Mowi ASA (MOWI) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the presentation of Mowi's Fourth Quarter Results of 2022. My name is Ivan Vindheim. 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. For those 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 the highlights of the quarter. A quarter that marks the end of a record high year for Mowi financially with operational revenues totaling EUR 4.95 billion and operational profit of EUR 1,005 million, or EUR 1.0 billion, if you like. This is an historic moment for us as it's the first time in Mowi's close to 60 years' history we have crossed the EUR 1 billion mark in operational profit. There are tens of millions of hours of hard work behind this achievement. So, a big thank you to all of my 11,500 colleagues in 25 countries who have made it happened. It's, of course, much appreciated. For the fourth quarter only, Mowi recorded an operational revenue of EUR 1.36 billion, which was also a record high. And operational profits came to EUR 239 million, the second best fourth quarter to date on seasonally strong prices, I would say, driven by our reasonably good demand and a modest supply -- actually, a global supply contraction of 2% year-over-year, at least before we adjust for inventory movements. Including inventory movements, supply was stable year-over-year. For the sake, an operational profit of EUR 239 million is also in line with the trading update of the 16th of January. Furthermore, blended farming costs, i.e., weighted farmers for our 6 farming countries was EUR 5.25 per kilo in the quarter, but that's relatively stable compared with the third quarter. Year-over-year, however, cost is significantly up due to inflation and then, first and foremost, feed inflation. And we expect a slight increase in release from stock costs in the first quarter due to this, in addition to seasonally lower dilution of costs because of lower volumes. The underlying inflation we have witnessed over the past 18 months is unprecedented. So hopefully, 2023 can offer some tailwinds on input costs. Time will show. In terms of farming volumes, we harvested 131,000 tonnes in the quarter, which was slightly above the guidance of 127,000 tonnes, adding up to 464,000 tonnes for 2022 in total. For 2023, we expect to harvest a record high 484,000 tonnes, which is equivalent to a growth of 4.3% year-over-year. As late as in 2018, we harvested 375,000 tonnes in Mowi, which means we have grown our farming volumes by as much as 109,000 tonnes over the past 5 years, or 5.2% annually. This is above market growth, and our clear goal is to continue to capture market share in the salmon category by growing our farming volumes in the coming years, both organically and acquisitively, because farming volumes are at the end of the day, the mainstay of our business model. That's what everything hinges on in this industry. And the demand for more salmon seems to be good. Otherwise, it was with great pleasure we -- or Mowi was once again ranked as the world's most sustainable animal protein producer by the prestigious Coller FAIRR. This is the fourth year in our row and as I said, numerous of times, sustainability is deeply ingrained in the Mowi culture, and at the heart of everything we do. So this is more definitely a recognition we sincerely appreciate internally. And personally, I must say it's very humbling to [ belong ], to lead such a company and organization that excel in this way in this important field. Speaking of pleasures, it was also with great pleasure we just for year-end, we received the approval of our acquisition of 51% of the shares in Arctic Fish, one of the leading salmon farming companies in Iceland. We have a separate slide on Iceland later in the presentation. So I think we'll leave it at that for now. When it comes to other divisions, Consumer Products, our downstream business has delivered another great set -- another set of great results in the quarter, which rounds off a record high year for Consumer Products and operational EBIT of EUR 112 million on 229,000 tonnes of product weight. This corresponds to a return on capital employed of solid 16.5%. Our feed division can also put behind its best year-to-date in operational EBITDA of EUR 47 million on 517,000 tonnes of feed, which is equivalent to a return on capital employed of satisfactory 13.1%. Feed performance was also strong last year, the fourth quarter included which is, of course, of utmost importance to us by virtue of being the world's largest salmon farmer. However, notwithstanding all these records, everything is still far from rosy in the salmon universe, at least in the Norwegian -- not in the Norwegian part at least. And then thinking on the category's [ big event ] on the 28th of September last year when the Norwegian left-wing government proposed to raise the tax level from 22% to unsustainable 62% on Norwegian salmon farming, or about 80% with Norwegian wealth tax. Such a tax level is completely unprecedented in a global aquaculture industry and would impose major limitations on future growth and development of the Norwegian salmon industry if it's put in action. The public consultation response process ended on the 4th of January with, as expected, massive resistance to the proposal among the majority of the respondents. As many as 8 out of 10 are against it, from professors