increasing feed prices, more challenging biology, more complex regulations.
And we are on track to deliver on the 2021 cost cut program. We have realized €18,000,000 year to date in June versus the target of €25,000,000 for the year. So this means that we have cost We have cut costs amounting to EUR 155,000,000 annualized since 2018, where the largest contribution naturally is from farming. And this is over 1,000 different initiatives throughout our business. And each initiative represents a verified permanent saving for the group, many are related to renegotiations of contracts, procurement savings related to improved A coordination between departments and units, entering into frame agreements and achieving volume discounts, tailoring contracts to our needs, fee cuts, reducing the number of suppliers, cuts on external services.
And in general, really a careful review of our spend in all areas. And this graph down here to the right also indicates how the cost savings are distributed amongst the various categories. We see that we have savings in many items, boats, treatment capacity, nets, net cleaning, vaccines, other health items, procurement savings and other initiatives. And through these initiatives, through this work on cost, We have improved what we call our cost culture and we now have an organization which is more cost aware. And in the end, we are of course dependent on everybody in the organization working in the same direction when it comes to working on cost.
And then 1 year ago, we announced the productivity program and That's part of the overall cost cutting program. We note that salary and personnel expenses, they represent the 2nd largest cost item after feed costs for the group. And there are, of course, opportunities here as in all other cost items. And that was demonstrated in 2020. We managed to reduce the number of FTEs for the first time, 353 down versus 2019, despite record high volumes.
So that represents a 3% productivity increase. And we are on track to deliver on this target we have, 10% FTE reduction productivity improvement by 2024 on assets volumes. And the FTE reductions will to a large extent be solved through natural turnover, retirement, reduced overtime, reduced contracted labor. And our expectation is, of course, to grow our business, grow the volumes. So we expect, in fact, to be a net job creator as we have also communicated before.
So much about the cost update, cost status and productivity program, where we are On track with our initiatives, but that's, of course, also important because of the underlying cost pressure. Moving on to financing. In June, we entered into a term sheet for a 5 year sustainability linked €1,800,000,000 facility in order to refinance the existing EUR 1,400,000,000 facility we have. In addition, there is a EUR 300,000,000 accordion option. We are very satisfied with the terms, and I wish to thank the banks for constructive conversations.
The lenders are DNB, Nordea, ABN AMRO, Rabobank, Transkebank, SEB and the Kordea Agricole. The latter is new from the existing facility. Interest on the facility is linked to MoWizz performance against sustainability KPIs, which are consistent with our overall ESG strategy. And sustainability linked facility is, of course, a significant step towards our aim of 100% green or sustainable financing. With this, we are up to 85%.
As with the existing facility, the financial covenant is an equity ratio of minimum 35%, so no changes there. And that is to be adjusted for the effects of IFRS 16 as today. And then we move on to market fundamentals. We see Yes, from this table here that the supply increased from the various farming regions in the quarter for the industry by 1%. But as we will see from the next slide, consumption in the market increased by 9%.
So the difference is related to inventory effects. In Q2 2021, there was a release of frozen inventory, mainly in Chile. So total supply growth of 9%. But the increase in supply from the farmers, that was somewhat higher than expected, mainly due to harvesting more individuals in Chile. The supply growth in Norway, 6% was in line with guidance, good growth conditions in sea, As Eivind also commented upon for Mauriz' sake.
Scotland, supply growth 17%, in line with guidance, increased biomass, improved harvest weights. But in Chile, a supply reduction 14%, less reduction in guidance as more individuals were harvested, but still a big contraction. Yeah, algal bloom in Q1 and impacting also Q2. Higher mortality in the industry, lower biomass in Chile And a negative growth is expected now for Chile for the remainder of 2021. Total frozen inventory in Chile is now expected to be at the normal level.
Yes. And then we see the various markets for the salmon. The table shows this consumption growth of 9% we see here. But despite 9% more volumes, we had a price increase spot prices increased by 25%. This indicates a really strong demand and good demand growth year over year, estimated to 10%.
Food service increased 50% year over year on gradual reopening and retail decreased slightly 4%, but holding up at higher levels. And we remember that due to last year, And retail was very strong, including the effect of promotional activity. Further progress in the vaccination rollout has, of course, led to a general easening of restrictions and gradual recovery in the Foodservice segment and also continued high activity in retail. We see the consumption in EU and UK increased by 2.1%. Retail volumes remain good, while the food service segment is still in recovery phase in Europe.
