Mowi ASA
OSE:MOWI
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
172.65
207.7
|
| Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Mowi ASA
You don't have any saved screeners yet
Good morning, everyone, and welcome to the presentation of Mowi's fourth quarter results 2020. My name is Ivan Vindheim. I'm the CEO of Mowi, and with me today to present the financial figures and the fundamentals, I have our CFO, Kristian Ellingsen.As usual, we start with highlights. The operational EBIT of EUR 49 million was in line with the trading update we released on the 17th of January. The second wave of COVID-19 has obviously had a high impact on our numbers this quarter through significantly lower prices. The shortfall we have seen in the very important foodservice market has not been fully offset by the fantastic growth we have seen in the retail market. The net effect, approximately 5%. Retail market up by approximately 20% according to our numbers and foodservice down by 35%.All-time high quarterly and full year Farming volumes this year, 127,000 tonnes in the quarter and 440,000 tonnes on a full year basis. In addition to that, we also had record high volumes in the other divisions, Consumer Products and Feed. So I would like to take this opportunity to say thank you to you all, my colleagues out there for making this happen. We have been through an extremely challenging year with the COVID-19 pandemic. So this is a fantastic achievement in that context. At the same time, we also have managed to keep ourselves safe by means of strict biosecurity measures all across our business.Blended farming cost in the quarter, EUR 4.28 per kilogram, down from EUR 4.40 last year and roughly in line with the production cost in the third quarter. Keeping a low cost is always extremely important and one of the 3 pillars we are working along in Farming.Further to this, we completed the 2020 cost savings program with an annual savings of EUR 35 million. If you remember, the target was initially EUR 25 million. So exceeding the target is, of course, also very satisfactory. We have already initiated a new annual cost saving program of EUR 25 million. Cost fighting is a never-ending story that will never stop. The CFO, Kristian Ellingsen, he will come further into this in his part of the presentation.As already said, record high volumes also in Consumer Products, 70,000 tonnes in the quarter and 239,000 tonnes on a full year basis, driven by partly the shift we have seen in -- towards elaborated products, so i.e., from foodservice to retail. This dynamic, we will also revisit later on in the presentation in detail.Record high quarterly and full year volumes also in Feed, 153,000 tonnes in the quarter and 540,000 tonnes full year.I'm also very proud to say that we yet again are ranked as the world's most sustainable animal protein producer by Coller FAIRR. This is extremely important. Sustainability is the other of the 3 pillars we are working along in Farming and in Mowi. And we think the importance of becoming even more sustainable in the future will grow. That being said, we are already on the right side of sustainability. And we are a part of the solution, not part of the problem.We finalized the divestment of our shares in DESS Aquaculture Shipping in January 2021, realized a gain of EUR 54 million in our accounts, and the proceeds amount to approximately EUR 115 million.The Board has decided to resume or reintroduce quarterly ordinary dividend, NOK 0.32 per share. Further to this, the Board has also decided to adjust the dividend policy in an effort to making it more predictable and transparent. Mowi's ambition is to create long-term value for the shareholder through both positive share price development and a growing dividend in line with long-term earnings. Dividend has always been an important part of our strategy, and that will not change going forward. So again, this is just an effort to make the policy somewhat more predictable and transparent.The quarterly ordinary dividend shall, under normal circumstances, be at least 50% of underlying earnings per share. Excess capital will also be paid out but in the form as extraordinary dividends. And when deciding excess capital, the Board of Directors will take into consideration expected cash flow, capital expenditure plans, financing requirements and appropriate financial flexibility. Further to this, a long-term target level for net interest-bearing debt is determined, renewed and updated on a regular basis. And just to remind ourselves that the current debt target is EUR 1.4 billion.Last but not least, shareholder