Mowi ASA

OSE:MOWI

Earnings Call Transcript 2022-Q3

[Ivan Vindheim, executive]

Good morning, everyone and welcome to the presentation of Mowi's Third Quarter Results of 2022. My name is Ivan Vindheim, and I'm the CEO of Mowi. And with me today to present the financial figures and fundamentals, I have, as usual, our CFO, Kristian Ellingsen. And after the presentation, our IRO, Kim Dosvig will routinely host the Q&A session. But also who are following the presentation on webcast can submit your questions or comments in advance, or as we go along by e-mail. Please refer to our website at mowi.com for the necessary details. Disclaimer, I think we'll leave for self-study as usual. Then we are ready for a key bullet points for the quarter. A quarter I think we can safely say goes down in history as the quarter of contrast to put it mildly, because despite another set of new operational records for Mowi, the third quarter of 2022 will unfortunately be remembered for September 28 and the Norwegian government's infamous resource rent tax proposal of 40% on Norwegian salmon farming or 62% including corporate tax and about 80% with Norwegian wealth tax. And then we haven't even included export tax, employees tax, et cetera, et cetera. Needless to say, such a tax level is completely disproportionate for biological production process, which are salmon farming, given the risks entailed. What we do is so different to the oil and hydro power industry, the 2 other resource rent tax industries in Norway, both from an operational and risk point of view. This tax level would also totally undermine the investment capacity of the salmon industry and place major limitations on future development, on one of the industries we were supposed to live off in this country after the oil age. And in direct contravention of the Norwegian government rhetoric, it would put thousands of jobs at stake in rural Norway. Manifested already in layoffs in the supplier industry, and by extension you can just wave goodbye to the tens of thousands of new jobs we were supposed to create along the Norwegian coast line in the coming years by growing this industry by more than threefold by 2050. Because this framework conditions are simply not fit for that purpose, as there is no money left to invest with. One cannot have it both ways, no matter what the Norwegian government says, and all always talk about resource rent tax being neutral in investments is a complete misjudgment based upon stylist assumptions that did not reflect what's happening in the real world, and the greatest policy of them all is that capital is a non-scarce resource with some theories for some reason tend to believe, proven by investment projects totaling NOK 35 billion already put on hold or terminated as a direct consequence of the tax proposal. Number four is the salmon farming is immovable with RAS technology you can farm salmon in all countries in the world. It's just a matter of cost and tax is a cost like any other cost in the cost basket. Nonetheless, we have far from given up. The proposal is now in a public consultation process until 4 of January, and we will continue for our part, work at all levels of Norwegian politics and organizations to try and turn this in our view and the business proposal into a viable framework for the salmon industry also going forward. Meanwhile we have unfortunately been forced to put all new structural investments in Mowi Norway on hold until further notice. So much about politics for now. Turn over to our operations. Turnover wise, the third quarter was the best quarter so far for Mowi. We have done operational revenue of EUR 1.26 billion, and earnings wise, it was also a good quarter for Mowi with an operational profit of EUR 240 million. In line with the trading update of October 17 and the third best quarter to-date. On seasonally-strong prices, I would say, driven by good underlying demand and notwithstanding a global supply growth of 7% year-over-year for the quarter. In addition to record high farming volumes for Mowi of 134,000 tonnes, which was record high and slightly above the guidance of 131,000 tonnes. In terms of full year guidance for 2022, we