Mowi scores BBB+ rating; positive outlook constrained by earnings volatility and biological challenges

Editorial Staff

Mowi’s dominant market position as the world’s largest salmon farmer underpins the strong rating.

The world’s largest producer of farmed Atlantic salmon Mowi has been assigned a ‘BBB+’ long-term issuer credit rating by Nordic Credit Rating (NCR), with a stable outlook.

The rating suggests that these debt instruments have a relatively high credit quality and are considered to have a moderate risk of default. It indicates that the company’s long-term financial obligations, represented by these debt instruments, are expected to be met satisfactorily, reflecting a stable outlook for the company’s financial health in the long term.

The ‘BBB+’ long-term issuer rating is supported by Mowi’s strong profitability and cash flow, coupled with moderate financial leverage, according to a release from Nordic Credit Rating on Tuesday.

Mowi’s dominant market position as the world’s largest salmon farmer, operating across major global salmon farming regions, further contributes to its rating. The company’s fully vertically integrated operations help mitigate the impact of price volatility in product and raw-material markets, according to the ratings company.

Work to be done

However, the seafood sector’s historical earnings volatility and biological challenges, such as higher costs for sea lice treatment, constrain the rating. The sector also faces political risk due to its profitability and environmental impact, as illustrated by the Norwegian government’s recent introduction of a ‘resource rent’ tax on aquaculture.

Revealed: Mowi’s Top 5 highest paid executives for 2023

The stable outlook reflects expectations of low salmon supply growth supporting global prices in the next three years, with an annual average salmon price projected around NOK 94 per kg, despite seasonal variations. Mowi is anticipated to effectively manage biological challenges and mitigate recent cost inflation. Forecasts also consider the impact of the resource rent tax, with expectations of reduced dividend payments and reconsideration of long-term investment plans.

The rating could be upgraded if Mowi maintains a moderate financial risk profile and demonstrates stable supply of Atlantic salmon, resulting in reduced price uncertainty and improved margin stability. Conversely, persistent biological issues or increased financial leverage could lead to a rating downgrade, along with diminished demand for Atlantic salmon.


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