Mowi ASA

OSE:MOWI

Good morning, everyone, both in the room and online. That was a little taste of some of the marketing activities that are ongoing for the Mowi salmon these days. My name is Ivan Vindheim, and I'm the CEO of Mowi, and it's my pleasure to wish you all welcome to the presentation of Mowi's fourth quarter results of 2024. And together with our CFO, Kristian Ellingsen, I will take you through the numbers and fundamentals this morning and to the best of my and our ability, add a few appropriate comments to them.

And after presentation, our IRO, Kim Dosvig, will routinely the host a Q&A session, but also you who are following the presentation online, can submit to questions or comments in advance or as we go along by e-mail. Please refer the website at mowi.com for necessary details.

The disclaimer, I think, we'll leave for self-study. So with the pleasant risk, practicalities, and the disclaimer out of the way, I think we are ready for the presentation. And what could be more appropriate this morning than to start off with our recently announced agreement to acquire the remaining shares of Nova Sea, a 52,000 tonnes fully integrated state-of-the-art salmon farmer in production area 8 in Northern Norway, known for its consistently industry-leading margins and biological metrics. And further on that note, I think it's fair to say that production area 8 Northern Norway is one of the best places in the world for farming of Atlantic salmon.

Mowi has been a large minority shareholder in Nova Sea since as long ago as 1995. So this is a company we know well. I have to say it was a day of joy when it finally decided to fully join our forces after 30 years. Good things come to those who wait, they say, and I think that's particularly true in this case because together, we will have 157,000 tonnes harvest volumes in Northern Norway, if you use 2025 figures.

And then we define Northern Norway as production area 7 to production area 12. And these volumes will provide the basis for significant synergies across the value chain, including improved MAB utilization and biologic performance in addition to enhanced license and site portfolio, not to mention reduced cost. And our preliminary estimate amounts to NOK 400 million.

This transaction will also strengthen Mowi as a global and national powerhouse for innovation and sustainable agriculture, including fish welfare as well as being an instrument and a catalyst for further sustainable growth in Northern Norway. So the industrial rationale for the transaction is very, very strong, which will benefit all our stakeholders. Otherwise, the transaction is conditional upon customary consents by relevant competition authorities, including the EU Commission in addition to certain other closing conditions. And we expect the closing to take place sometime in the second half of this year.

And finally, total payment for the remaining shares, including the 5% voluntary offer is NOK 8.2 billion or EUR 694 million, of which NOK 2.2 billion or EUR 188 million is through a so-called contribution kind share issues, i.e., through a share settlement where we pay with Mowi shares.

Then from M&A to the fourth quarter release. The fourth quarter release means it's also time to take stock of the year we have just left behind us. And when we stand here today and look in the rear view mirror, I think it's fair to say that 2024 was another record-breaking year for Mowi. And what really stands out, at least in my view, is that we, for the first time in Mowi's 60 years history crossed the, for us, magic 500,000 tonnes mark in harvest volumes, 502,000 tonnes to be precise, which is equivalent to a growth of 5.7% year-over-year, which is a lot in a low-growth industry, such as the salmon industry because the industry at large only grew by ignorable 1% last year, following several years within practice, no growth.

And these harvest volumes translated into a record-high turnover for Mowi last year of EUR 5.62 billion. And the record high standing biomass in sea at year-end of 342,000 tonnes live weight, which is up by 30,000 tonnes year-over-year. We have found ourselves obliged to up our harvest volume guidance for this year from originally 520,000 tonnes to now 530,000 tonnes, which is equivalent to a further growth of 5.7% year-over-year.

And with Nova Sea on board, we now expect to harvest 600,000 tonnes already next year and not in 2029, which was the original target, which means that we increased our 2029 harvest volume target accordingly to at least 650,000 tonnes. And this, we will achieve through increased smolt stocking and by means of postsmolt because we have still unutilized license capacity in Mowi in several other countries where we operate, and in postsmolt, we can increase the productivity on licenses already in operation. Because, as this slide reads, a quarter of smolt in Mowi this year, we namely be postsmolt and in Norway as much as half of the smolt if we take Region North out of the equation for natural reasons. So I think we can say that our extensive investments in smolt and postsmolt over the past few years, have borne a fruit.