to small farmers along the Norwegian coastline. So there is no lack of warnings of the negative consequences of this tax proposal. Everyone looks out for their own interests, of course, but even many of the municipalities, the main beneficiaries of this tax, at least according to the government are skeptical as they fear the havocs it will wreak on current and future jobs in their local communities, which I think is well founded. If this will make a difference, it's another story and remains to be seen. Now the political process has started, and we will, for our part, 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 Norwegian salmon industry also going forward. With regard to timetable, we do not expect to have a clarification until after Easter, at least a formal clarification and most likely not until close to the summer. Last not least, the Board of Directors has decided to distribute a quarterly dividend of NOK1.70 per share after the fourth quarter, which compares with 50% of underlying earnings per share and as such, is in accordance with our dividend policy. That, I think, does it for the highlights for the quarter. Turn over to key financials. Kristian, as usual, will go in depth on financial figures in his session, so do not disrupt the course events, I will just touch briefly upon the most important ones now. And first is turnover, which we already have been through. Mowi recorded an operational revenue of EUR 4.95 billion in 2022, which was record high and up by 80% year-over-year. Underlying volumes were quite stable last year across our business. So this is mainly explained by good market conditions and higher prices for all our divisions. For the fourth quarter only, Mowi recorded an operational revenue, as said, of EUR 1.36 billion, which was also a record high and by coincidence, up by 80% as well year-over-year. Operating EBIT of EUR 1,005 million, we have already commented on, also some [ high wide ] margin and almost doubled compared with 2021. As we addressed on the highlights, we have grown our farming volumes extensively over the past few years, which we capitalized on to the full in 2022, and the prices finally come back in euro after 2 troublesome pandemic years, where we, as a euro company, did not benefit from the weakening of the NOK contrary to our Norwegian peers. Cash flow in the quarter was highly impacted by a tie-up of working capital and capital expenditures in addition to closing of the Arctic Fish acquisition. The net interest-bearing debt came in at EUR 1.76 billion. Excluding Arctic Fish, net interest-bearing debt would have been EUR 1.51 billion. And adjusted for temporary build-up of working capital, it would have been below our long-term debt target of EUR 1.4 billion. In the case of the latter, we will revert to our long-term debt targets when we know the outcome of the Norwegian tax process. I think that's enough about cash for now. Kristian will get back to further details later. Otherwise, equity ratio was at healthy 49% at the end of the year and underlying earnings per share was EUR 1.43 for the year and EUR 0.33 for the quarter. And finally, annualized return on capital employed was 24% for the year and 20% for the quarter, both well above our long-term target of 12%. In terms of regional margins through the value chain, Mowi Norway stood once again out positively, whereas our operations in the British Islands were disfigured by another biologically challenging quarter in the aftermath of a record warm summer. We will get back to explanation shortly when we go through the various business entities. But first, briefly about prices. As already said, we saw seasonally strong prices in the fourth quarter, which have continued into the new year on a reasonably good demand and on a modest supply. Compared to the fourth quarter of 2021, reference price was up by 17% in Europe and up by 7% in Americas for salmon of Chilean origin. The salmon of Canadian origin, reference price was up by 10% in Americas in the quarter year-over-year. Kristian will elaborate more on prices and supply demand under his session. Then quickly about our own relative price performance. Overall, price achievement was good for Mowi in the fourth quarter, and on or above the reference price for all our fish apart from Canada East where we harvested out some ISA fish in the quarter. Superior share was also good in the fourth quarter. Then briefly about the EBIT waterfall. As we can see from the graph here, operational EBIT increased from EUR 146 million in the fourth quarter of 2021 to EUR 239 million in the fourth quarter of 2022. This was mainly driven by increased earnings in farming as a result of higher prices and volumes, partly offset by higher costs. But also the other businesses contributed positively this time around with strong operational performance and results across the board. Then it's time to address the various business entities. And first one out is, as usual, Mowi Norway, our largest and most important entity by far. Operational EBIT was EUR 198 million for Mowi Norway in the quarter, which is the third last quarter to date, at least according to my records, and up from EUR 125 million in the comparable quarter of 2021. EBIT margin was EUR 2.28 per kilo in the quarter versus EUR 1.76 per kilo in the fourth quarter of 2021. As the graph clearly