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Edited Transcript of MHG.OL earnings conference call or presentation 21-Aug-19 7:00am GMT

Q2 2019 Mowi ASA Earnings Presentation

Bergen Sep 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Mowi ASA earnings conference call or presentation Wednesday, August 21, 2019 at 7:00:00am GMT

TEXT version of Transcript


Corporate Participants


* Alf-Helge Aarskog

Mowi ASA - CEO

* Ivan Vindheim

Mowi ASA - CFO

* Kim Galtung Dosvig

Mowi ASA - Head of Treasury & IR Officer


Conference Call Participants


* Stein Alexander Aukner

DNB Markets, Research Division - Senior Analyst




Alf-Helge Aarskog, Mowi ASA - CEO [1]


(foreign language) Okay. Welcome to the presentation of the second quarter of 2019. And together with me to present, already introduced, we got Ivan Vindheim on my right side. And this one, you don't need to read, and then we go on into the second quarter.

It was a very good quarter for us, actually, the best second quarter ever for the company, with a EBIT of EUR 211 million. This is mostly backed up by higher volumes, so 26% higher volumes than the corresponding quarter a year before, but also a very good price achievement in the quarter as well as strong demand for the product. And if you take a look into the combination of price achieved and the volumes sold, we see that consumers spent 3% more money on salmon in this quarter than the corresponding quarter before. So a very good development in the business.

Cost has improved from Q2 2018. Also in terms of our business, which is -- we have a Feed division, and they've set a record in terms of feed sales and production. We opened a new factory in Scotland in this quarter, that has contributed to that result. But I have to say that the Norwegian operation in Bjugn has delivered fantastic in the second quarter and is the really machine for feed production, a really good part.

The Board decided to rebuild the smokehouse in Kritsen. That's the smokehouse that burned down in July last year. And we will launch the next MOWI launch, the brand launch, we started with Poland in the first quarter, and then the next one will come in France second half. First, we go to high-end restaurants in France and then we go to retail after introduction into restaurants.

MOWI has been very well received in the market in Poland. We are in most of the supermarkets down there and also in very high-end restaurants, an excellent product.

Then we bought a company called K. Strømmen in Bremanger in this quarter. We paid NOK 790 million for that company, NOK 150 million for the license because there was a lot of fish in the company and equipment as well as 4 really good locations.

For us, almost the location was the most important part because then we had control in a very important area for MOWI and new shore in terms of fish health and production is key for us.

Board has decided on a quarterly dividend of NOK 2.6 per share, and this is to be paid out for the lucky shareholders in Q3 2019.

A little bit about financials, Ivan will go more thorough through this later on.

But important, top line growth in the quarter, 15% compared to the same quarter last year. So now over EUR 1 billion in sales in Q2, a record for us. Operational EBIT, almost -- or up even more, 21% up, so a very strong performance operationally. And volume-wise, 26% up, up to 98,000 tonne. So a quarter where most of the divisions or most of the business units delivered good numbers, and I get back to that a little bit later.

If you see on the EBIT per kilo here, how much we make per kilo produced in the different production countries. Scotland was the best in the quarter with almost EUR 3, EUR 2.92 per kilo, Norway at EUR 2.45, and then you can see the rest of the numbers. Ireland, small operation for us, at EUR 2.66, only organic -- or almost only organic salmon produced and sold at a very, very good price.

This is the spot price development in the quarter. And through the second quarter, we saw a falling price in most markets, from 10% to 15% in the different markets where we sell. But lately, we have seen increased price, especially in the Canadian price on the West Coast, with almost $1 a kilo up in price over the last few weeks. And obviously, on the Norwegian side, it's low prices in August, that's normally it or lower prices in August. And then when you see through that and see into next year, an increase in volumes of about 4%. I think the fundamentals are very much in place in this business.

This is price achievement for the different -- or the biggest units we have. The Norwegian operation achieved 100% compared to 91% last year. And you see Scotland 108% compared to 97%, and so it grows. Canada is all spot, and Chile is also 31% on contract. Superior share is the quality of our fish, 90% in Norway, 96% in Scotland, 92% in Canada and 90% in Chile. And if you say that the spot price is 100%, quality will then drag the price achievement a little bit down and contracts -- long-term contracts will drag it up. So this is how we account for -- in a simple way, how complex and how our contracts performed compared to the spot price.