I also think it's fair to say that we have come out a long way in Mowi since we launched our productivity program a few years back because truth be told, not much happened on the volume side in Mowi for several years after the big merger in 2006 due to a confluence of factors where some were within our control and some were beyond, but which are now in the rearview mirror because we have gone from lagging behind our listed peers on farming volume growth to be ahead.

So I would like to take the opportunity to thank my 11,000 colleagues in 26 countries for the invaluable efforts to make this happen. It's, of course, much, much appreciated.

Then from the grand scheme of things to more specifically about the fourth quarter and as the first bullet point on this slide reads, Mowi we posted EUR 1.50 billion in operating revenues in the fourth quarter, which translated into an operational profit of EUR 226 million and harvest volumes were 134,000 tonnes, to which it can be added, that's operating revenues in the quarter was a record high for a quarter for Mowi, propelled by seasonal record-high harvest volumes.

Otherwise, prices increased as expected in the quarter from the third quarter on lower supply in combination with good Christmas demand, and our realized blended farming costs, i.e., weighted farming costs for 7 farming countries was slightly lower quarter-over-quarter and down compared with the first half of the year due to lower feed prices and improved biological metrics. And we expect this trend to continue in 2025, although the first quarter will be impacted by seasonally lower harvest volumes and therefore, less economies of scale, which will weigh on realized blended farming costs in this quarter.

Furthermore, Consumer Products & Feed delivered yet another strong quarter, I would say. And just before Christmas, Mowi was once again ranked as the world's most sustainable animal protein producer by the prestigious Coller FAIRR Initiative. In condition, the 6th of the largest listed animal protein producers in the world. And this is the sixth year in a row, which I have to say is a nice encouragement for our sustainability work because as we have said numerous of times, sustainability, including fish welfare is deeply ingrained in the Mowi culture and at the heart of everything we do. We care for salmon, and we care about nature.

Then last but not least, our Board of Directors has decided to distribute a quarterly dividend of NOK 2 per share after the fourth quarter. I think that does it for the highlights of the quarter.

So now on to key financial figures. Kristian will, as usual, go in depth on these numbers later this morning, so as not to be too repetitive. We will just touch briefly upon the most important ones now. And turnover profit, I think we skip as we have just been through them.

So let's start with cash this time around. Net interest-bearing debt stood at EUR 1.87 billion at year-end, impacted by seasonally working capital tie-up in our downstream business of EUR 80 million, which we will get back during the first half of this year, that's the dynamic of that seasonality. And with Nova Sea on board, net interest-bearing debt would have been EUR 2.42 billion year-end and equity ratio almost unchanged at 46%. So we still have a strong balance sheet, I would say, with a sustainable debt level.

And further on that note, we will revert with a new long-term debt target post-closing. But as you can hear, we are comfortable with our current pro forma debt level. Furthermore, underlying earnings per share was EUR 0.31 in the quarter, whilst annualized return on capital employed was 17%.

And in terms of regional margins through the value chain, I would say all regions did reasonably well in the quarter, given the prevailing market conditions, maybe with the exception of Mowi Ireland, which suffered from very low harvest volumes in addition to issues with Rickettsia.

And the market conditions in the quarter, I would characterize as good on increasing prices, as I said earlier this morning due to lower supply, coupled with good Christmas demand. And I think it's fair to say that the first quarter has offered a positive price sentiment so far adjusted for high supply. And although Americas is still lagging somewhat behind Europe and Asia in the way of the cost of living crisis there, but better year-over-year.

And the ongoing tariff situation we have now, we hope it does not escalate because tariffs are not good for anyone, neither for the imposer nor the addressee. Then our own price performance in the quarter, which I would say was strong as it was 15% above the reference price, which is the standard we like to hold ourselves to internally, positively impacted by a contract share of 25% in the quarter and contract prices above the prevailing spot prices in addition to good spot price performance in the quarter and a high superior share and good harvest weights across the board.