demonstrates, this was caused by higher prices and volumes, partly offset by inflation and then, first of most, feed inflation. In terms of biological performance, it's improved in the quarter year-over-year and also for 2022 as a whole. And by extension, I think it's fair to say that Mowi Norway has been on a formidable journey over the past few years. As the graph here shows, we harvested 210,000 tonnes in Mowi Norway as late as in 2017 versus record-high 294,000 tonnes in 2022, which means we are growing our farming volumes in Norway organically by as much as 84,000 tonnes over the past 5 years, or 6.9% annually and by that putting Mowi Norway towards the top of license utilization and production efficiency in Norway, which in turn has laid the foundation for the record high results we saw last year. So a big thank you to our Norwegian farming organization for this achievement. It's highly, highly appreciated. Then the breakdown of the margins for the different regions in Norway in the quarter. Region North stands once again out as the margin winner with EUR 2.65 per kilo on lowest cost and on strong price performance. But neither Region West nor Region South were far behind this time around with margins of EUR 2.35 per kilo and EUR 2.21 per kilo on good operational performance, I would say, taking into consideration their geographical location. Region Mid, on the other hand, was lagging behind in the fourth quarter with a soft margin of EUR 1.47 per kilo, adversely impacted by harvesting 50% of the volumes in October at seasonally low prices in addition to more issues than normal last year with, in particular, sea lice. Otherwise, it deserves a mention that both Region North, Region West and Region South harvested record high volumes last year. And all our entities in Norway recorded record high results, which is, of course, great. Then our Norwegian sales contract portfolio. In 2021 and 2022, we deliberately decided to keep our contract level low for our Norwegian volumes to capitalize on the expected post-pandemic market recovery. In hindsight, I think we can safely say that this strategy has served us well. For 2023, we have decided to keep our contracts relatively low as well, at least so far, partly due to uncertainty related to the Norwegian tax scheme, at least initially, but also due to our skewed harvest profile. In terms of contract prices for 2023, they are significantly higher than last year. Then it's time to address the other farming countries and first one out is Mowi Scotland. The fourth quarter, unfortunately, has become another biologically challenging quarter for our sorely tried Scottish organization. Now with issues with SRS, Salmon Rickettsial Syndrome. Normally alone, we are led by bacterial disease in these waters, which changed in the fourth quarter, probably triggered by an unusual warm summer, actually the warmest on record and huge issues with micro jellyfish, the Muggiaea atlantica, which did not only cause elevated mortalities but also a weak fish health in general. Against this backdrop, Mowi Scotland recorded a soft operational profit of EUR 7 million in the quarter, or EUR 0.67 in per kilo. Volumes have also been impacted by this and totaled 10,000 tonnes for the quarter and 48,000 tonnes for the year, both on the weak side. A [ positive note ], however, colder waters have done wonders for the fish health in Scotland. And by extension, we have harvested large-sized fish so far in the new year, which should prepare the ground for improving KPIs, knock on wood. Then Chile. Mowi Chile saw increased earnings and margins year-over-year in the quarter on higher prices and volumes, partly offset by higher cost for their part as well due to inflation. In terms of numbers, operational EBIT was EUR 20 million in this quarter versus EUR 11 million in the comparable quarter of 2021. The margin was up from EUR 0.64 per kilo to EUR 1.08 per kilo. Volumes are also up, as said, from 16,500 tonnes to 18,500 tonnes. In general, both production and biology were reasonably good for our Chilean operations in the fourth quarter. Then further north to Mowi Canada. Mowi Canada turned a profit of EUR 16 million in the fourth quarter against that breakeven result in the fourth quarter of 2021. This was driven by higher prices as well as costs increased year-over-year for our Canadian operations due to inflation. Volumes, however, were stable, 11,000 tonnes versus 10,000 tonnes. In Canada, we achieved a strong operational profit of EUR 21 million or EUR 2.15 per kilo, which is a significant improvement from EUR 8 million or EUR 1.07 per kilo last year, or in the fourth quarter of 2021. As far as Canada East is concerned, we harvested very low volumes in the quarter. On top of that, they were related to harvesting of ISA fish at high cost and low prices in addition to low dilution of cost [ after ] low volumes. In terms of overall biology for Canada East, it has improved compared with previous years, from which we expect to start gradually benefiting in 2023. I guess I should add knock on wood to this one as well. Then our 2 smallest farming entities, Mowi Ireland and Mowi Faroes. For salmon of Irish origin, we made a loss of EUR 3 million in the quarter, following issues with SRS as in Mowi Scotland. We also expect a weak first quarter due to this in addition to other biological issues last