Bakkafrost Q3 numbers hit by lower salmon prices, but Scotland improves
Bakkafrost today unveiled weaker than expected third quarter results. Meanwhile, the company’s Scottish arm continues to make a loss, but the latest figures show its recovery is continuing.
CEO Regin Jacobsen said bluntly that he was not satisfied with the group’s results this quarter.
The Faroese-owned salmon farmer announced a lower group EBIT or operational profit for the July to September period of 173 million Danish kroner (£19m) compared with DKK 269m (£30m) 12 months earlier.
Bakkafrost Scotland produced revenues of DKK 317m (£35m) up from DKK 232m (£26m) in Q3 last year. The operating loss or EBIT was almost halved – down from minus DKK 263 million (-£29m) to minus 138m(- £15m ) this time.
The Faroe Islands produced revenues of DKK 1,420 million (£159m) down from DKK 1,628m (£$182m) last year and a lower operational EBIT or profit of DKK 310m (£34m) which was DKK 232m or £26m lower than Q3 2023.
CEO Jacobsen told shareholders this morning that the results were mainly impacted by low salmon prices and the continued after effects of the general strike in the Faroe Islands in May, as well as an unplanned cull forced by a disease issue at one of its sites.
He said: “The strike in May combined with the unplanned harvest of A-19 impacted negatively our ability to adapt to market needs to optimise market value for our products.
But he stressed it was not all gloom with improvements showing through both operating countries.
The early harvest of remaining fish from farming site A-19, where the ISA virus was detected in two pens back in May had a negative financial impact. We are, however, very pleased with the effective response and our strong procedures, which successfully contained the virus. This challenge is now behind us, allowing us to focus forward.
“In the Faroe Islands, we have seen very good biological performance. This is evident in the strong growth, low mortality, and increased harvest weights.
“Our hatcheries have also delivered excellent operational results, enabling us to increase our smolt transfer expectations for this year, with further increases planned for next year.”
Turning to Scotland, Jacobsen said: “We conclude that our de-risking strategy has worked. Exceptional mortalities have reduced by more than 80% compared to last year, harvest weights have increased, and sea lice levels are all-time low — just like in the Faroes.
“We are making steady progress in ramping up production at the Applecross hatchery to produce large high-quality smolt and expect start transfer of 200g smolt in Q4. Hereafter, we expect to only transfer high-quality smolt above 200g.
He added: “To maintain a strong competitive position, we are prioritising cost management and aligning our capacity with operational needs. In line with this, we have implemented several cost-saving measures and capacity adjustments in Scotland, including the closure of the processing facility at Marybank in July 2024. The full effects of these measures were not visible in Q3.”
Jacobsen said the salmon market has been weaker in this quarter with low prices throughout but he now looked forward to a more favourable price environment – especially in the first half of 2025 , where the supply will be weaker of high-quality salmon.
“Our expected harvest next year is 100,000 tonnes, of which we plan to allocate around 15% for VAP [value added products] contracts,” he concluded.
