© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
And welcome to the third quarter presentation of 2019 for Mowi. Together with me to present, I have CFO, Ivan Vindheim. And I think we will just go right into it. In terms of this quarter for us, operational EBIT went from EUR 207 million in Q3 2018 to EUR 148 million in this quarter. We produced well in all areas, both Farming, Feed, and also Consumer Products had record high volumes. I'm very happy with the production in Feed and in Consumer Products, a lot of promotions going on in the consumer product area right now. So high activity. Reason for the drop in operational EBIT is the development in prices in this quarter on the back of high supply. The global supply grew by 13%, took us somewhat by surprise, and it's above our guiding. But then again, we know that the consumers in the world this quarter spent 5% more on salmon than they did in the corresponding quarter the year before. So even with a drop in prices there, the demand is very strong for salmon. And if we then take high activity in promotions and growth in most markets into account, I will say that the demand story still stands. We had, in Mowi, positive contribution from contracts in most of our operations. We had increased farming cost, and we had our fair shares of biological issues and incidents in this quarter. I'll come back to those when we come to the different countries. We started up in Scotland, successfully producing feed, as we speak, still in commission phase, but soon ready to go full speed ahead in our Scottish operation. We completed the acquisition of K. Strømmen, 4 licenses in Region Mid, which will give us many good sites and a good area for farming just south of Støtt. Quarterly dividend, the Board decided to pay out NOK 2.6 per share and to be paid out in Q4. Turnover-wise, north of EUR 1 billion this quarter, one of the highest or the highest quarter ever in turnover. Operational EBIT down, as I said, and harvest volume at 117,000 tonnes compared to 110,000 tonnes in Q3 2018. If you then look at salmon prices, as we wrote on the first page, quite volatile spot prices in all market, a downward trend that has kind of peaked up again after the quarter. We see increasing prices both in Norway and in Chile and in the North American market towards the -- or after the quarter ended, but still not untypical. I think you can see, if you look at these years, going back here, quite high prices in Q1, Q2, then dropping prices and then gradually increasing prices. I think that's probably the trend for this industry, if any. Price achievement, excellent price achievement for our operation in this quarter: 110% in our Norwegian operation, up from 102% in Q3 in 2018; 120% in Scotland, up from 114%; in Canada, we are in the spot market, also dragged down a little bit there, as you can see on the superior percentage, so 95%, down from 102%; and 103% price achievement in Chile. So here, we are satisfied. In terms of the EBIT bridge from Q3 in 2018, you can see the major change here is in Farming. And this is the majority of the reduction of the EUR 61 million, you can see there, is price-driven or spot price on salmon, slightly up in cost as well. I come back to that when I come into the different operations. In terms of the Norwegian operation, it's a mixed picture here. The result fell from EUR 160 million in Q3 2018 to EUR 103 million -- or EUR 104 million in Q3 '19. Harvest volume, slightly down from 71,000 tonnes to 63,000 tonnes and operational EBIT from EUR 2.25 million to EUR 1.64 million Good price achievement, and we'll come back a little bit to the different regions here. Low volumes and quite high cost, they go often together in Region South. I think we'll see improvement in Region South already in Q4. In Region Mid, we've had some issues. I'll come back to that when we come into Region Mid. But we've harvested a lot of smaller-sized fish, and we have had sea lice as a concern. We are in control of the sea lice situation, as we speak, but some areas there to improve upon going forward. Region North, stable, good performance in the quarter and low cost. The Norwegian sales portfolio here and the contract picture going forward. We have a normal increasing amount of contracts in Q4 2019, slightly north of the volume we had in Q4 of 2018, and we are on par in Q1 '19 with Q1 -- Q1 2020 with Q1 2019. It's almost 2020. Then to the different regions. Region South, as I said, I think this is a one-off. It's -- we harvested very low volumes, 4,000 or 5,000 tonnes for the quarter, close to 5,000 tonnes. And that had its reason in small stocking pattern here in this quarter and then one site that we had to take out early because of restriction on that site had smaller fish. But all in all, we also have good growth in this operation right now, so -- especially in Rogaland and Agder. So we will come back stronger here in the next quarter. Region Mid, our biggest region, struggled in some areas, specifically around [indiscernible] in which sites that was actually in very good condition in June, July with very low lice levels. And then we got lice in -- on those sites. We had one well boat then that went on ground or on to the rocks. That was a big well boat plant for this area. And in addition, we struggled with another service vessel. So here, we need to improve capacity. We need to have spare capacity. We were too low on that and need to improve on that going forward. So that gives obviously a big drop in operational EBIT, and that comes -- obviously, you get hit both ways when you harvest smaller fish and you have higher cost and when you have -- harvest smaller fish, you get lower price. So both factors works well -- or actually doesn't work well on the operational EBIT. I think Region North will stand out as one of the best performers also in this quarter as they've done for many, many quarters to come. EUR 2.28 is a good operational EBIT in this quarter, slightly down from the quarter in '18, but still prices are down substantially as well. Scotland, EUR 26.2 million in operational EBIT, up from EUR 12.3 million in the corresponding quarter in Q3 '18. Harvest volumes were high, 19 -- close to 20,000 tonnes or 