Bakkafrost warns biological challenges in Scotland to impact Q4 results
Severe biological issues that affected the Bakkafrost Group’s Scottish salmon farming operations in the third quarter of 2021 have carried over into the closing months of the year, with the company saying it expects high mortalities there to impact the company’s results Q4 results.
A new update from the Faroe Islands-headquartered firm said Bakkafrost has accounted for exceptional mortality totaling DKK 174.6 million (USD 26.5 million, EUR 23.5 million) for October and November 2021, and after the write-down of the exceptional mortality, its preliminary estimate is that its operational earnings before interest and taxes (EBIT) for the two months combined will reach around DKK 52 million (USD 7.9 million, EUR 7 million).
“The main root-cause for the mortality in Scotland is compromised gill health in combination with secondary complications, such as blooms of micro-jellyfish/hydrozoans, and fish handling during necessary treatments,” Bakkafrost said. “The overall biological situation improved during November and stabilized further in December.”
Due to exceptionally high mortality in Scotland during Q3, Bakkafrost lowered its expected harvest volume for Scotland to 30,000 MT gutted-weight in 2021, and its total harvest volume estimate for 2021 was lowered to 96,000 MT gutted-weight, compared with 85,686 MT harvested in 2020.
The company said as part of the five-year investment program, it will more than triple its freshwater treatment capacity next year, with two new wellboats with large freshwater treatment capabilities. Bakkafrost said these vessels are expected to be in operation in second- and third-quarters of 2022 respectively, and will help to mitigate the problem of compromised gill health and improve overall fish health, with the expectation the added treatments will significantly reduce the risk of mortality caused by secondary complications.
Bakkafrost expects to release its trading update for Q4 and full-year 2021 on 4 January, 2022, though it said it expects to achieve its original guidance on its total harvest volume for 2021 of 96,000 metric tons (MT) head-on-gutted (HOG) weight.
The company posted a lower total operational EBIT of DKK 70.5 million (USD 10.7 million, EUR 9.5 million) for Q3 2021, stating that the quarter’s results were weakened by several factors in both Scotland and the Faroe Islands. Its profit of DKK 131.3 million (USD 19.9 million, EUR 17.7 million), was down from DKK 176.8 million (USD 26.9 million, EUR 23.8 million) in Q3 2020.
Photo courtesy of Scottish Salmon Company