Bakkafrost unveils big Q2 profits rise

Bakkafrost more than doubled its operating profit in the second quarter of this year, the Faroe Islands and Scotland fish farmer announced today.

The profit or EBIT came out at 407.5m Danish kroner (DKK) (£47m), compared to DKK 181.9m (£21m) during the same period last year.

Revenues totalled DKK 1.6bn (£182m) , against DKK 1.1bn (£126m) a year ago on a total harvest of 28,200 tonnes which was split between 17,600 tonnes from the Faroe islands and 10,600 tonnes from Scotland (the Scottish Salmon Company, which Bakkafrost owns).

Harvest volumes for 2021 are expected to total 106,000 tonnes with 66,000 tonnes coming from the Faroes and 40,000 tonnes from Scotland.

Commenting on the result, CEO Regin Jacobsen said that he was satisfied with the results overall.

He reported: “Despite the salmon market still being somewhat hampered by the Covid-19 pandemic, the market was quite strong in the quarter, especially the US market which has taken increasing volumes of salmon.

The global harvest was only 1% up, compared to the same quarter last year. However, inventories have been released resulting in an increase in global supply of nearly 9%, compared to the second quarter last year.

“Looking ahead, the salmon market outlook is tight for the rest of 2021 as well as for H1 2022.”

Jacobsen continued: “We are especially pleased with the progress made in our hatcheries in the Faroe Islands from which during this quarter released 3.2 million smolt with an average size of 422g. Hence, we are closing in on our 500g target in our large-smolt strategy.

“We are very excited about this development and that our ongoing expansions of hatcheries in the Faroe Islands and in Scotland is progressing well, especially in Scotland, where having larger smolts is a key enabler for improving the performance of the farming operation.

“This is therefore also an important investment area for us, which not only benefits our operation, but also the suppliers in local communities where we operate.”

The importance of fish farming companies to the economies where they operate is illustrated by Bakkafrost’s announcement that its sourcing from local suppliers in Scotland totalled DKK 500m (£57m) and DKK 876m (£100m) in the Faroe Islands during the first six months of this year.

In addition to planned investments in the value chain in the Faroe Islands, Bakkafrost expects to invest DKK 350-400m (£40m-45m)a year in Scotland between now and 2024. A significant part of this will be invested in building three large hatcheries to increase smolt capacity and become self-sufficient with large smolt.

Further details on investments in both Scotland and the Faroe will be unveiled at a Capital Markets Day next month.

The company said that despite the uncertainties imposed by the pandemic, the long term market balances in the world market for salmon products should remain favourable for Bakkafrost.

“Bakkafrost has a long value chain and a cost-efficient production of high-quality salmon products and will likely maintain the financial flexibility going forward.”