Faroe Islands-based Atlantic salmon farmer Bakkafrost Group delivered total operational earnings before interest and taxes (EBIT) of DKK 254.7 million (USD 37.9 million, EUR 34.2 million) in the third quarter of this year, up from DKK 205.8 million (USD 30.6 million, EUR 27.7 million) in Q3 2015.
Thanks to the high salmon spot prices, the company’s farming segment achieved an operational EBIT of DKK 294.3 million (USD 43.7 million, EUR 39.5 million). Conversely, the high spot prices had a negative effect on its value-added products (VAP) segment, which posted an operational EBIT of DKK -46.7 million (USD -6.9 million, EUR -6.3 million).
At the same time, its fishmeal, oil and feed (FOF) segment delivered earnings before interest, taxes, depreciation and amortization (EBITDA) of DKK 62.4 million (USD 9.3 million, EUR 8.4 million). And with blue whiting, herring and mackerel quotas expected to increase next year, the FOF segment is forecast to produce 85,000 metric tons (MT) of fish feed in 2017, up from 80,000 MT this year.
“Bakkafrost delivered a satisfying result for Q3 2016. The salmon spot price continues to be high, although marginally down from previous quarter and our farming segment delivered a very good margin. The VAP segment is struggling when spot prices are this high, but some positive amendments were made in the quarter. The fishmeal, fish oil and fish feed segment continues to deliver strong results. The future is exciting with the farming operations in Suduroy now being a part of Bakkafrost Group, giving us new opportunities,” said Regin Jacobsen, CEO of Bakkafrost.
In total, Bakkafrost harvested 10,664 MT of fish (gutted weight) in the last quarter, down from 12,982 MT in Q3 2015. The company now expects to harvest 47,500 MT of salmon (gutted weight) in 2016, which is down 1,500 MT on its previous forecast. This is because it postponed some planned harvested volumes in order to optimize the size of its harvested fish. As a result, it expects to harvest 56,000 MT in 2017.
Meanwhile, Bakkafrost’s investment in a new harvest/VAP factory is nearing completion. The harvest operation started in this summer and ramped up its output during Q3 2016. The VAP operation was expected to start in the current quarter but has been put back to Q1 2017 in order to avoid the seasonal production peak.
There will be some extra costs during the start-up period, but the investment is expected to result in operational savings of DKK 70 to 90 million (USD 10.4 to 13.4 million, EUR 9.4 to 12.1 million) per year, the company said. It also expects to increase the value of the trimmings resulting from salmon harvested and processed in the new factory.
Further investments are to include a new salmon meal and salmon oil plant, located in Fuglafjordur and operated by Havsbrun, as well as a new feed line to increase its feed production capacity.