returns are distributed primarily as cash dividends with option of using share buybacks as a complementary supplement on an ad-hoc basis. So again, based on this, the Board has decided to pay out NOK 0.32 per share in ordinary dividend in the first quarter of 2021 based upon the fourth quarter earnings, equivalent to 50% of underlying earnings per share in that quarter.Then over to key financials. I will not spend too much time on this. Kristian will revert to it in detail later on, but just visit the main items here.First, turnover. Just above EUR 1 billion, down 9% year-over-year despite record high volumes in all divisions, the reason why we have already addressed significantly lower prices. We will come back to price achievements and the outlook later on.Operational EBIT, as said, EUR 49 million. Harvest volumes in Farming, 127,000 tonnes. In terms of margins, we will revisit them all as we go along in the presentation, but just mention that there is a mixed bag this quarter.Then over to prices. Prices were highly impacted by the COVID-19 pandemic in the fourth quarter. They were down as much as 30% -- or close to 30% in both Europe and Americas, which obviously had its toll on our earnings. That being said, we saw a steep surge or a hike in the prices in Americas towards the end of the quarter, although they have fallen somewhat back right now. They are still at a significantly higher level. And with continued demand building and hopefully also a pandemic that will blow off at some point here, we strongly believe in the future price outlook. And I also think we should read the reintroduction of the dividend in that context.Turn over to the price achievement in the quarter. So although prices were low, very low, our internal price achievement, relatively speaking, of course, was very good driven by good contract prices, but also from good work in the spot market.Operational EBIT waterfall. So a little bit repetitive. The decline was because of prices. Cost was down year-over-year, and volumes were up. So then the only missing factor in the equation is prices. And the total impact in absolute terms was as much as EUR 145 million.Then over to Norway, by far, our most important region. Results, as said numerous times already, impacted by reduced prices because of the second wave of the COVID-19 pandemic but also partly because of high supply. At least according to our numbers, the supply in the quarter was double as what we expected and amounted to 11%. So a 2-digit growth of supply, combined with a very difficult market because of COVID-19. So you could say we were close to our perfect storm.So in this very challenging environment, we managed to make EUR 0.75 per kilogram, which is reasonably good, I would argue. Cost was relatively stable in Norway. We had good biology, good growth. We also had record high volumes for the quarter but also full year, 262,000 tonnes. So I think we can say that despite a challenging environment, 2020 was an okay year for Farming, at least operational-wise.Then the region mix. As I said a few minutes ago, a mixed bag this time, fantastic results up in the North, EUR 1.29 per kilogram, driven by a fantastic cost level this quarter. Biology is good enough. We have had many good quarters now in a row. So we are very happy with the development of that region.For the other regions, it's, as said, more a mixed bag. We are not happy with the cost. We think we can make improvements, and we are working hard every day to make that happen. To be a little more detail, in Region Mid in the quarter, we struggled with gill issues. We also harvested from sites in the southern part of the region. So that means production area 4. So bear in mind that Region Mid in Mowi includes both region 4, 5 and 6. And the farther North, as we have said previously, the better the cost numbers and the biology gets.In the South, in general, a more challenging area, but still, I think biology is reasonably well, taking the geography into account, stable harvest volumes and a reasonable good cost level, particularly compared to our peers in that region.Then over to contracts. As you can see from the graph here, we are at the low end of our contract share policy, and that's deliberately. It's on purpose. We believe in a market recovery. And therefore, we have decided to be light on contract. In terms of contracts and price achievements in the fourth quarter, they were in line with what we originally forecast.Then over to Scotland. Also a good quarter, good biology, good cost achievements and development. And we are happy with what we see over