Then it's time to address the different business entities. and we start as usual with Mowi Norway, our largest and most important entity by far and the locomotive of our business model. And if you take the bigger picture first, 2024 was a milestone year for our Norwegian operation as we crossed the 300,000 tonnes harvest volume line for the first time, 304,000 tonnes, which was spot on our guidance.

Having Nova Sea on board, we are now on course for 400,000 tonnes in Mowi Norway. And as you can see from the chart here, as recently as in 2017, we harvested only 210,000 tonnes in Mowi Norway. So I think we can say things are moving along well in our largest and most important entity.

I also think it's fair to say that the fourth quarter was another strong quarter for Mowi Norway with an operational profit of EUR 184 million through the value chain by means of a margin of EUR 2.20 per kilo on 84,000 tonnes harvest volumes and on the back of good biology, which has continued into the new year. And the winter sore situation is much better this year than last year, knock on wood.

In terms of regional margins in Norway in the quarter, as you can see from this chart, all regions did well in the quarter, apart from Region Mid, which suffered from issues with string jellyfish and gills. And I'm afraid that the after effects of these issues will follow Region Mid in the coming months in the form of a low and expensive biomass because in a long production cycle such as in salmon farming, there is no quick way out of biological setbacks. Biology is a law and everything else is just a recommendation. So this we just have to work our way through.

Then the last slide on Mowi Norway, our sales contract portfolio. Contract share was 22% for Mowi Norway in the quarter and was with that spot on our guidance, and these contracts contributed, as I said earlier this morning positively to our earnings. And as for 2025 contracts, we have maintained the contract strategy we have had in recent years and which has served us well so far with slightly better contract prices year-over-year.

Then it's time to have a look at our 6 other farming countries, and we start as usual with Mowi Scotland. Mowi Scotland leaves behind a good quarter and year, biologically, I would say, with good help from low sea temperatures in Scotland last year. And this manifested itself in the best financial and operational results seen in our Scottish operation for many years.

And by extension, operation profit came to EUR 23 million in the quarter and EUR 111 million for the year, which is up from minus EUR 1 million and plus EUR 77 million, respectively, in 2023. On higher harvest volumes, lower cost and slightly better prices, which are always a strong combination. And with our postsmolt program in Loch Etive, large smolt in Lock Awe and a broodstock facility under construction at Ardessie, I will say the future looks bright for our Scottish operation. And with almost 40,000 tonnes in harvest volumes in the first half of the year, I think we have a few good months ahead of us now financially.

Then overseas to Chile. Mowi Chile was not far behind Mowi Scotland on operational profit in the quarter, which is EUR 19 million on 22,000 tonnes harvest volumes. And with a strong finish last year, 2024 ended almost equal to 2023 profit-wise. And for the first time since the ISA crisis in 2008, we were above 70,000 tonnes in harvest volumes in Mowi Chile last year, 73,000 tonnes to be precise. So it took a while. Otherwise, biology was satisfactory in Mowi Chile in the quarter despite its summer down there now, and it has developed satisfactorily so far this year.

Then faring off to Mowi Canada. Mowi Canada went from losing EUR 5 million in the fourth quarter of 2023 to make a profit of EUR 2 million in this quarter due to lower cost and better prices because harvest volumes are relatively stable year-over-year. And biology was good in Canada in the quarter, both in the West and in the East.

And in terms of tariffs, it looks like we didn't get tariff on our Canadian salmon into the U.S.A. in the first round after all because it was postponed by 1 month. So let's hope that postponement can become permanent because as we said earlier this morning, tariffs are not good for anyone, neither for the imposer nor for the addressee. But the situation is unstable, so we will continue to monitor it closely and take necessary actions, including shuffling around with our 7 origins for the best of our customers and our shareholders, whatever that might be at any given time.

This brings us to our 2 smallest farming entities, Mowi Ireland and Mowi Faroes. And if you take Mowi Ireland first, our Irish operation was loss-making in the fourth quarter due to a said already very low harvest volumes in the quarter in addition to issues with Rickettsia. But the year as a whole was a good year for Mowi Ireland, I would say, and the record high standing biomass at year-end, I would say we have a good starting point for this year as well.

