Satisfactory Q3 performance from Bakkafrost – Fishupdate.com

Satisfactory Q3 performance from Bakkafrost Published:  07 November, 2013

The Bakkafrost salmon farming group delivered a total operating EBIT of  (Danish Kroners) DKK 186.8 million in Q3 2013

The combined farming and VAP segment made an operational EBIT of DKK 167.9 million in Q3 2013. The salmon spot prices were high during the first two months of the quarter followed by a decrease in September. Because of the continued strong spot prices overall in the quarter, the VAP segment had an operating loss of DKK -19.6 million. The EBITDA for the feed segment was DKK 48.8 million in Q3 2013.

Commenting on the results, CEO Regin Jacobsen said:”We are satisfied with the performance and result for Q3 2013. The strong salmon prices especially in July and August and a good biology are the main reasons for the strong result. The Farming operation delivers a continuing strong performance, while the VAP production still have negative operating results, because of the high spot prices. However we are very satisfied with the production efficiency in VAP segment. The Fish meal, oil and feed segment had also a strong performance as the raw material intake is substantial higher then same period in 2012″.

The Group made a profit for the quarter of DKK 199.6 million (DKK 25.8 million). For the first nine months of 2013, the profit was DKK 451.4 million (DKK 133.2 million).

The total volumes harvested in Q3 2013 were 11,335 tonnes gutted weight (9,730 tgw). The total harvested volumes the first nine months of 2013 were 30,171 tonnes gutted weight (31,297 tgw).

Bakkafrost transferred 2.8 million smolts in Q3 2013 (3.6 million), which is in line with the company’s plans. Year to date 6.7 million have been transferred (8.4 million). The smolt release is less in 2013, compared to 2012, due to available sites for smolt release.

The 28th of October 2013, Bakkafrost announced the suspicion of Neoparamoeba perurans at a Bakkafrost farming site in Fuglafjørður. Further PCR analysis carried out by the Faroese Food- and Veterinary Authorities have detected the presence of Neoparamoeba perurans. The Neoparamoeba perurans agent is known to be able to cause amoeba gill disease (AGD). A number of other sites in the Faroes have been examined and Neoparamoeba perurans has been detected on 3 other sites, of which Bakkafrost owns one. The detected sites will be treated with Hydrogen Peroxide. Bakkafrost and the other farming companies in the Faroes have equipment and employees with skills and experience in using Hydrogen Peroxide. Hydrogen Peroxide is often used as treatment against sea lice. There has been no increase in mortality and not observed any disease outbreak on any of the detected sites. Bakkafrost and the other farmers in the Faroe Islands will work with the Faroese Food- and veterinary authority to avoid the introduction of the AGD.The combined farming and VAP segment made an operational EBIT of DKK 168.0 million (DKK 78.5 million) in Q3 2013. For the first nine months of 2013 the combined farming and VAP segment made an operational EBIT of DKK 427.0 million (DKK 215.2 million).

The farming segment made an operational EBIT of DKK 187.5 million (DKK 75.0 million). The reason for the improved result is a combination of improved spot prices and higher harvested volumes. For the first nine months of 2013, the operational EBIT was DKK 511.6 million (DKK 189.7 million).