Then to explain the improvement in result from Q2 last year. Q2 last year, EUR 175 million. Feed improved, not a lot, but EUR 2.2 million. Remember, we are in a construction phase or commissioning phase in the Scottish factory, that took the results somewhat down, but still improved from last year.

Farming, on the back of, for the most part, volumes, up EUR 35 million. Markets, EUR 7.6 million up. That's sale of whole fish into the markets. Consumer products, down, EUR 7.1 million on the back of fierce competition, especially in some European markets. And all in all, up to EUR 211 million in the quarter.

Norway, by far, our biggest units, out of the EUR 211 million made, EUR 126 million was made in Norway. Overall, a good result. Region South had a huge progress compared to the corresponding quarter the year before. We'll look at that a little bit later on. But they were harvesting from very good sites, so we harvested in Region South from basically mostly in Agder and Rogaland where fish farming has good conditions in general. It's typical -- obviously, when we go back to Hordaland -- sorry to say when you are in Hordaland, but then results fall down a little bit more. That has to do with fish health, and for the most part, the mortality rates on the fish. That can be fixed.

Region Mid, impacted by harvesting of smaller fish. We had to take out a few sites because of PD, and that's forced harvest in that region. And then you harvest out fish at 1, 2, 3 kilo. Takes your costs up and price down and impact your results negatively.

Region North, stable, good result and a good performance in the quarter. And what we have seen over time now is that Region North performed very well.

A little bit to the biology. Sea lice a little bit increasing in Region South and Region Mid. And Region North is stable, and this is obviously a key for how growth is given out in -- or not given out, bought. We had to buy it very costly in Norway. And then in Q3, we see -- we have 2 ISA sites that we're going to harvest from. So we'll see somewhat lower harvest weights in Q3, and as I said, higher costs because of that. Unfortunate, but that is biology for you.

Norway sales contract portfolio, very stable, I would say, around 22,000, 23,000 tonne in Q3. And if you see compare, a little bit up from Q3 2018, but not a lot. This is contracts from good prices and to stable customers going forward. So it kind of sets a good stable floor for our business.

And Q4 up. Q4 is obviously the season for a smoked in Europe, and we have normally higher contract share. You can see compared to Q4 2018, the contract share is slightly up in Q4 '19.

Then to the regions. I won't go in a lot in details here, but you can see the improvement in Region South, it's tremendous. It's from EUR 1.1 to EUR 2.57 or EUR 2.6, if you round up. And as I said, this is for the most part because we have been harvesting from very good sites in Agder and the Rogaland for the most part in that quarter.

Region Mid goes all the way around from EUR 2.63 down to EUR 1.88 on the back of what I explained before, harvest from, what we call, PD fish and for most of that and some challenge with sea lice pressure in the area. So we have to take out smaller fish. And then Region North making EUR 2.97, which is a very good result in this quarter. All in all, EUR 2.56 against EUR 2.45 -- or EUR 2.45 this year against EUR 2.56.

Then on to the other regions, Scotland, actually, our best-performing region in this quarter, increased volumes from almost 9,000 tonne of fish in the quarter in '18 to 16,000, so not quite a doubling, but close. And that has a profound effect on the result. At the same time, harvesting from very good sites and areas and good production, good price achievements -- or slightly down, but from quarter before, but offset by higher volumes and much, much better cost. So very good contribution from Scotland in this quarter, EUR 46.5 million. So we are very satisfied with the Scottish operation.

Then on to -- next one is, which is Canada. We are both on the East Coast and West Coast of Canada, so as of Campbell River, North of Vancouver, on the West Coast and Newfoundland, New Brunswick on the East Coast. Here, we had better volumes than corresponding quarter, driven by that we bought the company on the East Coast in 2018, which harvested some fish at least. And what we saw in this quarter was a price decline or a price achievement wasn't that good in the quarter -- in the second quarter. But as I said, this has recovered during Q3.

Cost reduced year-over-year. However, Canada is still at the high level. So we have much more work to do there to get this into a cost level where we are satisfied.

Chile. Chilean operation, another good result, EUR 28.2 million in result compared to EUR 18 million in 2018. Increased volumes as well in Chile from almost 10,000 tonne to 15,000 tonne and around the same contribution per kilo. You see, price went down on Chilean fish in the quarter, but cost improved. So all in all, a good quarter.

If you look at Chile, as we speak, I have to say that there is -- there has been stocked a lot more fish. There are some challenges when it comes to resistance toward some medicine against sea lice that needs to be handled, and we have a plan in place, but if there's anything that is a concern for the industry in Chile. In the same way, almost like the Norwegian industry, I would have to say.

