Escalating costs and low achieved price pulled down Mowi Q1 profits

Aslak Berge

Analysts are not satisfied after today’s trading update.

The first quarter results in 2020 came in well below the advance tips.

“Mowi (MOWI) delivers a weak first quarter trading update with EBIT 32% below median/mean consensus expectations. 50/50 due to higher cost and lower achieved price,” writes Thomas Myrholt and Robin Vinter, analysts at Sparebank1 Markets, in an analysis update.

At the stock opening Monday Mowis stock falls seven per cent.

The duo notes that EBIT / kg was EUR 1.29 compared to EUR 1.87 as a consensus estimate.

EBIT / kg was weak in all regions except for the Faroe Islands, but volumes were very low in this region, they write, adding that the company’s estimated production costs per kilo are the highest measured in any quarter historically.

“We see our 1Q EPS (earnings per share – editorial note) down 35-40 per cent and full-year EPS est. substantially down after this report. We expected a strong first quarter due to high prices in 1Q, but our full year Op. EBIT estimate was still 14% below consensus,” the analysts continue.

Sparebank1 Markets has a purchase recommendation with a price target of NOK 210 on Mowi.

Pareto Securities is nor satisfied with the report.

“Higher costs and lower price attainment, especially in Norway and the UK, are the main reasons behind the poor result,” analysts Carl-Emil Kjølås Johannessen and Gard Aarvik write in an analysis update sent well before the stock market opening on Monday morning.

“We are also lowering our estimates for the rest of 2020, and somewhat into 2021, driven by increased costs in Norway and the UK. We lower our target price to NOK 205, but repeat our purchase recommendation.”


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