Mowi Faroes also had low harvest volumes in the quarter in addition to being hit by harvesting out our highest cost site in the Faroes. So both earnings and margin in the quarter were lower than what we are used to in this entity. But on a positive note, however, we are now harvesting from our best-performing site in the Faroes, which should provide the basis for once again industry-leading earnings and margin in this entity.

Then it's time to move on to Iceland and our Icelandic operation, Arctic Fish. Operating profit was EUR 2.7 million for Arctic Fish in the fourth quarter and was with that almost identical with the fourth quarter of 2023 on now 3,500 tonnes harvest volumes. Margin was EUR 0.77 per kilo in the quarter to which it can be added at the main deviation from the Norwegian margin is cost.

So cost is therefore high on our agenda in Iceland and going from 10,000 tonnes harvest volumes last year to 15,000 tonnes this year, should obviously help us up to a certain point, but we have to do more.

So with that, I think we can conclude Mowi Farming and move on to Consumer Products, our downstream business. Operational profit was record high, EUR 53 million for Consumer Products in the fourth quarter, capitalizing on good demand and record high sold volumes of 71,000 tonnes product weight, which is up from EUR 38 million in the comparable quarter of 2023 on then 65,000 tonnes product weight. So I think we can say we still see good demand for our products, partly with the help of a constantly evolving product portfolio in the [ way ] of our branding efforts.

And whilst we are at it, we also continue to make progress on our Smart Factory concept in our 19 value-added factories spearheaded by our processing excellence team. Then last one out this morning, Mowi Feed. Mow Feed also continued to break records this time around with a seasonally record high operational EBITDA of EUR 21 million on seasonally record high sold volumes of 164,000 tonnes. And for the year, operational EBITDA was record high EUR 62 million on record high sold volumes of feed of 585,000 tonnes, which is equivalent to a growth of 12% year-over-year.

So with this growth and with Nova Sea on board, we need more feed capacity in Norway. So we will therefore break ground on our 60,000 tonnes feed expansion project in Bjugn in March, and we expect commissioning to take place sometime in the second quarter next year. So I think we can say things are moving along well in our Feed operation too.

So with that, Kristian, the floor is all yours, so you can take us through the financial figures and fundamentals. Thank you so far.

Thank you very much, Ivan. Good morning, everyone. Hope you're all doing well. As usual, we start with the overview of profit and loss, which shows all-time high Q4 revenue of EUR 1.5 billion and full year revenue of EUR 5.6 billion. Operational EBIT was EUR 226 million in Q4, up from EUR 203 million in the comparable quarter on record high volumes and the strong performance in all business areas. This translates into underlying earnings per share of EUR 0.31 and annualized return on capital employed of 17%.

For full year, earnings were somewhat down driven by lower price achievement. With regards to the items between operational EBIT and financial EBIT, the positive fair value adjustment of biomass, due to higher prices was partly offset by impairment of licenses in Canada West. This is related to the changed framework conditions announced by the government back in 2024, the impairment is in accordance with our prudent approach and could potentially be reversed, should there be any positive changes to framework conditions. The strategic review is still ongoing.

Income from associated companies is mainly related to Nova Sea. As Ivan mentioned, we expect the acquisition to be closed sometime in the second half. And from that point, Nova Sea will be fully consolidated into group figures. Until that, it will continue to be presented as an associated company.

We then move on to the balance sheet. As we have continued to invest in our value chain, invested in growth, there has been an increase in fixed assets and also biological assets as we see here from the numbers. Covenant equity ratio is 49.8%. So the balance sheet remains strong. Pro forma covenant equity ratio, including the effects of the acquisition of Nova Sea, would have been 49%, so not a significant effect.

When it comes to the cash flow, the contribution from EBITDA was partly offset by seasonal working capital tie-up of which approximately EUR 80 million is related to downstream i.e., accounts receivable and inventory. For the full year, working capital tie-up is EUR 44 million. That's a tie-up related to more biomass in sea, increased activity in the value chain and this was partly offset by a reduced cost at stock of approximately EUR 41 million or EUR 0.13 per kilo live weight.

