Bakkafrost Scotland turns loss into big profit for Q1

Bakkafrost announced today that its Scotland business showed significant improvement during the first three months of this year, turning a loss into profit.

The SCT (Scotland) farming segment produced an operational EBIT or profit of DKK 155m (£18m) against a loss of DKK 55m (£6.5m) 12 months earlier.

On a group level, the Faroes-based salmon farmer announced an operating EBIT or operating profit of 565 million Danish kroner (£66m) against DKK 418m (£49m) 12 month ago.

The combined FO farming and VAP segments made an operational EBIT of DKK 321m (£37m) down from DKK 442m (£52m) in Q1 2022.

CEO Regin Jacobsen said that overall he was satisfied with the results in this quarter but especially with the improved results in Scotland.

“We saw early signs of improvements in Q4, where the application of best practices significantly improved the operations.

“Through this quarter and so far this year, we have maintained strong operations in Scotland. Premium high-quality salmon with our One Company strategy has materialised in our sales and branding and created extra value. Our customers recognize the high quality of our fish, whether it is farmed in Faroese or Scottish origin.

CEO Jacobsen continued: “As expected, we have had low harvest volumes in the Faroe Islands this quarter, which impacted the financial results.

“The biological performance has been good and exceptionally strong when it comes to growth rates and feed conversion. We have had lower average harvest weights in the quarter due to our strong effort to push mortality levels down, as we also have done with sea lice levels.

“This led to earlier harvest at a lower weight. With the new capabilities gained with our new FSV, Bakkafossur, we expect to increase harvest weights while we continue to secure good fish welfare and low sea lice levels.”

Said the VAP segment performed well during the period with positive margins despite high salmon prices.

“For many years Bakkafrost has had a strategy to use around 40% of the harvest volume for value-added production in the VAP segment.”

He concluded: “This strategy will be revised depending on the outcome of the Faroese Government’s proposal to adjust the revenue tax. This also applies to the previously announced five-year investment plan. On our Capital Market Day in Scotland on 6 June 2023, we will present our new 2024-2028 investment plan.”

Today’s first quarter report said that in In Scotland, the farming operation improved considerably during the period as the biological development was brought more under control.

The first signs of improved control emerged in Q4 2022. In Q1 2023 and so far in Q2, this development has continued.

Bakkafrost has been able to harvest large fish in Scotland and maintain lower mortality, which has also impacted positively on the harvest volume and price achievement.

The report added a note of caution: “The turnaround operation in Scotland prioritises the mitigation of biological risk.

“However, Bakkafrost Scotland is still subject to higher biological risk than in the Faroe Islands. It needs to be demonstrated whether the positive development of biology in the past two quarters can be maintained during the traditionally more challenging periods in the fall.”