there now. We have, as you remember, been through a few really tough quarters in Scotland, but knock on wood, right now, things seem to go much better.That's not the case for Canada, unfortunately. So we have 10% of our Farming portfolio in Canada. And Canada is a challenging area to grow Atlantic salmon, and it has been particularly challenging over the 2 last years. This quarter, results were significantly impacted by low prices, of course, but also high costs due to low volumes, but also because of a high cost base and as a result of prolonged period of what we have called environmental challenges in both West and East.So further to this, the Board has decided to set forth a turnaround plan in Canada East. And the clear aim is to return to, of course, profitability and original growth trajectory. In Canada West, we had a very unfortunate decision by the government just before Christmas where they decided to phase out farming licenses in what's called the Discovery Island area, what we internally call Campbell River region. That impacts our volumes, obviously, 10,000 to 12,000 tonnes on an annual basis. So we also have to align with this. That means a rightsizing of the organization. It also means that we have to set up the operations we have now differently. So running our 40,000 tonnes operations is different to running a 30,000 tonnes operation.So we have made some provisions in this regard. Kristian will come back to it later on. In terms of cash effect, which in the end of day is what's most important here at least for investors, approximately EUR 6 million. And that is to come and related to restructuring and decommissioning of these sites.Turn over to Chile. Poor results, $0.49 (sic) [ EUR 0.49 ] negatively, but good biology, good cost. So this was price driven. You can read that from the graphs. We are satisfied with our biological performance in Chile and the operations we have there, we are absolutely comparative. And we strongly believe that Chile will recover when the market recovers. I also think it's worthwhile mentioning that we are not carrying any frozen inventories. So we are in shipshape to meet the coming quarters.Then Ireland and Faroes, 2 small entities volume-wise, approximately 1,000 tonnes, respectively, this quarter. So we should not spend too much time on it. But in Ireland where we have most of our organic production in Mowi, we had a fantastic result again, EUR 2.62 per kilogram. In the Faroes, poor results this time but on very low volumes and also driven by that we were harvesting out Sandsvág. We have 3 sites in the Faroes, and Sandsvág is normally the poorest one. And when you also are low on volumes and decommissioning, your costs tend to be high.Then over to Consumer Products. As said, record high fourth quarter and full year volumes, 70,000 tonnes and 239,000 tonnes, respectively, driven by the shift you have seen towards more elaborated products, of course, but also because of good work laid down in that division over time.All-time high quarterly and full year earnings of EUR 35 million and EUR 82 million is also, of course, very satisfactory. In the end of the day, it's about making money when you are running a business.As said, continued shift in demand towards more elaborated products. Further to this, we have seen an increased penetration rate in the retail sector. We also have seen an increased frequency. And some risks, we strongly believe, will continue. So with the foodservice recovering and with a still strong retail market, we think we will see a very positive demand development going forward as, hopefully, the COVID-19 pandemic eases.Anyway, in terms of retail, we are building that category every day. So at some point, this will offset the loss of foodservice in its entirety. Anyway, but that's not our main scenario. We believe in our recovery in also the foodservice markets. And we also believe in an end of this pandemic. And I assume that goes for the rest of you out there. So let's cross our fingers.Then over to Feed, our last division, yet another very good quarter with record high volumes, good margins, so driven by good growth in Mowi Farming in 2020. Mowi Farming is first and foremost -- it's a customer. And in order to sell feed and produce feed, you also need demand. And demand is driven by growth in sea. And growth in sea in 2020 was, in Mowi Farming, record high, particularly good in Europe where our food -- sorry, where our feed factories are situated.So with this, I would like to give you the floor, Kristian, and please take us through the financial figures and the fundamentals.