year. Our biomass in sea is low and we will prioritize biomass growth going forward and take advantage of colder waters during the winter and an improved fish health. In Faroes, operational EBIT came to EUR 5.5 million positively by means of a margin of EUR 1.75 per kilo on 3,000 tonnes harvest volumes. Then our latest addition to the Mowi family, Arctic Fish. As already said in the highlights, it was with great pleasure we just before year-end received the approval of the acquisition of 51% of the shares in Arctic Fish, one of the leading Icelandic salmon farmers. Iceland is Mowi's seventh farming country and was the last spot missing from our geographical footprint. Now we are looking forward to further develop the company together with the other owners and a highly competent and motivated organization. Iceland is namely one of the very few areas left that still offer extensive organic growth opportunities in conventional forming. And on top of that, Icelandic waters also provide excellent growth and living conditions for the salmon, which is key in this. In 2023, we expect to harvest 15,000 tonnes in Iceland. And in terms of reporting, we will start to report on the figures as from the first quarter onwards. The balance sheet is also -- already in our balance sheet, I'm referring to the P&L figures. So much about Mowi Farming, then over to Mowi Consumer Products, our downstream business. Consumer Products made an impressive operational profit of EUR 43 million in the quarter, which is record high and up from EUR 26 million in the comparable quarter with 2021, driven by strong operational performance and results across the aboard. In total, Consumer Products made an operational profit of EUR 112 in 2022, which corresponds to, as said, solid return on capital employed of 16.5%. This is also record high. So a big thank you to our Consumer Products organization for these impressive results. In terms of overall demand, it was good demand more or less all markets in the quarter, and we also see a reasonably good development in demand so far in the new year, notwithstanding the economic slowdown we are facing. Last one out, Mowi Feed. As said initially this morning, Mowi Feed also put behind its best year. It was its best quarter to date with an operational EBITDA of EUR 47 million and EUR 21 million, respectively, which corresponds to a return on capital employed of satisfactory 13.1% for 2022. Feed performance was also strong in 2022, as said, the fourth quarter included, which is, of course, of paramount importance to us as the world's largest salmon farmer. In terms of volumes, we sold 149,000 tonnes in the fourth quarter and 517,000 tonnes for the year. And as is proper, I would like to commend our feed organization for this great results in what has been a challenging sourcing environment. Then Kristian, the floor is all yours for walking us through the financials and fundamentals. Thank you so far.

Thank you very much, Ivan. Good morning, everybody. Hope everybody is doing well. As usual, we start with the profit and loss. And this statement here shows group revenue increased year-over-year for both Q4 and for the year. The full-year figure was record high at EUR 4.9 billion, following all-time high achieved prices, driven by a strong market and reduced contract share for Norwegian origin. Strong revenues and volumes and competitive costs, gave a record-high operational EBIT for the year and for the quarter at the same level as the third quarter. And we will go further into costs in a few slides. In financial EBIT, the fair value adjustment on biomass was positive on higher prices. Nova Sea, our associated company, where we are the largest owner with 49% of the shares, had an operational result of EUR 2 per kilo. That was above Mowi Norway region, Mid, but below the other regions in Mowi Norway, impacted by some biological issues and lower weights. Net financial items, as expected, paid interest of approximately EUR 12 million in addition to unrealized accounting effects. Underlying EPS increased in line with the operational EBIT, and return on capital employed annualized 20.3% for the quarter and 23.7% for the year, driven by farming, but also strong returns in Consumer Products and Feed, well below -- well, sorry, well above the 12% target. Cash flow per share impacted by working capital tie-up. We will come back to that in the cash flow statement shortly. We then move over to the balance sheet. These numbers include consolidation of Arctic Fish. And that's the main driver behind the change from the third quarter. Mowi's financial position is very strong with a 52% covenant equity ratio. With regards to the cash flow and the NIBD, we see that cash flow from operations was impacted by a working capital tie-up of EUR 229 million in the quarter, mainly related to temporary build-up of working capital and sales and marketing, feed and biomass in farming. Other investments include EUR 180 million for the shares in Arctic Fish, partly offset by dividends from Nova Sea. Excluding the acquisition of Arctic Fish, NIBD would have been EUR 1.51 billion, i.e., without the share purchase and the consolidation of their NIBD. As it looks now, we expect a net release of working capital this year in the amount of approximately EUR 150 million, as many of the items this year have been of a temporary