With regards to tax payments, this includes prepayments of tax of EUR 81 million in Norway, which will reduce 2025 tax payments accordingly. Net CapEx and financial items paid were in line with guidance and net interest-bearing debt of EUR 1,867 million year-end would have been EUR 2.4 billion, including the effects of the acquisition of Nova Sea, and we are comfortable with our balance sheet.

We then proceed with our cash flow guidance for 2025. Working capital tie-up is estimated to EUR 50 million related to biomass growth and growth through the value chain. CapEx is estimated to EUR 310 million, interests EUR 90 million and taxes around EUR 190 million.

To support all of our business initiatives, and our growth projects, we need a solid financing in place. Since last time, the 2020 bond has matured and has been repaid. And apart from this, there are no changes on this slide. And we will come back with a revised NIBD target in due course, when the Nova Sea transaction is closed.

We will then give some comments on cost. The top graph shows the development in full cost per kilo in Norway Farming. This development is linked to feed prices, which increased significantly 2021 to 2022, but were stable in '23 and decreased 8% in '24. This is the main driver behind the cost at stock reduction effect during 2024. And we believe in a further positive cash effect in 2025.

We expect full P&L cost to be reduced in 2025, as also indicated on the graph, although costs in Q1 isolated, as usual, will be impacted by seasonally lower volumes and less dilution of costs. And we maintain a strong focus on cost containment, on cost leadership. As communicated on our Capital Markets Day last year, we have identified cost reduction potential of EUR 300 million to EUR 400 million in the next 5 years with 2 main components: The main one is, of course, operational improvements, including postsmolt, Mowi 4.0 and other initiatives; and the other main component which is also very important is the cost saving program, including the productivity program.

And we have a good starting point as the graph below here illustrates. We are the #1 or the #2 performer on cost in the southern farming countries we operate. But we always strive for further improvements.

When it comes to the cost saving program, we realized EUR 42 million in annualized cost savings in 2024. Total cost savings in 2018 to 2024 then amount to EUR 327 million, of which EUR 215 million in farming. There is a total of around 1,800 different initiatives across the company, including boats, treatments, nets, health, automation, productivity, procurement, energy savings, travel costs and a lot more.

And one important result of this cost focus and all these cost-improvement projects we have run is a more cost-aware organization. Our teams across the company have a stronger cost culture than some years ago. And we, of course, I think it's very important to maintain this focus and continue to monitor and to follow up on various improvement initiatives. And we have initiated a new EUR 30 million cost-saving program for 2025. An important part of the cost-saving program is the productivity program. Salary and personnel expenses represents the second largest cost item in Mowi, EUR 706 million for the full year of '24. And this cost item is something we can influence through our efforts to work smarter, become more productive.

Since 2019, we have achieved as much as 21% productivity increase based on 15% more volumes with 6% less nominal FTEs. We have set ourselves a new target for '25 of reducing FTEs by 300 through the productivity program, and this is to be achieved through natural turnover through retirement, reduced overtime, reduced contracted labor and automation.

We then move on to market fundamentals. Market supply increased by 3% versus Q4 '23 or 5% adjusted for inventory movements. Harvest volumes in Norway for the industry increased by 6% compared with the same period last year. There was some early harvesting at the start of the quarter, but then growth and production in Norway improved markedly. And per year-end, the number of efficiency for the industry in Norway was up 1% and biomass, up 5%.

Biological conditions also improved in Scotland, which led to growth. Volumes were down in Chile as harvesting was postponed to Q1. Global consumption increased 5% year-on-year. Consumption in Europe increased by 4%, and demand trends in key European markets remained strong. There was a clear positive Christmas demand effect. The food service sector in Europe saw some higher activity, indicating some rebound from the downturn, caused by the higher cost of living.

U.S. consumption decreased by 2% compared with Q4 last year. That's mainly related to less volumes available from Chile and Canada. The U.S. market still lags some somewhat behind Europe when it comes to demand recovery. But the retail channel experienced volume growth in Q4 and the fresh pre-packed category continued to drive the volume increase in retail.