As expected, the VAP segment had a loss on its operations in Q3 due to high salmon spot prices. The VAP segment made an operational EBIT of DKK -19.6 million (DKK 3.4 million) for Q3 2013. For the first nine months of 2013, the accumulated losses amount to DKK -84.6 million (DKK 25.5 million). There is normally a time lag between the changes in the spot prices and the changes in the contract prices. Therefore, typically the VAP segment has losses the first quarters in a longer period with increasing salmon prices. The third segment – fishmeal, oil and feed – made an operational EBITDA of DKK 48.8 million (DKK 41.3 million) in Q3 2013 and for the first nine months of 2013 the operational EBITDA amounted to DKK 104.4 million (DKK 66.1 million). The increase in the EBITDA is primarily due to higher production of fishmeal and fish oil.In Q3 2013, Havsbrún sourced 68 thousand tonnes of raw material (8 thousand tonnes), and for the first nine months of 2013 the raw material intake was 142 thousand tonnes (38 thousand tonnes).The Bakkafrost Group had a net interest bearing debt at the end of Q3 2013 amounting to DKK 736.9 million (DKK 806.9 million at year-end 2012) and had undrawn credit facilities of approx DKK 600.7 million, of which DKK 15.0 million are restricted.Bakkafrost’s equity ratio is 52%, compared to 49% at the end of 2012. Bakkafrost paid out DKK 97.7 million in dividend in Q2 2013. On 14 February 2013, Bakkafrost issued unsecur-ed bonds at a total nominal value of NOK 500,000,000; the issue date was 14 February 2013. The bonds were listed on the market on 3 May 2013. The interest rate is NIBOR 3 months plus a margin of 4.15 %. The bonds are measured at fair value at initial recognition. The bonds mature five years from the issue date at their nominal value. In Q2, all full-time employees from 2012, still employed at Bakkafrost, have received bonus shares with a total value of 2% of paid out salary in 2012. In total Bakkafrost has allocated 45,957 shares to its employees at a fair value on DKK 3,206 million. The grant date was on 22 May 2013 and the share price was DKK 69.65 (NOK 69.75) per share.Farming:The operating revenue for Bakkafrost’s farming segment was DKK 520.3 million in Q3 2013 (DKK 327.4 million) and DKK 1,465.6 million for the first nine months of 2013 (DKK 936.7 million).

Operational EBIT, which is EBIT before fair value adjustments on biological assets, amounted to DKK 187.5 million in Q3 2013 (DKK 75.0 million), and for the first nine months of 2013 it was DKK 511.6 million (DKK 189.7 million).

Operational EBIT/kg for the farming segment was DKK 16.54 (NOK 17.59) in Q3 2013, compared to DKK 7.71 (NOK 7.65) in Q3 2012. The salmon prices in Q3 2013 have been stronger than in Q3 2012 and thus higher margins per kilo. Operational EBIT/kg for the first nine months of 2013 was DKK 16.96 (NOK 17.02), compared to DKK 6.06 (NOK 6.12) for the first nine months of 2012.

Value Added Products (VAP):The operating revenue for the value added segment amounted to DKK 147.7 million in Q3 2013 (DKK 121.4 million). For the first nine months of 2013, the revenue was DKK 463.6 million (DKK 372.5 million). The increase in the revenue from Q3 2012 to Q3 2013 is 22%, while the volumes that went for VAP products only increased by 15%.

Operational EBIT amounted to DKK -19.6 million in Q3 2013 (DKK 3.4 million), corresponding to an operational EBIT of DKK -4.66 (NOK -4.96) per kg gutted weight in Q3 2013, compared to DKK 0.95 (NOK 0.94) per kg gutted weight in Q3 2012. The decrease in the operational EBIT margins is due to higher salmon spot prices. The VAP segment acquires its raw material (fresh salmon) at spot prices each week. For the first nine months of 2013, operational EBIT amounted to DKK -84.6 million (DKK 25.5 million), corresponding to an operational EBIT of DKK -6.36 (NOK -6.38) per kg gutted weight in Q3 2013, compared to DKK 2.21 (NOK 2.23) per kg gutted weight in Q3 2012.

Fishmeal, Fish Oil and Fish Feed:The operating revenue for the fishmeal, fish oil and fish feed segment amounted to DKK 422.3 million (DKK 300.0 million) in Q3 2013, of which DKK 211.5 million represents sales to Bakkafrost’s farming segment corresponding to 50.0% (68.2%). For the first nine months of 2013 the revenue was DKK 830.5 million (DKK 641.2 million), of which DKK 480.6 million represents sales to Bakkafrost’s farming segment corresponding to 57.9% (65.9%).

Operational EBITDA was DKK 48.8 million (DKK 41.3 million) in Q3 2013, and the operational EBITDA margin was 11.55% (13.76%). For the first nine months of 2013
the EBITDA was DKK 104.4 million (DKK 66.1 million), and the margin was 12.57% (10.31%).

Sales of feed amounted to 31,961 tonnes (30,290 tonnes) in Q3 2013, of which the farming segment internally used 23,681 tonnes (21,093 tonnes). For the first nine months of 2013, the feed sale was 65,063 tonnes (66,351 tonnes). The internal sale was 49,084 tonnes (45,296 tonnes).

The Group’s total assets as of end Q3 2013 amounted to DKK 3,004.2 million, compared to DKK 2,570.9 million at the end of 2012.