have maintained it at 460,000 tonnes though with increased volumes from Mowi Norway in the wake of good biomass growth season, offset first and foremost by Mowi Scotland due to prolonged biological issues there. Kristian will get back to the details later and so will I. For next year, we expect to harvest 470,000 tonnes, despite a reduction of our Canadian volumes by as much as 16,000 tonnes year-over-year following the loss of our Discovery Island sites in British Columbia in December 2020, and an uneven site mix structure next year. Then the farming costs i.e., weighted farming costs for our 6 farming countries was EUR 5.15 per kilo in the quarter, relatively stable compared with the second quarter. When it comes to our other divisions, Consumer Products has delivered another set of great results in the quarter by means of a good operational performance, but also with tailwinds from seasonally-lower raw material prices. The Feed division for its part has delivered both record high volumes and profit on strong demand from Mowi Farming. Otherwise, it was with great pleasure, we recently entered into an agreement to purchase 51% of the shares in Arctic Fish, one of the leading salmon farmers in Iceland. Iceland was the last missing spot for -- in Mowi Farming's geographical footprint and it's also one of the very few areas left that offer extensive organic growth opportunities. On top of that Icelandic waters also provide excellent growth and living conditions for the salmon. There's no secret that we have been looking for an entry in Iceland for years. So when we finally got the chance, we were not hard to ask. Last but not least, the Board of Directors has declared a quarterly dividend of NOK 1.70 per share, which compares to 50% of underlying earnings per share and as such is in accordance with the dividend policy. That I think does it for the key bullet points for the quarter. Then over to key financials. Kristian will, as usual, go in depth on financial figures under his session, so do not disrupt the course of events, we will just touch briefly upon the most important ones now. And first turnover, which we already have been through. Mowi recorded an operational revenue EUR 1.26 billion in the third quarter, which was record high and up by 21% year-over-year on 14% higher farming volumes. Operational EBIT of EUR 240 million, we've also already commented on, almost doubled compared with the third quarter last year and third best quarter to-date. Cash flow in the quarter was highly impacted by tie-up of working capital and capital expenditures, and net interest bearing debt came in at EUR 1.35 billion within our long-term target of EUR 1.4 billion. Furthermore, underlying earnings per share in the quarter was EUR 0.34 and annualized return on capital employed was 21%, well above our long-term target of 12%. In terms of regional margins through the value chain, they varied more than normal this time around, and we will get back to the explanation shortly when we go through the various business entities, but first briefly about the prices. As expected spot prices in the third quarter corrected down from the second quarter on higher seasonal supply. Having said that, spot prices were still at a reasonably good level in the third quarter, I would say and in Europe, the prices were actually up by 30% year-over-year. In Americas, the price development was softer and the Salmon of Chilean Origin was stable price wise year-over-year, whereas the Salmon of Canadian Origin was down by 11% year-over-year. Then our own relative price achievement. Overall price achievement for Mowi was slightly above the reference price in the quarter. I mean, so good price achievement for all our fish apart from Canada East where we harvested out some ISA fish in the quarter. Superior share was also very good in the third quarter. Then briefly about the EBIT waterfall. Overall operational EBIT increased from EUR 131 million to EUR 240 million year-over-year, driven by increased earnings in farming as a result of higher prices and volumes, but also the other businesses contributed positively at this time around with good operational results across