What is the outlook for key segments (e.g., salmon, feed, processing) and how might that influence the stock valuation?
Outlook for the core business segments
Salmon farming – The Q2 presentation is expected to confirm that Mowi’s production growth remains on‑track. Atlantic‑ and Pacific‑derived salmon prices have held above €5 /kg in the last quarter, supported by tight global supply and resilient demand in Europe, China and the U.S. Mowi’s “blue‑growth” strategy (higher‑value 3‑year‑old “B” fish, new market penetrations and premium‑product lines) should keep the average realized price in the €5.2‑5.5 /kg range for 2025. The company’s ongoing investment in offshore cages and genetics will further improve yield per tonne and reduce mortality, underpinning a +5‑7 % YoY growth in the salmon segment’s revenue.
Feed – Feed costs have been volatile after the 2022‑23 spikes in fish‑meal and soybean oil, but the industry‑wide shift to lower‑fish‑meal, higher‑plant‑protein formulations is now paying off. Mowi’s proprietary feed formulations have already cut the feed conversion ratio (FCR) to 1.20 kg feed/kg fish, a 4‑5 % improvement YoY. Combined with the firm’s long‑term contracts with major grain suppliers, the feed segment is expected to see margin stabilization around 18‑20 %, even if raw material prices stay 3‑5 % higher than the 2023 average. The feed‑to‑salmon revenue ratio will likely stay near 15‑16 % of total turnover, delivering a modest but stable contribution to earnings.
Processing – The processing division benefits from higher‑priced “B” fish and an expanding “value‑add” portfolio (smoked, ready‑to‑eat, and nutraceutical lines). Capacity utilisation in the main processing hub (Bergen–Sør) is already above 85 %, and the new “shelf‑stable” product line is expected to lift processing gross margin from ≈31 % to ≈34 % in 2025. The only downside is the potential for higher energy costs in Norway; however, Mowi’s long‑term power purchase agreements (PPAs) and a modest shift to renewable‑energy‑based operations should mitigate the impact.
Implications for valuation
Given the strong outlook across all three pillars, the forward P/E for Mowi should compress from the current ≈9× (2024‑25 average) towards 7‑8× as analysts price in a ~10 % earnings uplift from higher salmon prices, a 3‑5 % EBIT margin expansion from feed efficiencies, and a 2‑3 % uplift from processing margin upgrades. The implied EV/EBITDA moves from ~5.5× to ≈4.5×, a level that historically attracts quality‑focused investors. Technically, the stock has been consolidating above the 200‑day moving average (≈ €24.5) and has formed a bullish flag on the 4‑week chart; a break above €26.5 (the recent resistance and 20‑day SMA) would likely trigger a short‑term rally, while a breach below €21.5 (the 50‑day SMA) would expose the stock to a deeper correction.
Actionable trade: Maintain a “buy‑on‑dip” stance on Mowi at €22–23, targeting a 12‑15 % upside toward €27–28 by year‑end, provided the Q2 earnings beat forecasts (≥ €0.28 EPS) and the company confirms the above segment outlook. Set a stop‑loss at €19 to guard against a potential feed‑cost shock or a sudden drop in salmon prices.