10,000 tonnes in the quarter, and operational EBIT about at the same level. Price on spot -- in the spot market obviously took down some in Scotland as well. Volume worked the other way around. And non -- see where the cost was slightly up, and that, for the most part, lice treatment. We have had some issues here on algae bloom at one site, called Rum, took out quite a bit of fish for us in this quarter. And we have also a few other diseases here that we've been struggling with. So cost-wise, the cost in Scotland was up in the quarter. We expect it also to go up in Q4 based on also coming in with much lower volumes in Q4 in 2019. Canada. This consists of both Canada East and Canada West to these numbers. We had issue in our Newfoundland operation in Canada East. We operate both in New Brunswick and Newfoundland in -- on the East Coast of Canada. And what happened was we got extreme warm seawater, north of 20 degrees on surface level, with very and prolonged no waves, no current on these sites. The previous owner has obviously farmed in this area for many years, has never experienced anything like it. So this shows that we are in farming. We are -- depend upon nature in many ways and had used various shallow nets. Only 8 meter deep nets on the sites where we were struck with this incident. That is just too shallow. We had -- we took over this operation about 1 year ago and have built one brand-new site with bigger cages, deeper nets, did not get -- didn't lose one fish there. So I think we have the actions going forward ready. We need to get it because the sites are more than deep enough. So it's more tradition and, how to say it, farming practice from before that made this happen. So we lost 2.6 million fish in total, and that is a catastrophe for operations like this. And for those of you that's never been into algae blooms or major mortalities, that puts a really toll on the organization. You have to work day and night to clean this up. It's not the most fun job in the world. And I have to say that our workers in Canada have really done a good job with not the best of equipment. It's always easy to be a fish farmer in Norway, where you have the support industries. Here, you have to very much manage on your own. I think we have a good plan for this region going forward. For those of you have been there, it's a fantastic area to farm fish in, done right. Also close to the U.S. border. So I think we, together with the government and together with good competence and also gradually building up a service industry here, will manage well going forward in this area. And then again, there's no guarantee in fish farming. It's land-based, ocean-based anywhere because we are working with live individuals. So you can have issues like this. But again, a good plan and good experience should make us better going forward. Chilean operation delivering very well, I would say. Operational EBIT a little bit better than last year, up at about EUR 1 million. Obviously, the 14,000 tonnes in this quarter at the operational EBIT margin at EUR 1.32. I think that will go well compared to any other Chilean operations. They are now in a political situation, which is challenging in Chile. We have not -- what we have done is to put together a team, which we always do in situations and try to focus on safety for our employees in the Chilean operation and have not been hit so hard with the protests and can still continue working. But it is something that the government need to solve to make this good going forward. Issues around sea lice in Chile, we've been speaking about that for a while. We work on different types of treatments. The good thing about Chile is that many of the treatments we are using -- have been using in Norway that doesn't work anymore works well there. And the good thing is that the Chilean sea lice is different sea lice and much more -- or easier to deal with in many ways than the Norwegian sea lice. So I think that we can cope with. What we still need is a more predictable regulatory environment. I've spoken about that many times. That can really make Chilean to the salmon nation. Then I think -- the sound is still there. Fantastic. Ireland, Faroe Islands, small operation. A little bit down in Faroe Islands, some issues around there and no in Ireland from the quarter before. This is low-volume production, will be hit when you have low volumes and high cost and so forth. And in the Faroe Islands, we harvested from a site that has never performed. We have only 3 sites in Faroe Islands, one fantastic, the best site in Faroe Islands. So when we harvest from there, really good result. And one that is not so good and a third that's medium. So this quarter, it was the bad site. I think going forward, we see improvement in the Faroe Islands operation. Consumer Products. What's good to see here is obviously, the revenues are high, the volumes are high. It's high activity in an area that really creates demand. This is the girls and guys that is actually creating the food we're eating and that is creating the demand we see for salmon. And we see strong consumption rates in almost all markets where we operate, maybe with the exception of Russia and Japan. Strong demand and strong growth in France. Again in Germany. The U.K. market is going well. Margin pressure in this segment, we are hampered with high raw material contracts there into this division. There is competition here in this field. But I think in a way it's a good thing for this operation and for the salmon industry as a whole that we have a good functioning value-added operation. On to Feed. The fish feed operation delivered well, record-high volume. I would say that going from 1 to 2 factories, that should give record high volumes and it does. Scotland is coming on well. Norway had its best quarter ever volume-wise and I think earnings-wise as well, 100,000 tonnes from this factory in Bjugn. And EBIT margin at 7% in the Norwegian operation, isolated still. So Scotland took us a little bit down, but it's coming. And we are to be self-sufficient in our European operation here during 2020. With that, Ivan, I think it's good to look more into financials and markets and more on guiding on harvest volumes.