the board. Then it's time to address the various business entities and as usual, we start with Mowi Norway, our largest and most important one by far. Operational EBIT for Mowi Norway in the quarter was EUR 222 million, which is the second best quarter ever and up from EUR 98 million last year. EBIT margin was EUR 2.53 per kilo versus EUR 1.39 per kilo last year and as the graph clearly demonstrates this was caused by higher prices and volumes. Cost on the other hand was up year-over-year due to mainly inflation and then feed inflation, because our overall operational performance has been good in Norway this year and by extension, we have upped our full year guidance for 2022 from 272,000 tonnes to record high 286,000 tonnes, and further to 290,000 tonnes next year. As latest 2017, we harvested 210,000 tonnes in Mowi Norway, which means that we have grown Mowi Norway by as much as 76,000 tonnes or 6.4% annually over the past 5 years and by that putting Mowi Norway towards the top of license utilization and production efficiency in Norway. So, kudos to organization for this achievement. It's of course, much appreciated. Then it's time to address the various margins in Norway, so for the different regions. Margin wise, it was much flatter than normal this time around. Having said that Region North stands yet again out as the margin winner with EUR 2.83 per kilo on lowest cost, although cost was adversely impacted by inflation and a less favorable site mix year-over-year with a higher proportion from Production Area 7 this year. Closely followed by Region Mid with a margin of EUR 2.62 per kilo and Region West with EUR 2.40 per kilo. Region South for its part achieved a margin of EUR 2.16 per kilo and improved by that its -- I think someone has to get up. Region South for its part achieved a margin of EUR 2.16 per kilo in the third quarter and improved by that its relative position year-over-year on significantly higher volumes, although cost was adversely impacted by challenging environmental conditions for Agder sites in region 1 -- or sorry in Production Area 1. Then our Norwegian sales contract portfolio. In the third quarter, we yet again capitalized on being in the lower end of our contract policy as spot prices also with this quarter were higher than the prevailing contract price or prices. This time around with a contract share of 22% for our part. However, at this time of year, the big elephant in the room is, of course, contracts for next year and to call a spade a spade the government's infamous resource rent tax proposal as it stands has unintentionally, I assume, pulled the rug under the contract market for the Norwegian salmon next year as the proposal applies the NASDAQ price as the tax settlement price. This is double unfortunate because, firstly, the NASDAQ price doesn't really exist, it's also higher than the relevant spot price for the farmer. Secondly, and maybe even worse, the spot price may also differ significantly from the prevailing contract price referenced in the second quarter this year when the spot price went through the roof. One by one toxic and combined completely devastating. So it's paramount to sort this one out it quickly. We don't have time to wait for the consultation process to conclude on this one. Meanwhile, the contract market for the Norwegian salmon is -- excuse me, my language that for all practical purposes. Then it's time to address the other farming countries and as usual we start with Mowi Scotland. Nothing is assured as things fluctuate in salmon farming. Biology is the law and everything else is just a recommendation. After an impressive last year for Mowi Scotland, the biological challenges seem to have no end this year for our [indiscernible] Scottish organization. No sooner had we harvested out the poor performing externally genetic sourced stocks then may run into severe issues in all around Skye and in the Western Isles due to micro-jelly fish which caused some elevated mortalities in some of our farms. This resulted in a soft operational EBIT for Mowi Scotland in the third quarter of EUR 4 million, down from EUR 13 million last year notwithstanding substantially higher