Glyvrar, Faroe Islands-based salmon-farming firm Bakkafrost reported drops in its operational EBIT and revenues in Q3 2024.
CEO Regin Jacobsen attributed the drops to several factors, and emphasized the four-week Faroese workers’ strike in May 2024 – which delayed his firm’s planned salmon harvests until after Q2’s peak price window. The early harvesting of two pens at its A-19 farming site, after the detection of ISA virus, also contributed to the drops.
Jacobsen said Bakkafrost harvested 3,300 metric tons (MT) from A-19 at a high cost and with an average weight of just 3.4 kilograms (HOG), negatively impacting the Q3 results of the Faroese farming segment. The A-19 harvest represented 23 percent of the total harvest from the region in the period.
Ultimately, no ISA virus was found in fish at the site, but they had to be removed in accordance with Faroese regulations, he said.
“That contributed to a situation in the quarter where we had to harvest big volumes in a soft market, which contributed to our lower price achievement [and] weaker (negative) premium,” Jacobsen said.
For Q3 2024, Bakkafrost posted total operating EBIT of DKK 173 million (USD 25.3 million, EUR 23.2 million), down from the DKK 269 million (USD 39.3 million, EUR 36.1 million) reported for the corresponding period of 2023. Operating revenues slipped by DKK 122 million (USD 17.8 million, EUR 16.4 million) to DKK 1.74 billion (USD 254.2 million, EUR 233.3 million), while profits after tax for the period fell by DKK 335 million (USD 48.9 million, EUR 44.9 million) to a loss of DKK 116 million (USD 16.9 million, EUR 15.6 million).
The group harvested 27,029 MT of gutted weight salmon in the quarter, 6,189 MT more than a year previously. Its Faroe Islands farming segment (Farming FO) accounted for 21,618 MT of the total harvest, compared to 16,740 MT in Q3 2023, with the strike-enforced delayed harvest accounting for much of the increase. The Scottish farming segment (Farming SCT) harvested 5,411 MT, compared to 4,100 MT a year previously.
For the first nine months of this year, both farming segments harvested 70,178 MT, compared to 55,939 MT in the corresponding period of 2023. Farming FO has harvested 46,138 MT, versus 36,403 MT previously, while Farming SCT’s contribution was 24,040 MT, which was more than the 19,536 MT harvested a year ago.
Jacobsen noted that in general, Farming FO realized solid biological performance in Q3, with strong growth, low mortality, and increased harvest weights, while the performance of its hatcheries has led to increased smolt transfer expectations for the year, with further increases planned for 2025. Bakkafrost’s expected smolt transfer in the Faroe Islands for 2024 is now around 17.7 million, with an average weight of 410 grams.
In Scotland, there was an 80 percent year-over-year reduction in mortality for Q3 2024, largely thanks to Bakkafrost’s de-risking strategy taken there, Jacobsen said, adding that Scottish harvest weights have also increased and sea lice levels are at an all-time low.
On the hatchery side, after a slow start, the company is now scaling up production at the firm’s Applecross facility and has eyes on Q4 2024 as to when it will start to transfer 200-gram smolt.
“In Scotland, we have focused on survivability – keeping the fish alive. The real value in Scotland will be when we have healthy and robust smolt, which we have unfortunately not seen yet … but we are on a journey where we will see a transition to larger smolt,” Jacobsen said. “A lot of the fish that’s in the water is still from the old regime with 100-gram fish, but next year, through the transition period, we will eventually go to where a larger share of the biomass is from healthy, larger smolt.”
The goal is to release 10 million smolt in Scotland in 2025 with an average weight of around 200 grams, Jacobsen said. By comparison, this year’s smolt transfer is expected to be around 6.2 million smolts with an average weight of 114 grams.
Elsewhere within the company, the Fishmeal, Oil and Feed (FOF) segment sourced 40,134 MT of raw materials, down from last year’s 109,685 MT, while fish feed sales amounted to 41,513 MT, up from 35,903 MT.
For the full-year 2024, Bakkafrost expects to harvest around 63,500 MT of gutted weight salmon in the Faroes and 26,100 MT in Scotland, giving a total of around 89,600 MT. Next year, the expected harvests are 77,000 MT in the Faroes and 23,000 MT in Scotland.
Jacobsen said that while the salmon market was weaker with low prices in Q3 2024, a more favorable price environment is expected in the first half of next year due to a weaker expected supply of high-quality salmon.
