Bakkafrost Group reported year-over-year increases in revenue and operational EBIT in Q2 2024, but a 28-day workers’ strike in the Faroe Islands that ran through 9 June impacted the company in the period.
Delivering the group’s latest financial report, Bakkafrost CEO Regin Jacobsen said the strike – the first on the islands in 20 years – led to 4,000 metric tons (MT) of Bakkafrost’s salmon being harvested post-strike at much lower prices and resulted in overall harvest volumes for the quarter being much lower than planned.
“A lot of fish moved from a higher price segment to a lower price segment,” he said.
While no imports into or exports out of the Faroes were allowed during the strike, an agreement that has been in place since 2008 exempting marine and freshwater production from such labor strikes enabled Bakkafrost to stock, feed, and care for its fish throughout the walk-out.
The group reported Q2 2024 revenues of DKK 2.1 billion (USD 314.4 million, EUR 281.4 million), up from DKK 1.7 billion (USD 254.4 million, EUR 227.8 million) in the corresponding period of last year. Operational EBIT for the period totaled DKK 388 million (USD 58.1 million, EUR 52 million), compared to Q2 2023’s DKK 353 million (USD 52.8 million, EUR 47.3 million).
The company's profits improved slightly, but still represented a loss of DKK 117 million (USD 17.5 million, EUR 15.7 million), compared the loss of DKK 123 million (USD 18.4 million, EUR 16.5 million) in the same period a year prior.
Its Farming Faroe Islands (FO) segment delivered quarterly revenues of almost DKK 746 million (USD 111.7 million, EUR 100 million) and an operational EBIT of DKK 206.1 million (USD 30.4 million, EUR 27.6 million), compared DKK 656.4 million (USD 98.2 million, EUR 88 million) and DKK 150.3 million (USD 22.5 million, EUR 20.1 million) in Q2 2023, respectively. It harvested 10,226 MT of salmon in the quarter, compared to 8,658 MT in Q2 2023.
Farming Scotland’s (SCT) revenues for the period increased 55 percent to DKK 861.3 million (USD 128.9 million, EUR 115.4 million), and its operational EBIT climbed 156 percent to DKK 132.6 million (USD 19.8 million, EUR 17.8 million). Its operations harvested 11,366 MT of fish, compared to 7,343 MT a year ago.
Bakkafrost’s Fishmeal, Oil, and Feed (FOF) segment reported revenues fell 8 percent to DKK 686.7 million (USD 102.8 million, EUR 92 million) in Q2, and its operational EBIT slipped 7 percent to DKK 112.4 million (USD 16.8 million, EUR 15.1 million). FOF produced 19,104 MT of fishmeal and 1,241 MT of fish oil, and its fish feed sales amounted to 32,949 MT, up 9 percent on a year previously.
In the quarter, the FO segment internally used 22,739 MT of feed, and the SCT segment internally used 9,885 MT.
Feed sales weren’t affected by the strike, according to the company, but FOF’s operations were impacted, with a cease in all imports and exports leading to some 60,000 MT of raw materials lost.
Strike aside, Jacobsen said the group was generally pleased with current operations, particularly within its Faroese freshwater division, where both efficiency and production volume of large, high-quality smolt have been steadily improving. It has also been pleased with the condition of the biomass in the Faroes and Scotland, with solid growth, no sea lice problems in either location, and gill health in Scotland under proper management.
Scotland has historically struggled with biological challenges, but the company’s de-risking strategy for marine farming operations in Scotland has been effective, according to Jacobsen, resulting in significantly fewer biological issues and lower mortality than previous years.
He also added that the ramp-up at Bakkafrost’s Applecross hatchery in Scotland is now progressing well after addressing cooling system issues identified in Q1 2024 that resulted in fish being lost.
“We needed to restart the whole system,” Jacobsen said, advising that Bakkafrost anticipates achieving an average smolt weight of over 200 grams in Scotland by Q4.
“This is about nine or 10 months delayed compared with the plan we had one year ago,” he said. “When the Applecross 5 expansion is completed in around two months, Bakkafrost will have the capacity to produce all smolt in Scotland to around 200 to 300 grams. With the completion of Applecross 6 in [Q1 2025], Applecross will be able to supply all the fish in Scotland and the biosecurity will be further improved. As shown in the Faroe Islands, bigger and healthier smolt will face lower risks in the marine environment in Scotland because of the shorter production cycles in the sea and a more robust salmon.”
Jacobsen also confirmed that on 26 May, the company detected salmon anemia in two pens at its A-19 farming site in the Faroes. To mitigate the issue, Bakkafrost conducted an early and small harvest to contain the outbreak and prevent it spreading further. But, due to regulatory requirements, the entire site with around 1 million has been harvested this month, reducing the total harvest volume for 2024 due to lower harvest weight of the fish.
Because of the ISA outbreak, Bakkafrost’s harvest guidance for 2024 has been lowered to 88,500 MT gutted weight from 91,000 MT, with 63,500 MT coming from the Faroe Islands and 25,000 MT from Scotland.