Thank you very much for that Ivan, and thank you for a very good walk-through. Good morning to everybody. So then we move on to the financials, and we start with the profit and loss as usual.The top line shows revenue of approximately EUR 1 billion. It is down 9% from Q4 '19, even though volumes were 9% higher. So achieved prices were down approximately 20% versus a salmon spot price decline in Europe and Chile of approximately 28%.Operational EBIT, EUR 49 million, where the price decline explains 125% of the decrease from Q4 '19. That means that this effect is partly offset by lower costs and higher volumes.And when it comes to the items between operational EBIT and financial EBIT, there is a positive net fair value adjustment of biomass, this time around, EUR 20 million, mainly related to increased biomass in sea and also improved prices at the end of the quarter in Americas compared with the end of the third quarter.Restructuring costs, write-downs and impairment losses are mainly related to Canada West under the government decision there to phase out salmon farming in Discovery Islands. Most of the accounting effects are taken in Q4 '20, and one provision will also be made in Q1. In total, the cash effect of these items are EUR 6 million. This is mainly related to FTE reductions and the decommissioning costs.Income from associated companies, mainly related to Nova Sea. And the operational result is EUR 1.03 per kilo, which was a strong margin, although somewhat lower than the EUR 1.29 in Mowi Region North this time.Net financial items, EUR 1 million this time as interest costs were offset by positive currency effects. And then we see that the key metrics for 2020 are impacted by the more than 50% lower operational earnings versus 2019. And we also note that return on capital employed for the year, behind our 12% target in a very challenging year but still ended at 8.3%, which is decent.Then we move on to the balance sheet. Relatively stable assets as we see from the third quarter. On the other side of the balance sheet, we see that Mowi's financing position, the financial position is still solid. Covenant equity ratio of 52%. Net interest-bearing debt is EUR 1,458 million, so relatively stable from the third quarter. And the assets held for sale here, EUR 60 million. That's related to DESS Aqua. And we have an accounting gain of approximately EUR 54 million, nonoperational in Q1, which means that we have a cash inflow of approximately EUR 114 million.Then we move on to the cash flow. We see that the cash inflow matched more or less cash outflow in the quarter. NIBD, stable. Cash flow items for Q4 and 2020 were in line with the guidance, except working capital, which was lower than expected, EUR 57 million for the year versus a guiding of EUR 90 million. This was due to less tie-up of working capital in sales and marketing related to lower prices and thus, lower accounts receivable. In Farming, the effect of volume tie-up to a record high biomass in the sea of 326,000 tonnes lightweight was offset by improved costs on stock, which we, of course, are satisfied with.And then we move on to the overview of our financing. We have a total committed financing of EUR 2 billion, approximately, of which EUR 475 million are cash and undrawn lines. We are comfortably compliant with the equity covenant of 35%, and we have no earnings covenant. No changes in the financing since the last time we spoke. We have a very solid financing with the bank syndicate as the backbone and good terms.And then we can move ahead to the year that we have now started, 2021, and the guidance for the cash flow items. The working capital buildup is estimated to EUR 110 million as the tie-up in 2020 was lower than guiding due to lower prices and less accounts receivable. We expect to have an opposite effect in 2021 as we believe in a market recovery this year. And we also have the organic growth investments in working capital in Farming and increased the tie-up of biomass.With regards to CapEx, the guiding is EUR 265 million with a significant investment program in Farming and also investments in automation projects in Consumer Products.Interest payments, the guiding is EUR 45 million; and tax payments, EUR 80 million.And we completed the 2020 cost saving program with annualized savings of EUR 35 million, approximately 200 different initiatives related to procurement, with negotiation of contracts, FTE reductions and different concrete cost initiatives in the organization. And I would like to commend the organization for its work on this area in a challenging year. Cost savings are hard work, but it's important.EUR 20 million related to Farming, EUR 11 million related to sales and marketing. There is some underlying cost pressure in the industry, which we are addressing through farming initiatives and through cost saving programs, and we have initiated a new program for 2021 with a target of EUR 25 million, mainly related to the productivity program and also procurement savings.Then we move on to the market fundamentals. Global supply growth, as we see here, of 11%. That was higher than expected