Cost expected to increase somewhat in Q3 versus Q2, not a lot, but a little bit on the back of what I said with sea lice and somewhat more SRS. Those diseases and sea lice, they go together. So if you have control on sea lice, then your operation usually goes very well.

Then on to our 2 small, but nice operations. We have one in Ireland and one in Faroe Islands, both, over time, delivering very good numbers. Ireland, as I said, organic, special Irish salmon for special markets achieved a very good price, has the highest cost in our operation, that is branded and sold at very, very good money. So we're making EUR 2.66 per kilo, up from EUR 2.21 last year. Faroe Islands, down a little bit. We have only 3 sites in the Faroe Islands, so we don't even harvest the whole year, but okay result in this quarter as well.

And then on to our biggest division when it comes to number of people working there. There are some people that believe that Norwegian fish farming is kind of founded on we could do all our value-added in Norway, bring all the employment back to Norway, and this will go just fine. These people that's working in our plants in Europe, in Asia, in the U.S., they are the one actually laying the foundation for the good results in Norwegian fish farming. If it wasn't for these people developing new products close to market aligned with what the customer want, we wouldn't be able to supply. And people want fresh fish, and they want it their way, and you get the order in the morning at 7:00, and you have to deliver the same day, and you cannot do it from Norway. A lot of Norwegian politician doesn't seem to get that fully out, I think. And it's very important to state this because, obviously, we -- in MOWI, we are a company actually value-adding the most fish in Norway. We fillet it and then we take the fillets down. But the final value-added with the exception of frozen products has to be done close to market.

So maybe we are not making a whole lot of money in this division this quarter, but they're really driving the development in the business. Yes, we're happy with that. It's a very tough business to be in. We have smokehouses in Poland, in France, in U.K., in U.S., in -- as a starter and a lot of small factories that is making sushi, and sashimi slices and so on into the market. They are, as we said, creating demand, and we see increased consumption, but the competition here is fierce.

And as you can see, we're not making a whole lot of money here, EUR 4.9 million, down from EUR 12 million, but we are going at it. And we want obviously to improve it, and we will. We have factories that is doing fantastically well. A few mentioned here: Pieters is in Belgium, Rosyth in Scotland, Sterk in Holland, and Miami and Dallas as well, a really good improvement. And then we had tough competition in our factories, especially in Poland and France, and especially in the Smoked segment. And so that is the world we're living in, but at the same time, they're securing a good price for Norwegian salmon, that's about these guys -- and a development of a very healthy and good product.

It's easy to be taken into this election that's just coming up that everything has to come back to Norway. I just have to warn you against that because it can backfire a big time.

Fish feed is something we do in the market in the place where we operate. We built a fantastic factory in Bjugn. I guess windmills is off the chart and everybody doesn't like windmills anymore. But here, we are running a factory on windmills and nobody is complaining. It's a very clean energy. And we combine it. If you see the tanks out there on the side, we combine it with LNG, which is one also fairly clean source of energy. And we have built a factory. Employing in this division 150 people between Scotland and Norway, so maybe not a lot, but extremely important for the society in Bjugn and in Kyleakin in Skye, where the lowest plant is delivered. Delivered a good result -- or decent result, EUR 3 million. We want more. The Norwegian unit was close to 7%, but then we are in commissioning in Scotland, so that was on a negative side in this quarter. At the same time, we see that when we are getting this plant in Scotland to start up, we see that we can produce even more. So we are -- we can go -- the capacity was at 170,000, I think we can do 240,000 when we debottleneck the whole plant. And this is important for us.

The same we did in Norway. When we build, we are a little bit cautious. We had the capacity in Bjugn at 220,000 when we started. And last year, we did 350 million tonne -- no, 350,000 tonne. The Bjugn plant's been operating for 5 years, produced 1.5 million tonne in those 5 years, and was paid back in 3 years. So since -- you see that we can really develop the industry also in the rural areas. But I wouldn't put my value-added sushi factory in that place.

Then on to financials, Ivan, you know much more about that than me, and also he will comment on markets, volumes going forward.


Ivan Vindheim, Mowi ASA - CFO [2]


Thank you, Alf-Helge, and good morning, everyone.

As usual, we start with the P&L. As Alf-Helge correctly said, our second best quarter ever. Also in terms of turnover, 1 -- more than EUR 1 billion in the second quarter and just exactly EUR 2 billion in the first half. So yes, a good first half year for us, and particularly, a good second quarter. Operational EBIT, EUR 211 million.

