Second-quarter earnings estimates for salmon farmers are likely to come under pressure as salmon prices continue to track below market expectations, according to Arctic Securities.
The bank estimates the quarter-to-date salmon price at NOK 74.5/kg (EUR 6.78/kg), below consensus expectations of NOK 76-77/kg (EUR 6.92-7.01/kg). Arctic noted that prices have weakened throughout the quarter, suggesting the final Q2 average could end below the current quarter-to-date level. If prices average NOK 65/kg (EUR 5.92/kg) for the remainder of the quarter, the Q2 average would finish at around NOK 72.5/kg (EUR 6.60/kg).
At the same time, Arctic’s AIS-based harvest model indicates stronger-than-expected volumes from Norway’s largest salmon farmers. Mowi appears on track to exceed its 84,000-tonne harvest guidance, while Lerøy is tracking modestly ahead of expectations.
The model also points to a sharp increase in SalMar’s harvest volumes. However, Arctic cautioned that the scale of the increase raises questions about potential model errors, highlighting uncertainty around the estimate.
A more stable market emerges?
Using a salmon price assumption of NOK 73/kg (EUR 6.64/kg), Arctic estimates Mowi’s second-quarter EBIT could come in around 14% below current consensus, while Lerøy could be 18% below consensus. SalMar, supported by higher harvest volumes and lower group costs, is projected to deliver EBIT around 12% above consensus expectations.
The bank said weaker salmon prices are already reflected in share prices, noting that Mowi and Lerøy shares have fallen around 13% during the quarter, while SalMar is down about 8%.
Arctic argued that the more notable development may be on the supply side. Based on its analysis, harvest volumes appear to be becoming more evenly distributed through the year, reducing the traditional seasonal peaks and troughs between quarters. The bank said a flatter volume profile could contribute to a more stable salmon market over time.