Thank you, Alf-Helge, and good morning, everyone. As usual, we start with the P&L. As Alf-Helge already has said, a record high turnover for the third quarter this time, and also for the first time above EUR 1 billion. Top line growth of 3%. So not as much as the growth we had on volumes, but that is explained by lower salmon prices. And operational EBIT, EUR 148 million, down from last year, driven by, first and foremost, the price but also a somewhat higher cost level. Biomass adjustment this time around as high as -- or as low as negative EUR 250 million (sic) [ negative EUR 215 million ], driven by the same spot price or prices. Income from associated companies is still, first and foremost, Nova Sea, EUR 12.7 million. This is our share, bottom line. The underlying profit or EBIT per kilogram at very attractive levels also this time, EUR 2.13, although somewhat lower than what we achieved in Mowi, Norway and North. Net financial items, negative EUR 10 million. So it's quite normal. Although the buildup is, as usual, made up by various components. Underlying earnings per share this quarter, EUR 0.20; cash flow per share, EUR 0.15; harvest volumes, 117,000 tonnes, the highest ever. So very satisfactory. Then over to the balance sheet. The total balance sheet now amounts to EUR 5.7 billion. It's up by EUR 0.7 billion year-over-year, driven by IFRS 16, which we have been through previously, almost EUR 400 million, and the remainder is mainly due to organic growth through CapEx and the acquisition of K. Strømmen and the consolidation we did in the third quarter. Net working capital quite stable, but please note that we have increased our biomass in sea by 12,000 tonnes during the quarter. So not year-over-year, but during the quarter. And the lion's share here is Norway. The cash flow statement. Good cash flow this quarter, relatively good earnings, not much tie-up in working capital led to a good cash flow from operations. Net CapEx EUR 61 million. A little bit low, and we will get back to the forecast for the year where we can comment on it more in depth. The acquisition of the K. Strømmen, EUR 51 million. The rest of the cash flow statement is quite normal. So we went from EUR 1.1 billion in net interest-bearing debt to north of EUR 1.2 billion. Then over to the cash flow guidance. We maintained our working capital guidance of EUR 150 million (sic) [ EUR 115 million ] for this year. We have already touched, based upon the CapEx forecast, we have decided to maintain it at EUR 290 million, but if anything, the risk is on the downside. We have a few delays in one of -- in some of our projects. Interest expenses, taxes are unchanged. The dividend, Alf-Helge has already been through. In terms of our financing, no changes since last quarter. We have a very solid financing with sufficient facilities, and that's very attractive terms, at least in our view. So much about financials. Then over to fundamentals. First, we go through the supplies for the quarter. I must say, much higher than what we expected, 13% year-over-year is a really high number. It's a long time since we have seen such an increase. And from the past that this is more than what the market can absorb in the short-term without changing the salmon prices. So the prices, they -- as you have already seen, they dropped substantially from the second quarter to the third quarter. Our original forecast was between 3% and 7%. And I think the consensus was about 5%. So the question is, how could this happen? And as far as we are concerned, the growth conditions in more or less all the areas have been very good this year. Plus, you also have some -- still have some biological issues. So this combined has driven the harvest to a record high level in the third quarter. Yes. We have already commented on the prices, this is year-over-year. So down in Europe by 13%, in Americas 5% to 7%. It depends on which currency you look at and in which part of the American segments, but the prices dropped further in America in October. So in October, this -- the change in price in Europe and Americas, they are quite equal. So there is a month like that. That being said, prices have increased from the bottom also in Americas. And if the industry supply outlook for next year comes true, we think that we will have a good supply-demand balance next year. As Alf-Helge said here, we had a very good underlying demand in the quarter. When we include contract prices, we see an