If we go further down in the P&L. No biomass adjustment this time around. Restructuring costs of EUR 19 million, that is related to decreasing fire and the restructuring of that factory. As some of you are aware of, the Board decided to rebuild the factory, announced in our stock release in the quarter. The EUR 19 million amount is fully aligned with the message we gave back then.

Income from associated companies, the first and foremost, Nova Sea, a very good farmer in Newland, where we own 48%. They had EBIT per kilo of as much as EUR 3.15 this time around. It's really, really good. I haven't seen anyone managed to compete with that so far. So we are very happy with our ownership in Nova Sea, in general, but particularly, this quarter, obviously.

For net financial items, quite stable or normal this time, EUR 12 million negative. Underlying earnings per share, EUR 0.29. Volumes, 98,000 tonnes, up as much as 26% year-over-year. Of course, the big driver of the results we achieved in the quarter. Return on capital employed or return on invested capital annualized, close to 22%.

Then over to the balance sheet or what we call the financial position these days. The total balance sheet now amounts to EUR 5.6 billion, so we are growing. You can see, up EUR 1 billion year-over-year, driven by both acquisitively, and I would say, first and foremost, organic growth. We have close to 27,000 tonnes, more biomass in sea year-over-year. We have bought license in last year auction. We also have invested heavily in several -- in various greenfield projects. We acquired Northern Harvest last year. And recently, we have acquired K. Strømmen, but K. Strømmen doesn't impact these numbers. So we have a growth strategy, and I think the numbers, they are quite evidently here.

Net interest-bearing debt, EUR 1.1 billion. So yes, somewhat below our long-term target, but in line with, at least, our internal forecast for this quarter. Equity ratio of solid 53%.

Then over to the cash flow. We started the quarter with a net interest-bearing debt of EUR 1.0 billion. Then we made EUR 248 million in operational EBITDA. We tried up some working capital, rough increase in biomass. We paid taxes of as much as EUR 82 million. So yes, the lion's share of the taxes this year is now paid.

Net CapEx, in line with our budget and the forecast to the market, EUR 69 million. Of the investments and dividends received, EUR 17 million is related to dividend from the associated company, Nova Sea, which we have just talked about. Net interest expenses paid in the quarter, around EUR 15 million, so quite normal. Dividend is the dividend the Board decided to distribute after the first quarter.

All in all, net interest-bearing debt at the end of the quarter of EUR 1.1 billion. And as you can see from more or less the footnote, this is euro. So we are euro company and 50% of the salmon is sold in euro.

Cash flow guidance. No changes since the first quarter, apart from taxes paid. It's now EUR 160 million for the year, up from EUR 140 million due to higher earnings. So you could argue for the right purposes.

Then a quick overview of our financing. We are very, very proud of this financing, particularly me and my team. So we have a bank facility with the best banks out there according to us, and I guess, also according to them: DNB, Nordea, ABN, Rabo, the 2 last ones, they are Dutch: Danske Bank and SEB. And we also have a senior unsecured bond of EUR 200 million. 5 years tenor and EURIBOR of 2.15%. This is unsecured money, and EURIBOR, as you all are aware, is negative. So very attractive terms.

And our senior unsecured Schuldschein loan, I guess, not many of you are aware of this. This is a loan in the German private markets. It's, first and foremost, banks than insurance companies investing in this. Seven years tenor and EURIBOR of as low as 1.70%. This is also unsecured money. So really, really cheap financing and extremely important to us. That's why we always take every opportunity to embolden the audience through it. Long-term debt targets, EUR 1.4 million -- EUR 1.4 billion, unchanged. So much about the financials.

Then over to the fundamentals. First, supply development in the quarter. In the upper bound of our forecasts, 8% year-over-year. Our forecast to expectation was in the range of 3% to 7%. We have had more growth in Norway than expected, but also the algae bloom drove the volumes in Norway in the quarter. This was in the northern part of Norway as, I guess, most of you are aware of, and it resulted in advanced harvesting.

And Chile, in line. Prices, a lot of negative figures this time, we are not used to that. Remember that last year, we were at a record high level, so we are down 10% from a very high level in Europe and 13%, 14% in Americas. For most, a very high level. If you blend this with the contracts according to our calculator, the value of the market has still increased by approximately 3% year-over-year. So the underlying demand, the way we see it, is still very healthy.

