Bakkafrost bullish on Q3 results

Faroese fish farmer Bakkafrost, owners of the Scottish Salmon Company, today announced a third quarter EBIT of 102.7 million Danish kroner (DKK) (£12m) during what has been a difficult period for salmon farmers.
Comparisons with Q3 2019 do not apply this time because during that period SSC was not an integral part of the group.
The Group made a profit in Q3 2020 of DKK 176.8 million (£21m) (DKK 180.9 million in 2019). For the first nine months of 2020, the profit was DKK 500.5 million (£60m) (DKK 582.4 million in 2019).
As reported last month harvest volumes totalled 21,600 tonnes gutted weight, with the Faroe Islands producing 11,100 tonnes and Scotland 10,500 tonnes.
Bakkafrost CEO Regin Jacobsen said: “During this quarter, the global salmon market has again been affected by the Covid-19 pandemic, putting pressure on the salmon industry and affecting the financial returns across the industry negatively.
“Throughout the third quarter, we have, however, been able to maintain a steady supply to our customers. In the VAP segment, the supply has been higher than in a normal third quarter due to a strongly increased demand from our retail customers in Europe and the US. The sales to Russia have picked up again as well in this quarter. “
He continued: “The biology in the Faroe Islands has performed strongly, and the harvested fish has had a high quality. This is partly a result of our investments in our ability to produce larger smolts.
“Our investments in increased hatchery capacity – latest with the completion of the Strond hatchery – have enabled us to increase the average smolt size significantly, and this increase will continue as we have now commenced the expansion of the hatcheries at Norðtoftir and Glyvradalur. In 2022, we expect to reach our target average smolt size of 500g. “
Mr Jacobsen said that the high quality of the larger smolts produced has a positive impact on the performance of the smolts released into its marine sites, which in combination with good stewardship and proper care have created good end results.
He added: “In 2013, we set ourselves the ambitious goal to become 100 per cent Aquaculture Stewardship Council (ASC) certified in 2020, and since then we have worked very hard to make it happen.
“This has required huge commitment from our employees, who have worked hard on changing the way we operate, and to establish the necessary competences in the company. I am therefore extremely pleased to be able to announce that we have now got the final piece of the puzzle in place.
With our unique selling points, a flexible value chain, increasing harvest volumes and a tight market outlook for 2021, it is our view that Bakkafrost is in an excellent position.”
Bakkafrost’s expected harvest volume for this year in the Faroe Islands is 50,000 tonnes gutted weight, while the expected harvest in 2020 in Scotland is 39,000 tonnes gutted weight. Harvest volumes for 2021 in the Faroe Islands are expected to reach 62,500 tonnes gutted weight and 44,000 tonnes gutted weight in Scotland.
Bakkafrost expects to release around 14.7 million smolts in 2020 in the Faroe Islands, compared to 12.7 million smolts in 2019 and 12.6 million smolts in 2018. The smolt release in Scotland is expected to be 10.7 million smolts in 2020, compared to 12.4 million smolts in 2019 and 8.6 million smolts in 2018.
In its market outlook report Bakkafrost said the global harvest of Atlantic salmon was 4.8 per cent higher in Q3 2020, compared to Q3 2019, according to the latest estimate from Kontali Analysis.
Looking forward, the market dynamics will still be affected by the Covid-19 situation which imposes greater than normal uncertainty to the market development estimates.
In Q4 2020, the global harvest of Atlantic salmon is expected to increase by around five per cent compared to Q4 2019. The estimated global harvest of Atlantic salmon for 2020 is an increase of around four per cent compared to 2019. In 2021, the global harvest of salmon is expected to increase around one per cent.