Consumption in Asia demonstrated significant growth during the quarter, as we see here as much as 19% compared to the same period last year. All key markets in Asia showed positive consumption trends. And primarily driven by more larger size salmon available, which was a good fit with the strong demand in the foodservice segment.

With regards to prices, we saw the usual uptick in prices in Q4 versus Q3 and the estimated total value spent on salmon in the market reached a new record high level for fourth quarter.

When it comes to volumes for the industry, according to our estimates, global industry supply growth for '25 is expected to be modest, around 2% to 3%, which should be supportive of continued good supply and demand balance. This is an increase from last quarter's estimate following good biology in the Northern Hemisphere over the past few months.

And when it comes to our own volumes, we have further increased our 25% volume guidance by 10,000 tonnes to 530,000 tonnes. So this gives a growth of 5.7% from '24 to '25. With regards to Q1 volumes, we are up 12% Q1 '25 versus Q1 '24 and up 13% for Norway. And this means that we are on the right track to increase H1 volumes, which is something we have worked on. And our volume guidance is supported by all-time higher biomass in sea of 342,000 tonnes live weight.

And as this slide shows, we have a track record of actually delivering on our volume guidance with a positive 0.3% positive duration last 5 years versus negative 7.9% for listed peers.

With that, I conclude this walk-through of financials and fundamentals. And then we are ready for Ivan and some comments on the outlook.

Thank you, Kristian, 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.

And as I said earlier this morning, the fourth quarter marked the end of another record-breaking year for Mowi in terms of top line and volumes across the board. I also think it's fair to say that we did well versus our peers on margin last year. But perhaps most satisfying of all, we crossed the, for us, magic 500,000 tonnes mark in harvest volumes for the first time in Mowi's 60 years history, 502,000 tonnes to be precise, which is equivalent to a growth of 5.7% in year-over-year, which is a lot in a low-growth industry, such as the salmon industry.

And whilst we are on the subject, we have upped our harvest volume guidance for this year from originally 520,000 tonnes to now 530,000 tonnes, which is equivalent to a further growth of 5.7% year-over-year. So Mowi's idiosyncratic growth continues unabated and with Nova Sea on board, we now expect to harvest 600,000 tonnes already next year, not in 2029, which was the original target.

This transaction will also strengthen Mowi as a global and national powerhouse for innovation and sustainable agriculture, including fish welfare as well as being an instrument and a catalyst for further sustainable growth in Northern Norway. So the industrial rationale for the transaction is very, very strong.

It's also satisfying to see that the cost has leveled out and is now coming somewhat down on lower feed prices after a few years of unprecedented inflation. And as Kristian just showed us here, we continue to take further cost measures on our end. Individually, they do not always amount too much, but combined, they are very, very important for us, purely from a cost-generic nature as every little counts, particularly with our size, but also because they help us build and maintain a cost-conscious business culture in Mowi.

Culture eats strategy for breakfast, they say, and that's not only a cliche, there's a lot of wisdom embedded in it. And finally, it looks like the market is working its way out of the cost of living crisis all around, and we still believe in a modest supply growth in the coming years.

So fundamentally, I would say things are looking good. So let's hope this tariff situation we have ongoing does not escalate because as we said earlier this morning, tariffs are not good for anyone, neither for the imposer nor the other addressee. But the situation is unstable, so we will continue to monitor it closely and take necessary actions including shuffling around with our 7 origins for the best of our customers and our shareholders. Whatever that might be at any given time.

From one thing to another. This is Karen Kyllesø, she works as a farming technician in Mowi Norway region South. And when the rest of us were celebrating Christmas with great food and drink in front of the fireplace. She was celebrating Christmas completely alone in the icy wilderness in Antarctica minus 30 degrees Celsius. And on 13th of January, she arrived at the south pole as the youngest ever to ski solo, after 54 days and 1,130 kilometers on Antarctic ice. Some is just tougher than the rest of us, and I think Karen is one of them.

And as you can see on the picture here, now the Mowi flag is planted on the South pole.