Then over to their demand or the consumption of the fish produced. As you can see from the first line here, EU increased by as much as 8%. So this is the main market for the salmon, it accounts for almost half of the market, so very important to the European farmers, to all global farmers in general. So a very good development in Europe. And all countries are increasing. So we're very happy with the -- again, the development in Europe.

Russia is challenging, has been challenging for a long time due to political issues. This has turned from a fresh market to a frozen market, and we think that would be the case as long as the situation is that is in Europe. So down 11% this quarter because of the Chilean fish is -- was redistributed to the fresh market in Brazil. Selling fish fresh is always more profitable. And as you know, it's much shorter to ship or truck the fish to Brazil than to ship it to Russia as frozen.

Very good development in Americas, in general, 6.5% increase. Brazil stands out, as just mentioned. U.S.A. this time, 3%. U.S.A. is the biggest single market for the salmon, close to 500,000 tonnes and almost now a half of the European market. So the U.S. is extremely important to us. So the footprint we have on the farming side, both in Canada, but I would also argue, in Chile, is very, very important to us in order to have the right raw material to continue to develop this market. And I would also like to add that our growth in the quarter was higher than this 3%.

China/Hong Kong, 0% this quarter. I guess a little bit disappointing. China is actually up by 5%, but Hong Kong is down. We can see on the telly that there are things going on there. That also impacts our business. So in general, issues, political or others, are not good for trade and salmon is a very global market, so -- and product. So yes, each time such things happen, it's, in general, not good for us.

Japan is a mature market, hasn't grown for years. And so 1.7%, I would argue, is just as expected. South Korea/Taiwan, 6% plus, it's okay. 5% in Asia, in general, also okay. So the demand, as we see it, is still very, very good.

Then over to the supply outlook, the fundamentals going forward. I guess as an investor, this is what really matters, maybe not this year, but next year and the years to come. And for the remainder of the year, we expect a growth of 3% to 7%. For the year as a whole, 4% to 7%. So I think the consensus is 6%. If we look into next year, which is closing in, Kontali expects 4% and our internal take is so far also the same.

So the fundamentals for next year look good for our -- for the market balance. So we are aware of that there is some seasonality at the moment. But again, looking into the fundamentals for next year, also the years to come, we still have a good belief in this.

Then over to our own volumes. No change at this time. So there's not much to say really. We are still comfortable with achieving 430,000 tonnes in total. A big increase of growth compared to last year from 375,000. But that being said, bear in mind that we have been at these levels before. So I would still like to use the word recovery. And again, we are comfortable with the numbers.

Then I would like to say thank you, and leave the word to Alf-Helge and he can wrap this up with the -- yes, walking us through the outlook. Thank you.


Alf-Helge Aarskog, Mowi ASA - CEO [3]


Okay. We will shortly open up for questions.

But just to sum up, Ivan just said it, the fundamentals looks strong. There will -- we don't see any oversupply in salmon going forward. Control estimate is 4% next year, and that's not more than the market needs. At the same time, Fish Pool prices -- forward prices at EUR 5.9, a very decent price level.

For us, organic growth throughout the value chain, the feed plant in Scotland, we continue to fine-tune. Farming side, we have ample opportunities to grow in Newfoundland. We are in -- we have opportunity to grow in Chile, in Norway and Scotland as well, slightly worse in the Faroe Islands and Ireland, but they are small.

In terms of downstream on the market side, our branding effort continues with full speed going ahead. So to grow this company going forward, fantastic opportunity. I think we are one of the bigger companies in Norway today and we should stay that way.

In terms of the acquisition of K. Strømmen, we expect to finalize this in Q3 2019, just in a few days, actually. And that will bring us stability in Norse shore where we have many of -- or a big part of our operation.

Feed plant, where we had -- we see we can increase the capacity from 170,000 tonnes to 240,000 tonnes. That's always a good sign, and we need the feed for the future.

And then as already stated, quarterly dividend, NOK 2.60 per share, paid out as ordinary dividend in the third quarter.

And with that, we open up for questions, so both Ivan and myself are able to answer at least some of them, we hope.

So Kim, I don't know how you do it with the microphones or stuff or if you have any things coming in on your computer?


Questions and Answers


Unidentified Analyst, [1]


One question regarding the feed plant. When do you expect it to be up and running at, at least close to full capacity? And what do you expect to do with the additional volumes that you are able to produce? At least your own operation in U.K., I guess, doesn't support such high volumes.


