Bakkafrost on track, but Scotland mortalities increasing again

The Bakkafrost Group today unveiled a second quarter operating EBIT or profit of 353 million Danish kroner (£40.5m), exactly as predicted when it issued a profit warning a few weeks ago.

This compares with an EBIT of DKK 587m (£67m) over the same period last year. Bakkafrost shares fell by 7% on the Oslo Stock Exchange following publication of the results.

The company said farming operations in Scotland performed well during the first five months of this year, but it experienced higher mortality levels towards the end of the period which may affect this year’s harvest.

The Scotland farming segment produced an operational EBIT of DKK 71m (£8.1m) up by DKK 40m (£4.6m) on a year ago, while the Faroese farming and VAP segment produced an operational EBIT of DKK 216m (£24.8m) against DKK 509m (£58m) in Q2 2022.

CEO Regin Jacobsen said overall, the group was satisfied with the results especially with its fishmeal, oil and feed segment which delivered a record quarter.

This year’s first half result has been record-breaking with all time high sourcing leading to all time high fishmeal and-oil production. Fish meal and- oil prices are also all-time high.

“Harvest volume from our Faroese salmon farms have been low in the quarter due to a back-end loaded harvest profile for 2023 and low mean weights.

“For the first time past 12 years, we increased the biomass in the Faroe Islands during the cold period of the year. The biomass is healthy, and we expect an increasing average weight of harvested fish going forward.

“The farming operation in Scotland performed well in the first five months of 2023, but towards the end of Q2, mortality levels increased due to environmental challenges. “

He said this development has continued into Q3 and may lead to lower than anticipated harvest volumes in Scotland for 2023.

The company was following the situation closely and evaluating a range of risk-mitigating measures.

The CEO explained: “With the recent AP4 expansion of the Applecross hatchery in Scotland, the hatchery capacity in Scotland is increasing.

“In Q2 2023, we released the first batch of smolt weighing between 200-300g and a large batch of 200-300g smolt will be released later this year.

“This marks the beginning of the large-smolt transition instrumental for the transition of the farming operation in Scotland.

“At our Capital Market Day in Scotland 6 June 2023, we presented our plans for 2024-2028, which includes investments of 6.3bn DKK leading to an annual harvest of 165,000 tonnes HOG in 2028 and an annual production capacity of 200,000 tonnes.”

He concluded: “The salmon market has been good in this quarter with high prices, although (there was) a more significant price difference between small and large-sized salmon towards the end of the quarter, and a tight supply outlook for H2.”