increase in the value of -- or consume salmon of approximately 5%. So again, the underlying demand is good. If you address the various markets, good growth in EU, 12%. All the major markets, they are growing well, French -- France, Germany, U.K., but also Spain. Russia has been, yes, poor for a long time. You know why? So we don't spend so much time on it this time. The U.S., the biggest single market, is also growing at a very decent figures, 12%. Brazil is growing. China, also growth. So when we are -- when we have the right products for China, i.e., large-sized salmon, then the market is there. So it's just about producing and selling the right products for them. Also, rest of Asia, it grew very well in the quarter, in total 14%. So again, the underlying demand, as we see it, is still strong, but a 30% increase in supply year-over-year, that's simply too much also for the salmon market. So if consensus is right, that industry supply outlook will go down in the fourth quarter and then also next year, then we think this will also give us a better price environment going forward. For this year, we have increased our supply outlook a little bit, in line with Kontali. So we apply a range. So this is now 6% to 8%. Last time, we had 4% to 7%. Next year, in the neighborhood of 1% to 6%, which is in line with consensus of 4%. And again, if these numbers come true, we think it bodes well for the supply-demand balance next year. Then over to our own volumes. We maintained our '19 guidance of 430,000 tonnes. Some country changes, but just minor. The same for Norway and Scotland. Canada, we've taken down by 1,000 tonnes. Chile, we have taken up by 2,000 tonnes and Ireland and Faroes were taken down by 500 tonnes. So just minor changes for '19 and the total number we maintain. For next year, we aim at 450,000 tonnes. This growth will first of most take place in Norway, 260,000 tonnes. Bear in mind that we have 235 standard licenses in Norway, plus a few R&D and the likes. That means that the volumes you have this year is not satisfactory in terms of utilization. So one of our key priorities going forward is to improve our utilization of the licenses in Norway. Norway is also normally the most profitable area we grow the salmon. So with this context, we think 260,000 as target for next year is reasonable. We also have the biomass in sea to support this record-high biomass as of the third quarter. And this is -- and this record is mainly explained by Norway. So we have that individuals in sea right now. So yes, all else being equal, we think that the next year's forecast is likely. Then, Alf-Helge, I would like to leave the word to you, again. Thank you.
Thank you, Ivan. Just quick to sum up the outlook. Already said a few times, but based on the numbers, we think the fundamentals remain strong in the salmon universe. We see good demand, good response in all markets and increased retail promotions in the most important markets. Based on this, I call it a setback on -- with lower prices, significant volumes we've seen, just been through it in Q3, gives reduced biomass for future harvest. Fish Pool forward price at EUR 5.8 for the next 12 months. For us, a record high third quarter. At the same time, we keep our guidance for 430,000 and up it to 450,000, 20,000 tonnes for next year based on what we know we have of fish in the ocean and taking into account the same biological situation as this year. And I think that is fair. Feed plant in Scotland will be up and running full speed within the fourth quarter, that's our aim. And then the dividend, again, at NOK 2.6 per share. So with that, I think we should open up for questions. Kim here has a microphone and is sitting next to one that will present himself with name and employer for the camera, and then we'll go on.
It's Tore Tønseth, Sparebank 1 Markets. I have 2 questions for you. The first one is related to CapEx in 2020, next year. I know you don't give guidance for 2020 yet, but the direction, could you say something about it?
To start with the first part of the question, we do not guide for next year. So it's a little bit early. But we will revert to this after the fourth quarter. So I apologize.
The second question relates to Chile and the very high sea lice we have now. We're going into the summer, and it is spring there. You say that you're quite well prepared. But what do you think about the industry as a whole? Are they prepared for the summer coming up?