nature, including delays in the supply chain. Given the current information, we expect the release in the first half of the year of approximately EUR 200 million related to the accounts receivable, inventory and effects on payables. When it comes to CapEx, the guiding is EUR 370 million, including Arctic Fish with EUR 30 million. With regards to the structural CapEx, this includes EUR 70 million approximately in freshwater investments, including post smolt projects in Norway, which were already underway when the decision was made to hold back on expansion projects in Norway following the resource rent tax proposal. The same also with the ongoing Josnoya processing plant project in Norway. Also, Arctic Fish has high investments this year in a new processing facility and also expansion of the smolt facility. With regards to the interest paid, this is expected to increase to approximately EUR 70 million this year and taxes estimated to EUR 175 million. If we look further into the cost situation, the backdrop is that we have been able to keep costs stable for the last 5 years until 2022. We see that indicated here also in the graph, a CAGR of 1.8%. That's less than annual inflation. Cost initiatives have offset the underlying cost pressure in farming. However, the post-COVID inflation impacted cost figures in 2022. But the entire cost increase of EUR 0.62 can be attributed to inflation as biological performance has improved year-over-year. And by far most important driver here is feed inflation as feed prices have increased significantly. But continued cost focus is very important. We need to combat increasing feed prices, biological measures and more complex relations as best we can. And we also would like to mention that we have a cost performance, which is good relative to peers. We are #1 or #2 in the various regions. We operate over time. And then with regards to the cost saving program, we overdelivered on the targets we set ourselves for the 2022 program. The EUR 48 million annualized savings we achieved last year were related to the productivity program, yield and efficiency, procurement savings and other savings. And the accumulated annual savings since this program started back in 2018 amount to EUR 230 million related to various procurements, contract improvements, productivity, other savings. One example of the latter is that we achieved our target set for 2022 when it came to travel costs. We cut that by 50% compared with 2019 on avoiding unnecessary traveling and utilizing digital tools. We have initiated a new program now for 2023. This year, it also includes energy savings. We target a 3% cut on annual energy usage in Mowi, amounting to approximately 28 gigawatt hours. And one important result of these cost programs, in addition, of course, to the P&L effect and the cash effect is that we have built a more cost-conscientious organization, cost culture. Our teams across the company have a stronger cost culture than what was the case some years ago. And we think it's important to maintain this focus and continue to monitor and to follow up and to seek various improvement all across the value chain. When it comes to the productivity program, this is, of course, an important part of the overall cost saving program and the salary cost is the #2 cost item in our P&L, EUR 613 million for the year of 2022. We are proud to have achieved a 9% FTE reduction in 2022 versus the start of the program in 2020. In this period, volumes have increased 6%. Don't forget that. So we have, in fact, increased productivity with regards to FTEs and volumes by 15%. But we believe it's possible to have a further reduction in FTEs now in 2023 by working smarter, utilizing automation and rightsizing. And this will, to a large extent, be solved by natural turnover, as it's also stated here. Then we move over to fundamentals. First, sustainability. We have cut our CO2 emissions for Scope 1 and 2 by 9% the last year, as much as 33% reduced comparing with 2019. With regards to Scope 3, i.e., the suppliers and the value chain, we have, together with our partners, managed a 10% cut since 2019, and that's a good achievement, I would say. In the end, Scope 3 emissions are the most important part of the total here. So we are progressing well on our ambitious long-term targets in Mowi in this respect. And if you put this a little bit into context, we have avoided 2 million tonnes also in 2022, annualized savings of CO2 compared with what have been the case if you replaced our proteins with a mix of other land-based proteins. So salmon is definitely on the right side of sustainability. We have a good starting point with salmon being such an efficient protein. But these results don't come by themselves, and we are proud that we have been ranked #1 on the Coller FAIRR index now for the fourth time in a row. And we also have several other good rankings, that's also reflected here on the slide. A large part of our financing is also green or sustainability-linked, including the bank facility, which is the backbone of our financing in Mowi. So we have linked financial performance to sustainability performance. The current mix is 81%, including Arctic Fish, and the target is to be at 100% in 2026. We have a very solid financing in place, and we are comfortable with that and very good relationship with our core banks in DNB, Nordea, ABN