due to higher growth than expected in Norway and Chile.In Norway, we saw good growth conditions in sea, increased harvest weights. Norway growth was high in December, plus 24%. That's expected to be only 4% to 7% now in the first quarter.In Chile, we saw a record high harvest in the fourth quarter driven by postponed harvesting from prior quarters. Chile growth of 20% as we see in the fourth quarter but only 1% in December. So that's also continuing to decrease in January and Q1.Biomass at year-end 2020 in Chile, down 12% versus 2019. The expectation is that we will see a corresponding decrease in volumes in Chile this year for the industry.And then we have volumes for the market. And then we can sum it up, of course, by saying that we see a very strong growth in retail value-added products. The increase in retail was approximately 20%. This was offset by decreased foodservice volumes, down 50%. The net demand reduction was 5%. This was somewhat lower than the previous quarters as net retail volumes are normally higher in Q4.Of the 20% increase in retail, approximately half of the increase is increased penetration, meaning new customers who have not previously purchased salmon in retail. And the other half is increased frequency, and we expect to see permanent positive effects from this change behavior also in a post-COVID-19 market environment, even as we see that the foodservice segment will gradually reopen in due course.Yes. And in the different markets, we see Europe, plus 13% in volumes; Americas, plus 12%. In Asia, we see that the total is impacted by China, which was down 49%. Consumption in China was impacted by uncertainties regarding import certificates, which should now, for the most part, be solved, and also confidence issues in imported food in general. But we see now that volumes are improving. Norwegian and Scottish volumes are up, and Chilean volumes are also improving.Yes. And as we already discussed, spot prices are down approximately 28% in Norway and also in Chile, somewhat less in Canada on lower volume growth. Yes, and we see that the Chilean prices have more or less returned back to pre-COVID-19 levels as volumes have now decreased. Prices in Norway are collared by COVID-19 and high supply in December.We believe in the market recovery in 2021 on a modest supply increase of 2%. The supply growth estimates, 0% to 4% for the year, is in line with Kontali's estimate. In Norway, we expect to see 6% to 8% increase for the year. There are 3% more individuals in sea according to estimates. So this growth is then dependent on good biological performance. In Chile, we expect to see a minus 12% to minus 15% on lower biomass.Regarding Q1, we see estimates of plus 4% to 7% in Norway, as we see here, versus 24% in December and the minus 7% to minus 12% in Chile.When it comes to our own volumes, then we reiterate the volume guidance for the year, 445,000 tonnes. Norway stable, some growth in Scotland and Chile and lower volumes in Canada due to a challenging biology in 2020.So then, Ivan, the floor is again yours for the outlook statement.
Right. So thank you, Kristian. So the procedure is, as usual, first, we take the outlook, and then we open up for questions facilitated by our IRO, Kim Dosvig.So as already said, we strongly believe in a market recovery during 2021. We also believe in a tighter market balance. Kristian has just shown here that the supply growth for 2021 is expected to be as low as 2%. So under normal circumstances, that bodes well for prices and earnings. And then it's up to the future to decide.Low price level and a shift in demand towards more elaborated products is expected to boost demand, also post COVID-19. And in that regard, Mowi is well positioned to capitalize on this recovery.Farming volume is -- guidance for '21 is reiterated, 445,000 tonnes. Sustainability aspects are extremely important and will become even more important going forward. And further to this -- those, it's extremely encouraging to see that Mowi, again, is ranked as the world's most sustainable animal protein producer. And I would also like to say that farm salmon, in general, is ranked as the most sustainable animal protein. It's just to take the list of companies in the Coller FAIRR index, and you see salmon farming companies, they really have a good footprint in the right end of the scale.We'd also like to take the opportunity to give us all a friendly reminder of the digital market -- the Capital Markets Day we are arranging on the 17th of March 2021. There will be -- we will have a thorough strategy and business update by Mowi's group management team. So you are all welcome to follow us. Unfortunately, digital this time. But that's how it is.So with this, Kim Dosvig, then we open up for questions. And if Kristian can join me up here with at least 2 meters distance. Good. Thanks.
All right. So we have received some questions from the web. The first question is from Lars Konrad Johnsen at Carnegie. He's got a question about the dividend policy. How should we understand the former net debt target of EUR 1.4 billion now with the updated dividend strategy?
