Faroes salmon producer Bakkafrost posts record results

Published on
February 24, 2015

Faroe Islands-based Atlantic salmon farmer Bakkafrost delivered total operating earnings before interest and taxes (EBIT) of DKK 227.5 million (EUR 30.5 million; USD 34.6 million) in the fourth-quarter of 2014, an increase of 30 percent year-on-year and its best-ever performance in a quarter.

Bakkafrost’s operational EBIT for the year as a whole was DKK 833.8 million (EUR 117.8 million; USD 126.8 million), which was 31.1 percent more than in 2013 and another company best.

The business is fully integrated — from feed production to smolt, farming, value-added processing (VAP) and sales — and there were improved results from all these operations in Q4 2014, with its combined farming and VAP segment recording an operational EBIT of DKK 213.8 million (EUR 28.7 million; USD 32.5 million) in Q4 2014. For the year as a whole, this segment achieved a total operational EBIT of DKK 763.9 million (EUR 102.4 million; USD 116.1 million), up from DKK 551.9 million (EUR 74 million; USD 83.9 million) in 2013.

“We are very content with the result for the fourth-quarter of 2014 and the year 2014. We achieved a record high operating result both for the quarter and the year, driven by operational improvements in all segments. We are well positioned to meet future challenges and have entered into an exciting new year with the new well boat being delivered in the summer. With the well boat and other investments, Bakkafrost will continue to improve its operations and reduce biological risk,” said Regin Jacobsen, CEO of Bakkafrost.

Jacobsen added that Q4 was characterized by low supply growth and high demand for salmon in the market but also that the “interruption by the Russian import ban was quite strong.” Nevertheless, there was a strong price increase from mid-November until mid-December. The peak price, achieved around weeks 49 and 50 was about NOK 50 (EUR 5.81; USD 6.59), but at this point, he said the volumes increased too sharply and there were “heavy price decreases” in the run-up to the Christmas holidays. As a result, Bakkafrost suspended its harvest.

However, the company was able to achieve a combination of high contract prices and good spot prices for the full quarter, he said.

In terms of volumes, Bakkafrost harvested 12,651 metric tons (MT) gutted weight of salmon in Q4 2014, up 14 percent on the 11,097 MT harvested in Q4 2013. For the year, it harvested 44,013 MT gutted weight, compared to 41,268 MT in 2013. Of the total harvested volumes in 2014, 45 percent went toward the production of VAP products, while 55 percent was sold as whole gutted salmon.

This year, Bakkafrost expects to harvest between 49,000 MT and 51,000 MT gutted weight in 2015, while Faroe Farming, a company in which Bakkafrost holds 49 percent stake, expects to harvest around 4,500 MT this year.

Contributing Editor reporting from London, UK

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