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Strong Results for Bakkafrost in Q3 2014

28 October 2014

FAROE ISLANDS - The Bakkafrost Group delivered a total operating EBIT of DKK 208.7 million in Q3 2014. The combined farming and VAP segment made an operational EBIT of DKK 193.4 million in Q3 2014.

The Farming segment made an operational EBIT of DKK 166.9 million. The global salmon spot prices decreased during the quarter, while Bakkafrost’s VAP contract prices stayed on a record high level, consequently the VAP segment made an operational EBIT of DKK 26.5 million in Q3 2014. The EBITDA for the FOF segment was DKK 61.7 million in Q3 2014.

Commenting on the results, CEO Regin Jacobsen said: "The third quarter was strong and all segments delivered positive result. It is confirming our strategy that we continue to deliver positive results in the VAP segment. The outlook for the farming industry are bright, both concerning market and concerning biological development. With Bakkafrost’s investment plan, we are able to develop the company further, making the company more efficient, reduce the biological risk and carry out organic growth. "

The Group made a profit for the quarter of DKK 211.2 million (DKK 199.6 million). For the first nine months of 2014, the profit was DKK 424.7 million (DKK 451.4 million).

The total volumes harvested in Q3 2014 were 10,881 tonnes gutted weight (11,335 tgw). The total harvested volumes the first nine months of 2014 were 31,362 tonnes gutted weight (30,171 tgw).

The reason for the increase in the harvested volumes year on year is that Bakkafrost will harvest higher volumes this year compared to the year before.

Bakkafrost transferred 2.2 million smolts in Q3 2014 (2.8 million), which is in line with the company’s plans. Year to date 7.2 million have been trans-ferred (6.7 million). The smolt release is higher in 2014 compared to 2013, due to available sites for smolt release.

In Q3 2014, the associated company P/F Faroe Farming harvested 776 tonnes gutted weight (866 tgw). For the first nine months of 2014, Faroe Farming harvested 2,988 tonnes gutted weight (4,164 tgw).

The combined farming and VAP segment made an operational EBIT of DKK 193.4 million (DKK 167.9 million) in Q3 2014. For the first nine months of 2014, the combined farming and VAP segment made an operational EBIT of DKK 550.1 million (DKK 427.0 million).

The farming segment made an operational EBIT of DKK 166.9 million (DKK 187.5 million) in Q3 2014. The reason for the decrease are lower spot prices, combined with lower harvested volumes this quarter, compared to the same quarter in 2013. For the first nine months of 2014, the operational EBIT was DKK 512.6 million (DKK 511.6 million).

The VAP segment made an operational EBIT of DKK 26.5 million (DKK -19.6 million) for Q3 2014. The improved result is primarily due to a combi-nation of improved contract prices and lower raw material prices. There is normally a time lag be-tween the changes in the spot prices and the changes in the contract prices.

The contract prices have increased significantly from the level in 2013, due to the high salmon spot prices. When the spot prices decreased during the quarter, the contracts became profitable, compared to selling the salmon on the spot market. For the first nine months of 2014, the operational EBIT was DKK 37.5 million (DKK -84.6 million).

The third segment – FOF (fishmeal, oil and feed), made an operational EBITDA of DKK 61.7 million (DKK 48.8 million) in Q3 2014, and for the first nine months of 2014, the operational EBITDA amounted to DKK 140.8 million (DKK 104.4 million). The increase in the EBITDA year to date is primarily due to higher production of fishmeal and fish oil, as the raw material intake has increased significantly.

In Q3 2014, Havsbrún sourced 19,782 tonnes of raw material (68,430 tonnes) and in the first nine months of 2014, Havsbrún sourced 171,313 tonnes of raw material (142,150 tonnes).

In February 2014, a routine surveillance test detected a possible pathogenic ISA-virus at Bakkafrost’s farming site A-80. There was no increase in mortality and no impact on fish health or fish welfare, however. Bakkafrost decided to activate the ISA-contingency plan immediately and hence enforced slaughtering of the last cage at the farming site A-80 Selatrað. The detected site, together with all the neighbouring sites, are now empty. No signs of ISA have been observed since, and no cost increase was related to the detection.

The farming companies and the authorities have put a lot of work into maintaining the good biological status in the Faroe Islands. Regular surveillance tests for ISA-viruses have been performed at all farms during the last approx. 10 years at sea sites in the Faroes. Bakkafrost and the other farmers in the Faroe Islands will keep working with the Faroese Food and Veterinary authority to avoid the introduction of AGD and ISA.

Further Reading

You can view the full report and outlook by clicking here.

 

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