prices. Also manifested in a drop in EBIT per kilo from EUR 0.90 to EUR 0.29. Volumes on the other hand were stable at 14,000 tonnes and 15,000 tonnes. Things are now on a reasonably good control in Mowi Scotland, but unfortunately this will impact our cost and volume figures for the fourth quarter as well. In the case of the latter as we prioritize biomass growth going forward. Our guidance for Mowi Scotland is therefore taken down this year from 60,000 tonnes to 50,000 tonnes, but next year we expect to be more or less back on track and we have guided approximately 65,000 tonnes. Then Chile. Mowi Chile has increased earnings and margins, here we are in the quarter on higher prices and volumes, partly offset by cost due to inflation. In terms of numbers, operational profit was EUR 22 million this year versus EUR 14 million last year and the margin was up from EUR 0.93 per kilo to EUR 1.27 per kilo. Volumes are also up as said from 15,000 tonnes to 17,000 tonnes. In general both production and biology were good in Mowi Chile in the quarter. Then further north to Mowi Canada. Mowi Canada made a loss of EUR 4 million in the third quarter against a breakeven result last year. This was driven by lower prices as cost is actually somewhat down year-over-year. Volumes on the other hand was stable at 11,000 tonnes. In Canada West, we achieved an operational profit of EUR 7.5 million or EUR 0.78 per kilo, which is an improvement from last year where we made EUR 5.6 million or EUR 0.66 per kilo. As far as Canada East is concerned, we harvested very low volumes in the third quarter and on top of that they were related to ISA fish at both high cost and low prices in addition to low dilution of costs in general. In terms of overall biology for Canada East, it has improved this year compared with previous years and in particular, the life situation is good this year or has been good this year, knock on wood. And the work on reducing our cost basket continues in full force. Then it's time to address our 2 smallest farming entities, Mowi Ireland and Mowi Faroes. For the Salmon of Irish Origin, we made a loss of EUR 3 million in the quarter, following previously announced issues with pancreas disease compounded by compromise gill pathology due to micro-jellyfish, the same species as for Scotland [indiscernible] Atlantic. Biology is now under control, but this will unfortunately impact our fourth quarter numbers as well though not to the same extent as for the third quarter. In Mowi Faroes, operating EBIT came to EUR 2 million by means of a margin of EUR 1.06 per kilo on 1,700 tonnes harvest volumes. So much about Mowi Farming. Then over to Mowi Consumer Products. Consumer Products made an operational profit, and I should say an impressive operational profit of EUR 30 million in the third quarter, up from EUR 22 million last year on higher margins, both in total and for value-added only, by means of a strong operational performance in addition to tailwinds from seasonally-lower raw material prices. Volumes on the other hand, were down from pandemic, boosted 60,000 tonnes product weight last year to 56,000 tonnes product weight this year. In terms of overall demand, it was reasonably good in more or less all markets in the quarter and we also see a reasonably good development in demand so far in the fourth quarter notwithstanding the global economic slowdown. Then our latest addition to the Mowi family, Mowi Feed. The third quarter is high season for Mowi Feed where all that entails. And as said initially this morning, we can put behind the third quarter with record high feed volumes and feed profit on strong demand from Mowi Farming. As recurrent capital expenditures are limited in Feed compared to Farming, our key metric on earnings in Feed is EBITDA and operational EBITDA was EUR 19 million in the third quarter versus EUR 14 million last year and sold volumes were 169,000 tonnes this year versus 156,000 tonnes last year. Feed performance was also very good in the third quarter, which is of course of utmost importance to us. Then, Kristian, the floor is all yours for walking us through the financial figures and fundamentals. Thank you so far.

