Bakkafrost posts improved Q4 results, bringing “eventful” 2019 to a close
Faroe Islands-headquartered Bakkafrost Group delivered total operational earnings before interest and taxes (EBIT) of DKK 415.3 million (USD 60.2 million, EUR 55.6 million) in the fourth quarter of last year, up from DKK 230.5 million (USD 33.4 million, EUR 30.9 million) in the corresponding period of 2018 – with strong prices and volumes helping deliver the higher margin.
Its profit for the last quarter was DKK 219.5 million (USD 31.8 million, EUR 29.4 million), turning around a loss of DKK 6.6 million (USD 957,468, EUR 883,423) in Q4 2018.
For the full-year 2019, the Atlantic salmon producer achieved an operational EBIT of more than DKK 1.3 billion (USD 188.6 million, EUR 174 million), up from less than DKK 1.1 billion (USD 159.6 million, EUR 147.2 million) in 2018. The annual profit fell from DKK 960.3 million (USD 139.3 million, EUR 128.5 million) to DKK 801.9 million (USD 116.3 million, EUR 107.3 million).
In total, the group harvested 25,855 metric tons (MT) of salmon (gutted weight) in the last quarter, doubling the 12,234 MT harvested in Q4 2018. This comprised 17,930 MT that was harvested in the Faroe Islands and 7,925 MT from Scotland, following its acquisition of the majority (95.6 percent) of the Scottish Salmon Company (SSC) in October 2019.
For 2019 as a whole, Bakkafrost harvested 65,109 MT of salmon, with the 57,184 MT from the Faroes eclipsing the previous year’s 44,591 MT of fish.
With 60 sites across the Scottish west coast and Hebridean Islands, SSC produced 33,799 MT of gutted weight salmon in 2019. Its current annual production capacity is 50,000 MT.
Bakkafrost CEO Regin Jacobsen said the group was “satisfied” with the 2019 results, highlighting that the start of Q4 was characterized by a high supply of small fish, which caused disruption in the market.
At the end of the quarter, supply pressure shifted to demand-driven growth, he said.
“Our harvested volumes in the Faroe Islands were the highest ever for a fourth-quarter – with record big fish – the revenue and operational result was also record high for a fourth quarter. The biological performance has been very good. The new Strond Hatchery is upscaling production and contributes from now on significantly to our operation. We are pleased about the VAP (Value Added Products) segment’s good results for the quarter,” Jacobsen said.
Bakkafrost’s Faroese Farming segment achieved a higher operational EBIT of DKK 338.3 million (USD 49.1 million, EUR 45.3 million) in Q4 2019, which corresponded to NOK 25.49 (USD 3.70, EUR 3.41) per kg. For 2019, Farming’s operational EBIT was DKK 1.1 billion, up from DKK 965.7 million (USD 140.1 million, EUR 129.3 million).
Its Scottish Farming segment made an operational EBIT of DKK 18.1 million (USD 2.6 million, EUR 2.4 million) in Q4 2019.
The VAP segment posted an operational EBIT of DKK 36.6 million (USD 5.3 million, EUR 4.9 million) for the last quarter, up from DKK 3.3 million (USD 478,768, EUR 441,702). At the same time, the Fishmeal, Oil and Feed (FOF) unit delivered slightly reduced earnings before interest, taxes, depreciation and amortization (EBITDA) of DKK 57.7 million (USD 8.4 million, EUR 7.7 million).
In 2020, Bakkafrost has forecast a harvest of 57,000 MT in the Faroe Islands and 35,000 MT in Scotland.
It expects to release 15 million smolts in the Faroe Islands this year, compared to 12.7 million smolts in 2019 and 12.6 million smolts in 2018. The smolt release in Scotland is expected to be 10.7 million smolts in 2020, compared to 12.4 million smolts in 2019 and 8.6 million smolts in 2018.
“2019 has been an eventful year for Bakkafrost. We have made a giant leap into a new geography by the acquisition of the Scottish Salmon Company. This acquisition has increased the scale of our operation significantly and brought us new possibilities to exploit for many years ahead," Jacobsen said. "We are very excited about this but do realize that it will take time before we will really see results of the investments we will do in the Scottish operation. We are convinced that this is possible, however, with the committed people we have in the organization in Scotland and in the Faroe Islands.”
Photo courtesy of Bakkafrost