Right. So that target of EUR 1.4 billion is unchanged. But as we say in the policy, it will be addressed on regular basis. So it's not carved in stone, but it's not changed this time.
Okay. And then another question on the dividend policy from Alexander Jones, Bank of America. Can you please elaborate on the reasoning behind the new dividend policy and whether we should take this as a signal of higher CapEx spend to come?
Right. So over time, we have been asked by a lot of investors and potential investors what our previous policy -- dividend policy actually mean, because in the end of the day, it was 100% discretionary. So in order to meet this or try -- yes, as an effort to fill this gap, the Board has adjusted the dividend policy to make it more predictable, more transparent. So we are tying ourselves to the mast with regard to the ordinary quarter dividend. So at least 50% will be distributed under normal circumstances. And you know how it is. If you end up in a pandemic, then you have a normal situation, but the normal is always the normal.That doesn't mean that the company will start to retain excess capital. That capital will also be distributed going forward but in the form of extraordinary dividend. So again, this is just a hand-out to investors to try to make this more predictable going forward.I would like to state that dividend has been and will be an important part of Mowi's financial strategy. We have marketed ourselves as a dividend company since the merger in 2006, and nothing has changed. So please do not read more into it than this.
Very good. And then a question from Martin Kaland from ABG. He's got 2 questions. The first one on Consumer Products. You have reported strong margins in Consumer Products since Q2 2020. Should we expect similar strong margins as long as we have lockdowns and demand is reallocated from foodservice to retail? Or are there additional seasonal effects we should take into account short term?
So nothing has happened really with the season, but this shift towards more elaborated products boost, of course, the earnings and the demand for our products in Consumer Products. And then you also make more money. Some of this, we also believe will stay there in a post-COVID-19 situation. So we are growing this over time, but that you could see a temporary effect in a post-COVID-19 situation. I guess it's likely, but it's not back to start to put like that.And I also think we will see seasonality going forward. And I think most of you understand what that means. So towards Christmas, then you have high season and Easter, for instance. And then you have some other parts of the year where it's a little bit slower. But in general, we think we will continue to grow Consumer Products. And we strongly believe in this leg. And our consumers, they are getting more and more requiring. So the days where you could just farm a salmon and sell it is over. I'm not afraid, I'm very happy for it. So the market is evolving, and we are evolving accordingly.
Okay. And then his second question is related to biology in Norway. We have seen favorable growth conditions in Norway towards the year-end of Q4, but seawater temperatures now looks to be colder than normal. How is the biology looking at the moment? And do you expect a more challenging winter than normal?
It's really hard to predict the weather. But we are finished with January. January was great in terms of growth and seawater temperatures. I think everyone knows that. Then temperatures have fallen into February. And towards end of January, that, of course, has an impact on growth, but we are just talking about a few weeks. I think it's hard to read much of 2021 into the development in a few weeks. So let's see. The most important part of the growth season is, as you all know, in the second half of the year.So he was addressing in Norway. And in Norway, we are, I would say, in okay shape and has had a good start of the year. But what's the comp? Who knows? There are still 11 months to work through here. So no one knows. It's a good question. It's really hard to answer it, I must say.
Okay. Then 2 questions from Jann Molnes from Holberg Fondene. The first one is on the CapEx projects. If we can elaborate some more about the CapEx projects we have in sea for 2021.
Yes. In general, we are investing in new sites. We are investing in equipment. So this is a general part of the investment program in Farming. The major part of the Farming investments are fresh water investments, but still seawater is a significant part of this. So this is Norway, it's Scotland, it's Canada and also Chile. So I guess it's many different types of investments. So I guess it's difficult to be too specific there.
Okay. And then his second question is about Canada East. Can you elaborate somewhat more about the turnaround plan for Canada East? Does it have anything to do with the biology or politics?