[Kristian Ellingsen, executive]

Thank you very much, Ivan. My name is Kristian Ellingsen. Good morning, everybody. Hope everybody is doing well. As usual, we start the session on financials and fundamentals with the statement of profit and loss. And we see that the top line shows a record high revenue of EUR 1.26 billion in the third quarter. This was an increase of 21% from Q3 last year, on all-time high volumes and increased prices from the comparable quarter. Operational EBIT EUR 240 million, that's up 84% from Q3 last year, driven by the Farming segment, and with a corresponding increase in underlying earnings per share EUR 0.34 and return on capital employed 21.4%. When it comes to the items between operational EBIT and financial EBIT, the net fair value adjustment was negative this time around driven by lower prices at the end of Q3 versus end Q2. Other non-operational items include a gain of EUR 22.5 million, on sale of unused development licenses. When it comes to associated companies, the operational result from our associated company Nova Sea was EUR 2.55 per kilo, that was a good margin for Nova Sea, but somewhat below Norway Region Mid, and also Region North, in Q3 and not far away from Norway Region West. Net financial items negative EUR 33 million in the quarter interest as expected so this was related to unrealized currency losses on hedges and working capital items. And the key figures are positively impacted by the increased earnings, that's very good. And we also see that net cash flow per share is impacted by working capital tie-up, which we will come back to shortly. So that figure ended at EUR 0.02. Yes. So then we move on to the financial position. The balance sheet for Mowi remains very solid versus year-end. There are some increases on both the current assets and liabilities while fixed assets are relatively stable. Covenant equity ratio somewhat up from year end, and is 55.4%. When it comes to the cash flow, we see that net interest bearing debt increased by EUR 116 million, in the period including a dividend payment for Q2 of EUR 122 million. There was a working capital tie-up of EUR 151 million in the quarter, mainly due to biomass in sea, feed inventory and Consumer Products. Other investments and dividends received include the proceeds from the sale of unused development licenses. The other items were as expected. And then when it comes to the cash flow guidance for the year as a whole, we increased the estimate for working capital tie up to EUR 350 million, but approximately half of this is related to temporary elevated working capital build-up related to inventory, accounts receivable, et cetera, and that's expected to be released next year. Then the other half is mainly related to volume increase in sea and cost inflation, also part of the cost inflation is temporary as we see it. CapEx guiding unchanged at EUR 300 million. Projects already initiated will continue, but proposal for the resource rent tax means that we have to put all new structural investments on hold until further notice. Interest paid and taxes also unchanged at EUR 35 million and EUR 130 million respectively and the dividend for Q3 of NOK 1.7 per share will be paid in the fourth quarter. Then, we look -- take a look at the financing and there are no changes with regards to our existing debt instruments. We have a very solid and good financing in place for Mowi. Then we move over to market fundamentals. We start with supply, and global supply as we see here increased by 7% in the third quarter versus Q3 last year. That was somewhat above the guiding of between minus 1% to 2% that was the guiding. The increase was driven by Chile as we see here, Chile was up 26% where the company has harvested more than expected due to biological challenges mainly related to SRS, but average rates were also good in Chile, indicating that opening biomass was probably higher than the initial estimates. Closing biomass in Chile is estimated to be 8% down compared to Q3 last year and that indicates then of course reduced volumes from Chile going forward. In Norway, the closing biomass is stable from last year, indicating that growth also from Norway would be rather limited. We will come little bit back to that. Then we move over to consumption in the various markets and we can start with the value of the salmon consumed in the third quarter that increased by as much as 25% with 4% higher volumes, 21% higher blended prices. And in Europe, retail sales were somewhat down from a high level during the pandemic, but still higher than pre-pandemic levels. And the foodservice segment continued to improve. So demand has been good in the quarter. And so far, we would say that the salmon has performed well, even though the economic climate has become more challenging. When it comes to the U.S., this market continues to grow as we see here. Good figures annual consumption approaches 600,000 tonnes in the U.S., and we saw a 7% consumption growth in the third quarter. Asia saw an increase in some markets as pandemic related restrictions were relaxed, but in general the Asian market is impacted by still high air freight rates. And then there was a difference between supply and consumption of approximately 18,000 tonnes, mainly due to frozen inventory build-up in Chile. So that's approximately the same level as last year. So nothing of particular interest as we see it. We saw a seasonal decline in prices during the quarter compared to the very high prices we saw in the first half of the year, driven by increased supply. But compared with Q3 last year, prices were up 30% in Europe on improved demand. Chilean prices were relatively stable and improved demand, but high supply and Canadian prices were impacted by record high wild catch of sockeye at the start of the quarter and then general increased volumes into the North American market during the third quarter. When it comes to industry supply growth, this slide indicates that growth is expected to be very modest, 0% for 2022, 1% for the fourth quarter this year and also 1% for 2023. 2023 has been revised down, following the resource rent tax proposal and unsold MAB capacity in Norway. And we expect this picture really to remain in the coming years. So that the growth for the industry has been impacted by this proposal and halt in investments. And when it comes to our own volumes, we maintain the guidance for 2022 as Ivan said at 460,000 tonnes, but we have done some changes within the group, between the entities. Norway increased by 14,000 tonnes to 286,000 tonnes and Scotland down 10,000 tonnes. In 2023, the guidance is 470,000 tonnes, including a reduction of 16,000 tonnes in Canada compared to 2022, that's related to Canada West and the loss of licenses in Discovery Island area and this stocking pattern. Canada West is expected to stabilize around 25,000 tonnes from 2024 onwards and long-term volumes in Canada East should be around 50,000 tonnes with the current site structure. So then I'll leave the word to you, Ivan to look at the outlook slide.