Amro, Rabobank, Danske Bank, SEB and Credit Agricole. Then the market fundamentals, starting with the supply developments in the quarter, adjusted for inventory movements, then global supply was stable. So some additional comments to the supply situation. We saw that there were lower volumes than expected in Norway and Scotland in the quarter, partly offset by higher volumes than expected in Chile. In Norway, there was some early harvesting, lower rates and lower feed consumption than expected. Biomass in Norway, down 3% for the market versus last year. In Chile, more harvesting than expected, but biomass down also here, down 5% versus last year. And here, we see that the supply to the market was stable year-over-year. And it's also very positive, of course, to see that the prices and the value of the salmon consumed was up approximately 20% in Q4. And 2022 was a record year when it came to the salmon market, with consumption totaling EUR 21 billion, up as much as 30% for the year. When it comes to demand and consumption, we see in Europe, foodservice continued to improve in the fourth quarter. Retail sales were higher than before the pandemic, but decreased from the high level seen during the last years. In the US, consumption increased by 8% despite very harsh winter weather in December. When we look at our own trading and Consumer Products figures in the US, we increased volumes by even more, 13%. So the numbers in the US were strong in the quarter. In Asia, however, we saw consumption declined by 3%, higher than normal air freight still and also limited availability of large sized fish from Europe. So it has been a record year price-wise. And after a seasonal downwards adjustment after the summer, we have seen a good development during the winter. And the blended euro price increase in Q4 was approximately 20%. And then with regards to the expected supply growth, with lower biomass in Norway and Chile, the expected supply growth for 2023 is on the low side, 2%. And in Q1, we are looking at the supply contraction of between 0 and minus 5%. So a constrained supply side going forward. When it comes to our own volumes, 2022 was another year where we not only reached our harvest volume guidance, but also overdelivered on the guiding we set. With regards to 2023 volumes, they now include Arctic Fish estimated to 15,000 tonnes. Total figure, as we see here, is 484,000 tonnes for the year. In Scotland, we expect the volume recovery from a challenging 2022. We expect growth in Chile on overall good performance, while Canada West will be reduced following the loss of licenses in the Discovery Islands area and also site mix. Canada West is expected to be around 25,000 tonnes from 2024 onwards. And with the 484,000 tonnes harvest volume guidance, we have increased volumes by as much as 109,000 tonnes over the last 5 years, equivalent to 5.2% annual growth versus industry at 4%. And there is an intrinsic potential here to grow volumes well above 500,000 tonnes. Then it's over to Ivan for some comments on the prospects ahead of us.

Thank you, Kristian. Much appreciated. Now it's time to conclude with some closing remarks before we wrap it all up with a Q&A session hosted by our IRO, Kim Dosvig. As already said, the fourth quarter marked the end of a record-high year for Mowi financially with operational revenues totaling EUR 4.95 billion with an operational profit of EUR 1,005 million. We also said, an historic moment for us as is the first time in Mowi's close to 60 years' history, we crossed the magic EUR 1 billion mark in operational profit. And further to this, I think we must say that 2023 has started off on a good note with seasonally strong prices so far on our reasonably good demand and our modest supply. How this will develop further on the demand side normally and also, of course, including ourselves? But normally, the salmon fares well in challenging economic times. And the supply side looks supportive with an expected global supply growth of as low as 2% for 2023, according to Kontali. So in other words, a good start to the new year. Having said that, and as addressed earlier this morning, everything is low, unfortunately, far from rosy in the salmon universe, that is not in the Norwegian part of it. Because the Norwegian government's infamous resource rent tax proposal is hanging over us all [ cause a ] dark cloud or the future prospects for the Norwegian salmon industry going forward. An unprecedented tax level of 62% or 80% with Norwegian wealth tax is simply not sustainable and would impose major limitations on future growth and development if it's put in action, and thereby, cause a ratable damage to current and future jobs in the thousands along the Norwegian coastline. Because the additional NOK 1 billion of going to resource rent tax payments going forward will not be replaced by external capital infusions and therefore, deteriorate our and the industry's investment capacity. There is no such thing as a free lunch, not here either. And I must admit that it really puzzles me that the Norwegian Ministry of Finance in all seriousness appear to believe that this tax proposal is neutral on future investments. Go figure or in Norwegian [Foreign Language]. Nevertheless, the public consultation response process ended on the 4th of January with, as said, massive protest from the majority