So with that, Kristian and Kim, I think we're ready for the Q&A session. So if Kristian can please join me on the stage and Kim can administer the mic and the question.

Christian Nordby, Arctic Securities. One question regarding your net debt target. I know that you will address it later. But how do you think about a net debt target? Is it on a -- primarily on a per kilogram basis or is it more on a net debt-to-EBITDA basis? Or what are your thoughts regarding a revised sort of the methodology behind revising it?

EBITDA and then we convert it to per kilo.

So it's fair to say that also excluding Nova Sea, you would have probably revised it anyhow based on the strong growth you're getting?

That's true, yes.

Second question, in terms of tariffs, what are your thoughts if Chile avoids the tariffs and all the other countries get it for Mowi?

I think that's bad for everyone, but of course, for Mowi it's an advantage versus peers. But we don't like tariffs. Salmon is an extremely international product, so open markets, 0 tariffs, 0 friction. That's what we want.

Aleksander, DNB. Just a question on the supply guidance. So on industry supply, it's been up roughly 1% on good biology in the Northern Hemisphere, but your own guidance, Norway and Scotland has not increased. Any comments to that?

Not really. Still early days, Aleksander. So I think if we had to revert to this -- we have obviously a lot of fish in the sea right now. So going forward with 520, even for us, that's too prudent. So we had to operate, but there is still potential in this, but again, early days. So let's revert to this at a later stage.

Martin Kaland, ABG Sundal Collier. You comment that the winter source situation is much better than last year, but could you give some more details? And perhaps, I know it's early days, but whether some of this also could be explained by temperature, higher temperatures than last year or vaccine and so on?

I can put it into perspective for you. I think that's the best way to answer that question. In January, in Region North, we had a superior share of 94% and 100% of the fish was vaccinated. I won't tell you what we had last year, but it was a very different number. So for the vaccinated fish, things are so far knock on good going very well. We see for the fish, we haven't vaccinated, it's very different.

So I think we have to thank the vaccine for the lion's share of this improvement. But of course, sea temperatures are lower year-over-year. So still they are 1.5 to 1 degree lower, so that helps. But the main driver here is, at least in our view, the vaccine.

So then on price achievements for Q1, do we so far, it's much better than last year, but still we should assume some negative effects from downgrades.

That's true. You have seen the industry numbers. So it's typically, there was no 100% access to this vaccine for the fish we are harvesting now. So for the fish that was not vaccinated, we see downgrades with do. But the situation again is much better year-over-year.

We have also increased our processing capacity. So in that way, we are much better off than last year. We had a drawback last year and the year before that versus our peers. So our situation is much, much better, but also biologically things look better. So hopefully, this we can put behind us. That's -- and then we can spend the time on other issues.

Thank you. So we have a question from the web, Alexander Jones, Bank of America on U.S. demand. If you can comment on the recent developments there, please?

Yes. So what we see is that there is a positive development in the retail channel. We see that on our own numbers, we see around 13% increase Q4 versus Q4 last year in skin pack. And we also see some positive movements in foodservice, especially when it comes to e-commerce, home delivery, that segment of the market, which is more important than the U.S. than in Europe. But still, as I also said earlier, they are somewhat behind Europe on the recovery curve when it comes to demand, but we are very confident that, that will work itself out in due course.

Then a question from Alexander Sloane from Barclays, on cost, if you can give us a sense of how much lower feed costs could contribute to lower blended farming costs in '25 versus '24?

Yes. We have indicated a cost at stock reduction in the presentation and in the report material. We said that also feed prices is the main driver behind that cash decrease of EUR 0.13 per kilo live weight. And we also say that we believe that '25 feed prices will -- are expected to also continue that trend.

So this will, of course, translate into P&L cost savings in '25. And the magnitude is something I think we need to come back to. But at least we have given some input on the level we are talking about when it comes to cost of stock reduction, which is then driven by the 8% lower feed prices we have seen during '24.

Okay. Thank you. That concludes the questions.

Okay. And it only remains for me to thank everyone for the attention. We hope to see you back in May at our first quarter release, if not before. Meanwhile, take care and have a great day ahead. Thank you.