According to our information, some domestic food service frozen inventory was also released in Europe, which comes down in addition to the 2.1% shown here. But we see that especially the U. S. And Brazil, they standout, 22% consumption growth in Americas. We see a very strong retail demand still in the U.
S, a strong recovery in out of home consumption on the top of that. The U. S. Has come the furthest with the reopening and the figures are very encouraging from the U. S.
Asia, with a more mixed picture. China, Hong Kong decreased by 25% from a high base, I might add, in 2020, in the Q2, when the market was open before we saw tightening of COVID-nineteen restrictions. But we see that China and Hong increased by 37% from Q1. Japan relatively stable, Korea and other Asia showed a good development. Yeah, and here we see the spot price increases in the different markets Up to 8% in Europe, close to 50% in America.
And also we note that airfreight cost is still higher than before the pandemic. So that means that for Chile, which is, as we know, dependent on airfreight to their market in the U. S. There is still a difference between the spot price and the realized price in farming, which is larger than normal. When it comes to industry supply growth for 2021, We expect a global supply contraction of 2% to 3% for the second half of the year.
And for the next 12 months, we expect a global supply contraction of 2%. This, of course, indicates a tight market in the time ahead. I think that's strongly supported by these numbers. And then when it comes to MoWizz own volume guidance, that has been increased slightly to 450,000 tons from 4 $45,000,000 increase is in Scotland by 5,000 tonnes. So then I will leave it at that for now.
And then it's over to Ivan for the outlook statement.
Thank you, Christian. Much appreciated. Then it's time to conclude with some closing remarks before we wrap it all up with the Q and A session facilitated by our Aero, Kim Dusswig. As said a few times already, we are optimistic about the market prospects going forward. The market is the way we see it on the road to full recovery.
Concurrently, we have built new markets gradually During the pandemic and the recovery of the foodservice segment, we think will only bolster an already strong demand for the Atlantic salmon. Combined with our global supply outlook for the coming 12 months of minus 2%, we think that bodes well for prices going forward. And with MoWIS low contract share and integrated value chain, we think we are in a good position to capitalize on this. In terms of harvest volumes and guidance, we have as Christian just showed us, up to it slightly from 445,000 tons to 450,000 tons on a full year basis. And lastly, and as already stated, the Board of Directors has Yet an ordinary quarterly dividend of NOK 0.96 per share equivalent to 50% of underlying earnings per share and an extraordinary quarterly dividend of NOK 1 per share supported by our strong financial position and our favorable outlook.
So in our words, in total NOK 1.96 per share in quarterly dividend to be paid out after the Q2. Then I think we are ready for the Q and A session, Kim.
Okay. Thanks for that, Ivan. Just a friendly reminder to everyone, if you have any questions, please send those to me On my e mail address and then I will ask Ivan and Christian. The first question is from Nils Thomason in Fearnleys. How has biology in the different regions in Norway developed so far in the Q3 with regards to higher seawater temperatures and increased sea lice pressure.
Thank you, Niels. A very good question. So far, so good, I would say, but at the same time, knock on wood, As you indicate yourself, this is the most troublesome part of the year, but we are okay as per date or as of today.
Okay. And then A question from Karl Emil Johannessen, Pareto. What is your view on the potential new closed system licenses in Norway? At what prices per license are these licenses attractive?
Thank you, Karl Emil. Another good question. This was announced yesterday. So On behalf of the rest of the administration and the Board, we haven't spent so much time on this so far and the consequences it can have for us. But we take the news as very interesting and this is a potential opportunity for us.
But when it comes to pricing and the way this is allocated, that we haven't a clear opinion on yet. So you have to We are with us. This we can, I guess, discuss in-depth next time we meet?
Then the next question from Alexander Eichner, DNB. When do you expect Canada East to be back to a normal cost level?
Yeah. Maybe we should start with the last part, normal cost level. So this is a tricky part of the salmon universe. Canada East Has the lowest seawater temperatures in the winter season and the highest in summer season. So Cost level in Canada East will always be at a relatively high level compared to the best farming regions.
But That doesn't say that it's not possible to run kind of East profitable because it is. And that was absolutely the case until We were riddled with the biological challenges over the last 2 years. So we are targeting First now, breakeven going forward and then the idea is to start to make money here. But As you all know, it takes some time to grow a year class or generation in salmon farming after the long production cycle. So but for the generation we have in sea now, the shape is much better.