of the respondents, including many of the local municipalities. So now the political process has started, and we will, for our part, continue to work with all levels of Norwegian politics and organizations to try and turn this in our view, [ antibusiness ] proposal into a viable framework for the Norwegian salmon industry also going forward. With regard to timetable, we do not expect to have a clarification until after Easter, at least not a formal clarification and most likely not until close to the summer. So much about politics. In terms of full-year farming volume guidance, we expect to harvest, as Kristian just showed us, 484,000 tons in 2023, which is equivalent to a growth of 4.3% year-over-year, double of the expected industry supply growth and a continuation of the growth trajectory, Kristian, just walked us through. Our clear goal is namely to continue to capture market share in the salmon category in the years to come. And as you all know, in our industry, it's all about the farming volumes. Otherwise, heads up on blended farming costs for the first quarter, as we expected, to increase slightly quarter-over-quarter due to seasonally lower dilution in addition to previous inflation. That being said, we hope to see a decline in cost to stock this year on falling input prices. That's at least I would take as of today. And finally, the Board of Directors has decided to distribute a quarterly dividend of NOK1.70 per share after the fourth quarter, which compares with 50% of underlying earnings per share and as such is in line with our dividend policy. Then I think we are ready for the Q&A session, Kim. So if Kristian can please join me on the stage.

So we have the first question from the web this time. Alexander Jones, Bank of America. He's asking -- he's got 2 questions on demand. The first one, can you give us an update on what you're seeing in terms of latest demand trends? And the second one in China. How do you expect China's relaxation of COVID curbs to affect salmon demand this year? And what do you believe is the long-term outlook for Chinese consumption?

Yes. So if we start with the demand, I would say that prices have been good now for a significant period of time. We have seen, of course, we saw a seasonal decline following the summer last year, but the salmon has fared well during this autumn and this winter. And in the end, the best indicator of demand and the market is prices, and we continue to see good prices in the market. In the Q4, volumes and developments were good. As mentioned in my section, we saw that volumes were still ahead of pre-pandemic levels in retail and also good development in foodservice. And then we are in a challenging economic time. So time will show how this develops going forward, but still prices are good and development in the market has been good. And then when it comes to China, China is a market, which used to be around 5%, looking at the 2019 situation before pandemic. Now it is significantly lower, I guess, around 3%. There is a significant potential for China. We see still air freight rates. That is expected, of course, to improve at some point. We know that China is predominantly a foodservice market. There is a significant potential for more home consumption. And we have our presence there. So I think Mowi is well set to benefit from improving market conditions in China, which we, of course, expect now with the reopening over time.

Knut Ivar Bakken, SpareBank1 Markets. Could you say something about the winter wound situation in Norway this year compared to last year?

It's still an issue. How this evolved during the winter is a little bit early to say, but we already see signals of winter sores at the normal sites or the usual sites. So most likely, it will be an issue this year. But from Mowi's part, I think we are doing okay so far. So -- but again, still early days.

Wilhelm Roe, Danske Bank. Just a question on the strong development in the Consumer Products market. Could you elaborate a little bit more on how you see the margins going forward here just based on how you see the demand developing going into Q1 and also just operationally?

As we said during the presentation here, so far, it has been reasonably well. So there are no indications of a slowdown. But as Kristian just said, we are in unchartered waters, right? So if this slowdown turns into a recession and it becomes deep and also persistent, then this can change. But so far, I think we are good then. Just to look at our prices so far this year, and now I'm talking about 2023, it's amazing. It's fantastic. It's the best start of the year ever, at least in my time in this industry. So, so far, so good. But again, we are humble. So we are not [ researchers ]. We don't know about the future, right? So in the end, it's about how does the economy -- world economy in general develop. And salmon is our global product. Foodservice has been fantastic after the pandemic. So that market has really come back at the expense, partly of retail, of course, because then people go out instead of eating home. But in total, as Kristian showed, a really fantastic development so far. But again, he knows about the future.

Christian Nordby, Kepler Cheuvreux. We saw that you made some contracts now for first half 2023. Is the contract market more functioning now than it did a few months ago?