I think it's hard for us to answer for the rest of the industry. But we have maintained a steady stocking number, steady around -- number of smolt going into ocean; try to utilize our best sites, we have many; and taking maybe a little bit more defensive approach. At the same time, you can say we have had a good growth also in Chile. It's always challenging with -- when you get more fish in the ocean. At the same time, if we believe the small stocking numbers, they are coming down. So I think it's about getting capacity right and best practice in place. We work with the other players as well to try to minimize the impact of sea lice, but it can be a challenge if you don't have the equipment ready. We know that from our own experience. But the good thing is that many methods works there. And -- for example, freshwater in Chile has a much better effect on the Caligus lice compared to the lice we have in Norway. So treatment time in Chile with freshwater is 1 hour and you have good clearance. In Norway, you need to go to 6, 7, 8 hours with freshwater to get good clearance. So that gives you better capacity. That is not exactly answering question, but kind of touching on it.
Okay. Maybe just one last question, and it relates to Norway and Strømmen, and to clarify is it approximately 4,000 or 5,000 tonnes related to Strømmen in 2020?
Yes. We calculate on 4,000 tonnes for Strømmen next year.
Carl-Emil Johannessen, Pareto. You guide on quite a big reduction in volumes in Canada, which of course is related to the excellence on the East Coast. Can you say something about how things are going on the West Coast? You have previously basically harvested more volumes on the West Coast than you know guide for the whole group in Canada. And can you also say something about how the discussions are with the government regarding the suspended licenses? And how you think about the East Coast, like in the next coming years?
Yes. West Coast of Canada, it's also, let's say, a challenging area to farm in many, many ways. We know that. We have -- we work on many channels there, we have always -- maybe it's the best protected farms in the world in terms of algae blooms. They're there. We have set up good systems for many of the biological issues on the West Coast. It's a tough place to farm, but it's close to the U.S. market. So on par, it's still high cost. West Coast Canada as well. But we think that will improve. There are issues on the West Coast as well with First Nation agreements and so on, but we're working on getting new sites and keeping up our production. So basically, a stable production going forward in -- on the West Coast. On the East Coast, we have dialogue obviously with the government here. And I think it goes both ways. It's -- we are new there. We need to learn their ways and how they expect us to operate. And I think we also can benefit from even better cooperation going forward here. In terms of -- we did a mistake. I have to be honest about that. We reported obviously all the mortality on -- we had 6 sites with mass mortality here. And then we had a few sites with lower mortality that we should have reported immediately. We did a mistake there, a little bit because the organization was stressed out. They thought they had reported and so this is going back and forth. On the other hand, I think a good dialogue on -- that's much more important is how to secure and how to improve going forward. And I think that will be constructive because we have a lot to offer to the East Coast of Canada in terms of farming practices. So I should have a meeting with the Premier and Minister of Fisheries hopefully next week, made all my days available going forward here. So we are ready, and we have a lot to discuss. So hopefully, that will come through.
Kolbjørn Giskeødegård, Nordea Markets. A follow-up on the Canadian issues. Mr. Trudeau, the newly-elected Prime Minister, suggested in the election campaign that they should take all the fish farms on the West Coast on land, which will obviously impact you together with a few others. What are your consideration and risk on that? And also, what's the risk of -- I mean your 10 licenses in the east has been suspended. What's the risk of permanently losing them? That's sort of the follow-up question on Canada. And then a general question. We have seen over the past quarters that you have guided and reported higher costs. After a period of, let's say, 2, 3 years in the past, with stable costs, do you see costs generally creeping up now to a new level? Or is this just a series of one-off incidents quarter-by-quarter?
Let's continue with Canada first. I think for our operation, if you go to the West Coast, and Trudeau states in a statement on moving everything on land, I think what we need to do is to work and explain how fish farming is working also to the higher political level in Canada. Also the benefits in terms of -- if you think maybe if the issue around environment, many would say the biggest question these days is around climate gas emission and so forth. And then you would think, and we know that ocean farming is the most efficient way of any to produce protein to people, at least animal protein or fish protein. So if you really need -- want to improve the environment, then you should actually go for more fish farming. Then the way the regulation is structured in Canada is that the province and the federal government have quite a bit of different positions than in Norway. The province is very strong in terms of licenses, operational and so forth. The federal government basically deals with fish health and that's it. So I think -- and what he said was 2025, just in pre-election. So I think now the election is over, and I think it's time to sit down and work with the government there, to explain to the federal government also what we are doing and try to convince them that this is the best thing after sliced bread. So the risk there, it's always a risk in what we do, but 6,000, 7,000 jobs depending on it in British Columbia, a quite important industry for that part of the world, not for Canada as a whole, but for that part of the world. So I think we are -- we have 6, 7 years to work on it and a lot of water is going to go into the ocean before that. And then you said Canada East and permanently losing those 10 licenses. I don't think that will happen. We have 59 licenses in this area. We are not affected by this in any way in terms of stocking or anything because we're not planning on using these licenses anyway for 2020 or 2021. So I think that will come in. And when we explain them the plans going forward, I think, as before, the province of Newfoundland has been very supportive actually to fish farming. So I think that will -- we will work through it.