It's not politics at all. It's all about running a good farming operation with all that entails: cost base, biology, biosecurity, producing enough volumes, have the right people, have the right size of the organization, have the right equipment. Bear in mind, we bought this back in 2018. It's not a long time ago, and then we run into a severe mass mortality from an algae bloom. Last year was also challenging. We had not a mass mortality, but we struggled with plankton. Lice is also an issue in the East. They have a very warm summer and a very cold winter, so you could say the worst of 2 worlds. That makes it even more challenging to be a farmer.So of all spots on the planet, I think, where you actually can do this, let me underpin that. I think Canada East is one of the most challenging areas. So it's much tougher to deliver results in this area than in other areas. That being said, the history of Northern harvest proves that this is something you could do with good earnings, with good results, with also good biological performance.So although we have been through 1 or 2 setbacks there, we strongly believe in making this to a blossoming business for us. But to do so, we have to take some measures. And now we also have a new management in place in Canada East. I think that's also extremely important. In the end of the day, you can buy everything. The only difference between companies over time is people. So -- and good people makes a difference in sports, but I can promise you one thing, good people really makes a difference in business, too.
Okay. Then reverting to dividends. Carl-Emil Johannessen from Pareto. He is asking, will the Board make a decision every quarter whether the company can pay an extraordinary dividend? Or will this be something that will be evaluated once or twice per year?
Once or twice or 4 times per year, that's hard to say. It depends on the situation. But on a regular basis then, I look at our balance sheet every day. So -- and I assume our Board does the same. So regular means constantly. Balance sheet is something you have to build and take care of over time. And if you have a poor brick in the wall, you have to change it. So this is not something you take up 1 or 2 times per year. This is also part of work you do constantly. This is everyday business. And I guess, Kristian, he can nod on this.
Definitely.
This is what he does among other things.
Okay. Then shifting gear back to biomass from Christian Nordby at Kepler. He is asking about the biomass. You have a very strong biomass growth. Does this imply that your harvest guidance is somewhat conservative? Can you comment on winter wounds problems in 2021 versus last year?
Yes. So to start with biomass, yes, so we have record high biomass at year-end. So it's absolutely supportive for our volume guidance, but the volume guidance still stands. So that's the number we believe in. And we also like to deliver on guidance, and that's not always easy in this industry because you start with one individual. From there, it can only go wrong.So this normal distribution you learned at school and I learned at school, it doesn't look like it in this industry, unfortunately. So 445,000 tonnes is the guidance. And we have a good opening balance, you could say. So we believe in it.Then winter sores was a huge problem in the entire Northern Hemisphere last year, not only in Norway but also in the Faroes and in Canada. So hard to say why, but I guess weather was a very important component. This year, I'm not -- I'm now only talking for ourselves. We have a normal level. As you know, winter sores is a seasonal issue. So you normally have it every year. But this year is very -- at least so far, very different to what we experienced last year. So knock on wood, so far, it's under control.
Okay. Then a question from Fearnley from Nils Olav Thommesen. He's asking about the contract share. What are your expected contract shares in the different regions for 2021 as a whole?
Then I'm afraid we have come into an area we cannot be transparent. So this is this is day-to-day business. And our market strategy, I think, we have to keep to ourselves. So I must apologize and go to the next question.
Yes. Then the last question so far is from -- going back to Bank of America, Alexander Jones. He's got a question about the new aquaculture strategy in Norway, if we can elaborate on what the Norwegian government might do this summer in terms of this new aquaculture strategy offshore that they have announced.
That would just be speculation from our side. And we don't know more than the rest. So I think this is thoroughly addressed, at least the little bit know so far, in the media. So I'm afraid our knowledge limits to that level. But they have said they will congress during the year and maybe also this spring, and I believe they will do so. So meanwhile, we are waiting in excitement, all of us.
That concludes the questions from the web.
Thank you, Kim, and thank you, everyone. And we'll meet again, hopefully, already as soon as the 17th of March when we have our Digital Capital Markets Day. Stay safe. Take care.