Bakkafrost reports record Q2 profits –

Bakkafrost reports record Q2 profits Published:  02 September, 2013

The Bakkafrost salmon farming group has enjoyed its best results to date, reporting an operating pre-tax profit of  DKK (Danish kroners) 169.3 million for the second quarter of this year.

The combined farming and value added processing (VAP) segment alone made an operational EBIT (earnings before interest and tax) of DKK 157.8 million during the term.   The company says salmon spot prices stayed on a high level during the quarter, compared to previous three month periods. Because of the high salmon prices, the VAP segment had an operating loss of DKK 41.8 million, as the contracts prices still do not reflect the current market situation. The EBITDA for the feed segment was DKK 30.9 million in Q2 2013.  

Bakkafrost, which acquired Grimsby-based Faroe Seafood UK at the start of the year, said outlook for the salmon market was good. The global supply of salmon in 2013 is expected to increase by 2-3 per cent, compared to 2012. The increase is mainly in Chile, while the supply in Europe is expected to be lower than in 2012. Historically the demand for salmon has increased 6-7 per cent  per year, theoretically resulting in higher salmon prices in 2013, compared to 2012, because of the low supply growth.

Chief Executive Regin Jacobsen said: “We are very satisfied with the record high result for Q2 2013. The strong salmon prices during the quarter and a good biology are the main reasons for the strong result. The farming operation delivers a continuing strong performance, while the VAP production is suffering during the period with high spot prices, as we could expect. In Q3 and especially in Q4 we expect higher margins from the VAP products. The fish meal, oil and feed segment had a strong performance.”  For for the first half 2013 the profit was DKK 251.7 million (DKK 107.3 million last year ).

The total volumes harvested in Q2 2013 were 10,540 tonnes gutted weight (10,219 tgw). The total harvested volumes in H1 2013 were 18,836 tonnes gutted weight (21,567 tgw). The reason for the decrease in the harvested volumes year on year is that the harvested profile is more backend loaded in 2013, compared to 2012.

Bakkafrost transferred 1.8 million smolts in Q2 2013 (2.3 million), which is in line with the company’s plans. Year to date 3.9 million have been transferred (4.8 million). The smolt release is less in 2013 compared to 2012, due to available sites for smolt release.

In July Bakkafrost announced a five-year plan for optimising its value chain, resulting in savings, increased production and reduced biological risk. The yearly investments amount to DKK 170 million per year, in addition to investment in a new well boat operated by Bakkafrost, estimated to DKK 230 million. The purpose of the investment plan is to continue to have one of the most costs efficient value chains in the farming industry, increase efficiency and reduce the biological risk, to meet the futures consumers’ trends and be more end-customer orientated.