And with the ISO measures we have taken. We have faith in a better year next year with regard to the season and the latter is actually crucial. With ISA and significance of ISA issues we had this year, that's really devastating for not only financial figures, but also the operational performance.
Okay. Then his second question is in relation to Norway. Price Achievement was weak in Norway in Q2 due to downgrades contracts. What should we expect in the second half of this year?
Well, quality is increasing. So in terms of the debt discount, I think you will see improved numbers going forward. When it comes to contracts, losing money on contracts is always a good thing. That means that the spot prices are high and higher than what you expected. So that part we hope will Go on, but we don't know.
Normally, we have seasonal patterns in summer and We think that we will see that this year. So higher pressure on prices and an increased volatility in the Q3 and then increased prices towards the year. But overall, with our -2% global supply growth, The coming 12 months, it looks good. So we are positive.
Then Martin Karlen in ABG. He is asking, do you expect the challenging summer conditions in Chile To continue to weigh on costs going forward or have the improved biology during the winter had a positive effect?
Unfortunately, there are some knock on effects from biological problems. So the standing biomass is, of course, impacted by what happened this summer. But with good biology and good growth going forward, Some of this could be mitigated. I think we shall expect quite stable cost levels for Chile going forward, at least in the short term. Then I'm thinking of the next quarter and maybe the quarter thereafter.
Okay. Then a question from Christian Kepler Cheuvreux, he's got a more of a strategic question on the new licensing proposal yesterday. What are your thoughts on closed systems In general versus offshore or complete land based solutions?
That's really a big question, which we have to spend more time on than what we have available today, Christian. So and I'm happy to have this discussion with you. So but I think we take it in a different forum.
Okay. Then a question from Alexander Jones, Bank of America on demand. Demand into Q3, can you discuss what you have seen in the evolution of demand at the start of the Q3, particularly considering the Delta variant and new restrictions in some Asian economies. And the second part is, had food service demand Continue to recover or have you seen any temporary setback?
This was thank you for the question, Alisande. This was a very a short period. So it's really hard to talk about demand, yeah, when we apply weeks. But so far, the demand has been at a good level and we haven't seen any setbacks from the Delta variant in terms of the consumption of the Atlantic Sandman, maybe with the exception of China. So I think so far we are okay.
But of course, if The pandemic, for some reason, take a U-turn, then it will hit us as well. But so far, I I would argue, it hasn't. That's at least my personal view.
Okay. Question from Lars Konrad Johansen, Carnegie. Could you elaborate on the issues and expected improvements in region West and Mid now as you separate the 2 regions? Do you expect any extraordinary costs following the split?
We do not expect any extraordinary costs due to the split. So that part I think we nothing is for sure in this industry, but that part I think we can rule out. It takes 1.5 year in sea and then you have production on land. So for this generation and next generation, I don't think we Shall expect much, but that this will enable us and equip us to be even more hands on In this farming area, then what we have been previously, that's I really think we can take for sure and This will give us improvements. We strongly believe in the new organization model.
And with the 2 new MDs At the helm, we also have a very experienced and talented management. So particularly with the new with the newcomer in Region Mid. So this we will this we will follow with Our goal is always going forward, but we have to be reasonable. If we cannot expect much for the generation already in sea. But from there onwards, I think we must both expect and deliver better results than what we have done in this very important farming region for Moen Norway.
As we said during the presentation, we have not been happy with it up to now.
And then a question from the investor market on dividends. The board decided to pay an extraordinary dividend this Ordinary dividend this time around. Can you elaborate on that decision to pay an extraordinary dividend And some of the thinking behind the extraordinary dividend.
Yes. So we have recently introduced a Dividend policy in MoVI and this is 100% in line with that policy. So we have decided to separate our dividend with qualifying or calling it ordinary, we're naming it ordinary and extraordinary. So it's an ordinary part we can take for granted under normal circumstances and extraordinary part is at the Board of Directors full discretion. And the explanation this time around is, as we said during the presentation, It's based upon a very solid financial position.
We have a net interest bearing debt target of 1 point NOK 4,000,000,000 and we are far below that as of today. In addition, we have a favorable outlook. So with that backdrop, The Board of Directors found it appropriate to pay out an extra on a dividend this time around. And I guess you also remember that we sold off our well boat company just a few months ago. So that has also impacted our financial situation positively.
So but Again, this is at the Board of Directors full discretion. So you cannot put any automatic into this.
Okay, very good. That concludes The questions from the webcast.
Thank you, Kim. And then I would like to say thank you for the attention. Take care.