Bakkafrost delivers higher than predicted operating profit

The Bakkafrost group, owners of the Scottish Salmon Company, delivered a total operating EBIT or profit of 223.5m Danish kroner (£26m) during first three months of this year, higher than some analysts were suggesting.

The group harvested 21,000 tonnes gutted weight, with 7,000 tonnes coming from its Scottish operations.

The combined farming and Value Added Products (VAP) segment produced an operational EBIT of DKK 218.3m (£25m)

The group made a gross profit for Q1 2021 of DKK 407.7 million (£47m) against a loss of DKK 148m (£17m) in Q1 last year.

CEO Regin Jacobsen said that overall he was satisfied with the results, adding that the performance from Scotland was gradually improving. He also predicted brighter days ahead for the salmon industry.

Jacobsen said: “The salmon market has been severely hampered by the Covid-19 pandemic, but during this quarter we have also seen clear signs of improvements in the market. The global supply of salmon in this quarter increased by nearly 16%, compared to the first quarter last year. Despite such increase in supply, salmon prices increased during the quarter. The demand for salmon has been very strong in the retail segment and during this quarter we have also seen demand from the food service segment picking up again.

“We expect this positive development to continue as Covid-19 mass vaccination progresses in the key markets for salmon. All in all, the salmon market outlook is good for the rest of 2021 as the global supply is expected to decrease somewhat, compared to the same period last year.”

He added: “We are especially pleased with the strong results from the VAP segment. Once again, we have seen the benefit of having a flexible value chain which is of great importance to us to maintain our competitive position.

“The farming segment in the Faroe Islands has performed well and the biology has been strong with good growth and low feed conversion factor.

“Quarter by quarter our average smolt size increases which also was the case in this quarter. In Scotland, the farming performance is gradually improving, and we expect to see some increase in average smolt size by the end of this year. “

He concluded: “Our level of activity has been high in the first quarter of 2021. This applies to our production as well as to our ongoing investment projects in the Faroe Islands and Scotland.

“This creates indirect activities and jobs in the local communities where we operate and prefer to source from. The importance of this has been especially high during the Covid-19 pandemic. In this quarter alone, our sourcing from local suppliers in the Faroe Islands amounted to DKK 298 million [£34.5m].”

Looking ahead, Bakkafrost said market conditions have improved during this quarter, and further improvement were expected as the Covid-19 mass-vaccination programmes progress in key markets.

However, the company also expects supply to shrink in the short term, with the rate of global growth in Atlantic salmon likely to be down by one or two percentage points in the second quarter with no growth at all forecast for the second half of this year.




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