[Ivan Vindheim, executive]

Thank you, Kristian, and much appreciated. Then it's time to conclude with some closing remarks before we wrap it all up with our Q&A session hosted by our IRO, Kim Dosvig. As already said yet another record high quarter for Mowi was unfortunately completely overshadowed by the infamous resource rent tax proposal by the Norwegian government. This would obviously will be a game changer for the industry and Mowi alike, there's no doubt about that, if it's put in action. Having said that, I simply cannot believe that the consequences are fully understood by the lawmakers. So let's see what we can achieve by appealing to reason. We will therefore use the public consultation process for our part to continue to work with all levels of Norwegian politics and organizations to try and turn this in our view and the business proposal into a viable framework for the salmon industry also going forward. Meanwhile, we have unfortunately been forced to put all new structural investments in Mowi Norway on hold until further notice. So much about politics. In terms of fundamentals, they appear reasonably good or attractive going forward in our view. The supply side looks very constrained, but in practice no growth next year or in the coming years for that matter, and the salmon normally fares well in challenging economic times. So we continued reasonably good demand. This should lead basis for a tight market balance also in the time ahead. That's at least our main scenario for now. In terms of harvest volume guidance for 2022, we have as Kristian just showed us maintained it at 460,000 tonnes, overall reshuffling of volumes. So we are guiding Mowi Norway up and Mowi Scotland and Mowi Chile down. For next year, we expect to harvest 470,000 tonnes, despite a reduction of Canadian volumes by as much as 16,000 tonnes year-over-year. Then Iceland, as said earlier this morning it was with great pleasure we recently entered into an agreement to purchase 51% of the shares in Arctic Fish, one of the leading salmon farmers in Iceland. Iceland was the last missing spot Mowi Farming's geographical footprint and it's also one of the very few areas that still offer extensive organic growth opportunities. So this is really a good news story for us and we are looking forward to further develop the company together with the other owners and a highly competent organization. Finally, the Board of Directors has declared a quarterly dividend of NOK 1.70 per share, which is equivalent to 50% of underlying earnings per share. Then, Kim, I think we are ready for the Q&A session. So if you Kristian can please join me on the stage.

[Kim Dosvig, executive]

So this time we will start with some questions from the web. The first one is from Alexander Jones, Bank of America. He has 2 questions. The first one on Iceland. Could you contextualize how you see Iceland ranking in the long term on Farming margins versus your other geographies?

[Ivan Vindheim, executive]

That's a very good question, Alexander and this is something we debated internally in depth and to length. I would take that, we cannot see why not Iceland can be the new Faroes times 1.5 in 10 years, let's see what we can do. That's at least our initial take, but at the same time we are new in this game. So we are humbled and we also have to learn, but at the same time, we are already present in 6 of the other 7 farming countries in the world. So, I also think we have a reasonably good understanding on what we are going to.

[Kim Dosvig, executive]

And then a second question on Canada. Can you provide a split of next year's volume guidance into West and East and remind us the long-term volume path in each?

[Ivan Vindheim, executive]

Shall I take it or will you?

[Kristian Ellingsen, executive]

Yes, you can take it.

[Ivan Vindheim, executive]

I can take it. Okay. For Canada East next year, we expect to harvest 8,000 tonnes and the rest of the math, I guess the audience can do itself.

[Kim Dosvig, executive]

And then Herman Dahl, Nordea. He has a question on Scotland biological issues in the second half. Now it seems to be the normal or the new normal in Scotland rather than one-offs. How should we look at this going forward? Should we pencil in continued issues in the second half of next year and beyond?

[Ivan Vindheim, executive]

Well it's clearly the third quarter, which is challenging in Scotland, and also in Canada West and Canada East. So and it's right we have been struggling lately. We think this is partly due to the climate change, the waters are getting warmer and at least more pathogens, more plankton of different variants. For Scotland, our long-term solution to this is to produce postsmolt and that's something we are looking into as we speak. I think we simply just have to reduce the production cycle and I also have noted that our peers are looking into the same. In addition, you can always do more with the current toolbox and we are not taking initiatives together with the other farmers in Scotland to start with a scheme for surveillance taking water samples and then share it with each other. So, at least we can take preemptive measures when we see we are facing plankton blooms. So I think there are also some short-term measures we can take that can help the situation, for most part, I think we did reasonably well in the third quarter, after all we saved a lot of fish by moving fish and also by using oxygen tools. So there are things you can do if you're prepared, but we can do more, but the long-term solution, again I think is using the production cycle growing bigger smolt before we stock it in sea.