Okay. On the cost side?
Oh, the cost side. Yes, yes, sorry, Kolbjørn. No, no, I think there was a lot of one-off in this quarter. We will see somewhat higher cost in Canada. I think Norway will be more or less stable in cost going down in south, high in the middle, but north is low. So Norway, fairly stable. Scotland will be up. That has to do with the biological situation. And also, what sites we are harvesting from? If you see -- you look at Scotland, you see areas that does extremely well and some that come in and doesn't do that well. So I would say, in general, more of a stable cost environment going forward. Yes, it would be my take on it on. Ivan, if you want to?
Yes. So for the fourth quarter compared to the third quarter, our expectation is quite stable cost development. But in general, there is an underlying inflation in this. And if we compare our forecast cost for this year to last year, we are up by 2.5% roughly. And we know that feed prices are up by 4% or 5%. The input factors we put in the feed, they are subject to fierce competition. Some of them are actually a scarce resource. So in addition, we also have the biology we have. So cost fighting is a never-ending game and you, Kolbjørn, have followed this for many years, and the direction has just been up. So -- and I think over time, we will see the same direction until we come up with something which is much more efficient than what we do today. First and foremost, the driver here is in addition to the feed components, the lice. So just a few years back, we were at completely different cost levels. And I do not think we will see any substantial decrease in cost before we can cope with the lice better than what we do today.
Nordby, Kepler. First of all, just a quick follow-up on the cost side. We're seeing now that fish meal prices are dropping, and it also appears that -- will -- have you seen that feed prices are about to come down a little bit, just on -- comment just now?
We produce feed ourselves and we also buy feed externally. So the feed prices are not expected to go down in the next quarter or next 2 quarters according to our take and there are a lot of components. Also bear in mind that fish meal is not that important anymore.
And another question. You're seeing 10% volume growth in Norway. And you say that you have quite good biomass growth in Norway compared to your total biomass figure. The growth as seen in the last couple of years, that harvest rates have come down quite significantly, i.e., what sort of small yield are you expecting for next year? Is it going up? Or is it stable or going down? Or how is your productivity assumptions?
We do not like to be too detailed, but our internal measurement of harvest is -- in Norway is quite stable already. So when you look at it, it's quite surprising that they are stable as they are. So I cannot confirm your hypothesis there. So -- and for next year, we just assume this year. And as Alf-Helge has said earlier here, we have had our share at least of the biological issues this year. So I think, personally, that the starting point is good. I think the forecast is very much likely. But then we know that, as Alf-Helge said, things may happen. Again, you don't know. There are no guarantees in this. This is biology, life and death. And unfortunately, you do not get more life, you just lose. So -- but again, based upon what we know today, we think this forecast is reasonable.
Okay. We have one question from [ Jan Mornes ] from [indiscernible]. He is asking, how does the Chilean situation effect Mowi Chile?
Yes, I answered a little bit of that earlier. But it does affect because we have always, no matter what happens, in Chile, there are volcanoes and earthquakes. And so we're used to dealing with crisis. So we have a team working with our people, making sure that safety go first. So the effect is there has been curfew in Puerto Montt. That means that we have to send our people home about 1 early -- 1 hour early, so they get in before this goes into play. We have had a few containers stopped in Santiago, approximately 500 tonnes. And that's basically it for our case for now.
Lars Johnsen, Carnegie. Fourth quarter is typically the most important one for contract negotiations. Could you say something about the dynamics, at least compared to the previous years? I know you don't give indications on prices on, but dynamics is helpful.
No, I can say you are right about the fourth quarter is an important quarter also for contract negotiation. We negotiate contracts all year, but the fourth quarter is important. And as any time, it's contract, it's always tough negotiations on prices, and so this year.
But the process that we see on Fish Pool is like a fair comparison?
Again, we don't really comment on prices going forward and try to avoid that. Then I think we are about done as far as I can see. So have a great day, and thank you for coming.