Bakkafrost Chairman says Scottish turnaround is working

Faroes-based salmon farmer Bakkafrost says its Scottish investment is starting to show positive results, Chairman Runi M. Hansen has told shareholders in the company’s annual report, which was published at the weekend.

He said that when Bakkafrost bought the Scottish Salmon Company in 2019 it knew that the acquisition was a “turnaround case” requiring significant investment over a number of years.

Hansen said it had been expected that the first years during the turnaround would to be difficult, but 2021 and 2022 had been exceptionally challenging.

He said: “During these two years, farming conditions have been more difficult than usual. Bakkafrost suffered significant biological challenges leading to high mortality costs for our fish.

“Significant challenges in Scotland are poor quality smolt and gill challenges in marine farming.”

The turnaround of the Scottish operation is being mainly driven by the same kind of investments as Bakkafrost has made in the Faroe Islands, Hansen said, where the company had successfully demonstrated that biological risk can be reduced and efficiency improved.

He went on: “In Scotland, the most important investments are the replacement of the old obsolete hatcheries acquired with three new state-of-the-art hatcheries based on the same technology and experience from the Faroe Islands.

“Now, three years into the process, we see some early indications of improvements. However, the real test being in the autumn when sea water temperature and biological risks peak.

“The first of the new hatcheries, Applecross, is expected to deliver the first batch of large smolt in Q2 2023, and the second hatchery is expected to start construction in H2 2023.

“We have also seen good results from our increased treatment vessel capacity in Scotland, most recently in late Q3 2022 with the arrival of our second Farming Service Vessel for freshwater treatment.”

He said the vessel was uniquely equipped with dual treatment systems, treating gill health issues with fresh water and removing sea lice.

The chairman continued: “At the beginning of 2023, we have seen the benefit of this on the sales value of our fish by being able to adapt harvest to the improved biological situation, thereby growing the fish larger to achieve higher value in the market.

“We have already made several improvements in Scotland besides building hatcheries and treatment vessel capacity.

“This includes substantial investments in processing capacity, technology and marine farming operations.

“In addition, best practices have been shared across the Faroe Islands and Scotland to extract and implement the best of two worlds.

“We have focused on collaboration and knowledge transfer, supported by new organisational structures and simplicity via our strategic focus, ‘One Company’. One important milestone was passed in May 2022 when we renamed the Scottish Salmon Company ‘Bakkafrost Scotland’.”

He also said the group had managed to navigate well through 2022, a year of great market turbulence and global economic uncertainties.

“Overall we are satisfied with results – especially in the operation in the Faroe Islands,” he said.

Bakkafrost chairman Runi M. Hansen