Alf-Helge Aarskog, Mowi ASA - CEO [2]


No. The plan for this plant is, we do freshwater feed for a whole of Europe, and so small feed. We also do specialized feed organically for Ireland and any kind of special feed -- specialized feed for Europe. We will do rough feed as well for our lumpsucker and our ballan wrasse and then obviously, we are -- if we have excess feed, we have a fantastic feed, so we are -- obviously, we can sell into the market going forward.


Unidentified Analyst, [3]


And do you expect that to be running like maybe not full capacity, but at least at high capacity next year?


Alf-Helge Aarskog, Mowi ASA - CEO [4]


Yes. Sorry, I'm not answering your question fully. We -- second half, we will -- we are already tuning in on good speed. That's why we're saying -- stating the numbers, we are. But second half, we will be close to peak capacity. And next year, we should close in on our 240,000 tonnes.


Unidentified Analyst, [5]


And one question regarding organic growth in Norway. You have several of these development licenses approved. None of them, to my understanding, have been built yet or started to being built. What's your thought about around these new technologies and how do you approach that?


Alf-Helge Aarskog, Mowi ASA - CEO [6]


Yes. We have one, the Donut, which is on -- we're just waiting for our license of a location in northern part of Norway, so that is closing in. Then we were rejected on the ag. We got only 6 licenses, we applied for 14. This was a big project. The government unfortunately scale it down. We applied to build it in steel because steel is stronger, it's easier to decommission, and there is a second-hand market if we break it down. So -- but they said, "No, it was too cheap to build it in steel." It's strange because Norway is very dependent upon reducing farming costs, not increasing it, so it should be smart to build cheap, but that was not the case. So that was if you were evaluating, we'll come with a conclusion during the third quarter.

And then we have a few projects where we have not succeeded. [Storm Hubriq] project was rejected. That was offshore project where we were planning to produce underwater outside of the coast line and really offshore project. They said no. So maybe we haven't succeeded fully on that, but some are in process, and some are coming and some are gone.


Kim Galtung Dosvig, Mowi ASA - Head of Treasury & IR Officer [7]


Okay. We have 1 question from the web. It's from Christian Nordby at Kepler. He is asking, Region South in Norway has strong development due to Agder and Rogaland, should we expect EBIT per kilo to drop into the next quarter as we start to harvest in Hordaland?


Alf-Helge Aarskog, Mowi ASA - CEO [8]


I guess we guided on that. And I think it's fair to say that, that is the case based on what we now see.


Stein Alexander Aukner, DNB Markets, Research Division - Senior Analyst [9]


Alexander Aukner, DNB. Could you shed some more light on the sea lice situation in Chile? You mentioned you have a plan. What is that plan? And secondly, your consumer products, you have a fairly low margin at the moment. It's a bit surprising to see Lerøy Seafood report 2.5% operating margin in what I believe to be the same markets. Is it just the market or is there cost issues as well?


Alf-Helge Aarskog, Mowi ASA - CEO [10]


First question, first, it was -- remind me again. The first one was?


Stein Alexander Aukner, DNB Markets, Research Division - Senior Analyst [11]


The plan in Chile.


Alf-Helge Aarskog, Mowi ASA - CEO [12]


Yes, the plan in Chile. Caligus in Chile, it's a sea lice that is smaller than the one we have in Norway. It has -- the Norwegian sea lice has about 800 larvae going into the ocean, the Chilean has 200. What we see is resistance towards medication. That is to be expected over time. The plan is -- the best solution, as we see it now, is freshwater. And then there is demand for more well boats, but we are getting there. We can also treat in different ways. So use freshwater against the issue.

The second one was you referred to one of our competitors. And obviously, we had to look at the total number when you compare. But there is competition in the marketplace. We do very well and have good margins in some markets, but especially in some of the bigger markets, like smoked in France, the margin is low, to a certain extent, smoked in Germany as well. So the cost level is actually down in our production. So we -- because of higher volume, cost is growing and the production efficiency is really good, but the price is not good enough.

It's a big room, so now it's time. Okay. If not, do you have more questions on your computer, Kim?


Kim Galtung Dosvig, Mowi ASA - Head of Treasury & IR Officer [13]




Alf-Helge Aarskog, Mowi ASA - CEO [14]


No. Then I'd just like to say, thank you. It's very close to time as well. So thank you for listening in, and have a great day. Thanks.