[Christian Nordby, analyst]

Christian Nordby, Kepler Cheuvreux. At your CMD last time you launched quite a large postsmolt project in Norway for many years. If we assume that the current resource tax proposal goes through, is it now more interesting to rather invest in, for example Scotland, or is the Norwegian postsmolt project still viable?

[Ivan Vindheim, executive]

Well, as we said earlier this morning we have put all new structural investments in Mowi Norway on hold until further notice and that includes the postsmolt efforts or strategy we have. So once we have started to build we have past the point of no return, obviously, but we will not initiate any new ones with the framework conditions we are facing as we speak and if this proposal stands -- put in action, then we have to revert our -- or revisit our entire strategy because this is fundamental. This is a game changer. So I should not hide that. So let's hope that we can come to some kind of understanding with the government and also secure viable frameworks for the salmon industry in Norway going forward because Mowi Norway is by far as I said, our most important entity in Mowi and we perceive ourselves as Norwegians. We are Norwegian company although we can read a newspaper that someone out there has a different view on this and nothing at least make me personally happier than to invest in Norway. But at the same time you have to justify our investments and with the framework conditions we are facing now, then that will be really hard.

[Carl-Emil Johannessen, analyst]

Carl-Emil, Pareto. In Canada East you say that the biology is improving, but next year will of course be very low on volumes. Can you say something about one of your plans, smolt release this year and next year and what we should assume into '24 '25 for this region?

[Ivan Vindheim, executive]

Yes, biology is the law. So, biology decides actually. So when we see that we can do this properly, then we will stock more fish. So we do this gradually, but this year has been much better than the previous years, much better and we have done a lot of the changes, both organizationally and the way we operate. So, but I think we have to revert with the long-term target or Kristian here biology will make decisions for us.

[Carl-Emil Johannessen, analyst]

But I guess you have more fish to harvest in '24 than in '23. Is that fair to assume? That fish I guess you have already...

[Ivan Vindheim, executive]

Yes, that's the plan if things develops as we hope and think, but at the same time we are very humble. We have been through some very tough years in Canada East. So we have unfortunately learnt several lessons on the way.

[Carl-Emil Johannessen, analyst]

And one short on the U.K. Is it only the jellyfish problem impacting the [ gill ] of the fish. That is the issue or are there any other diseases that kind of have started to become a problem in Scotland?

[Ivan Vindheim, executive]

It's a mixed bag, but what impact our numbers this quarter was the micro-jellyfish. So it was quite severe and this species do not happen often. It's a natural part of the fauna, but because of weather and other conditions, it bloomed this year. We had the same actually in Region South in 2003, 20 years ago, but that was actually lost time. So now this time it was the micro-jellyfish. But in general the biology is getting more challenging it is because of the warmer waters.

[Kim Dosvig, executive]

Okay, then another question from the web from Alexander Aukner, DNB. He is asking about Consumer Products. You say the contract market is dead. How does this impact your Consumer Products business?

[Ivan Vindheim, executive]

Yes, for the sake, when I said dead it's not a good word but let's use dead, I meant for the Norwegian salmon, right. So we have a big business and a lot of salmon in other countries. So, and there the contract market is very healthy. So I should not say that Norwegian phase of it. But of course when someone lose someone gains, that's how it is. So Consumer Products will survive. We will get hold of the fish. So I'm not worried about death. What I'm worried about is, what is the consequences for the total market, what is the consequences for demand. So this is completely devastating and in my view, very unnecessary. And I also think it must be a result of a misunderstanding. So I can't imagine that someone really intends to do this actually.

[Kim Dosvig, executive]

Okay. So I think that concludes the questions from the web and from the audience.

[Ivan Vindheim, executive]

All right. Then it only remains for me to thank everyone for the attention. We hope to see you back in February at the fourth quarter release. Meanwhile, take care and have a great day ahead.