Lower salmon volumes, poisonous algae contribute to mixed Q3 results for Bakkafrost
Faroese salmon farmer Bakkafrost Group delivered total operational earnings before interest and taxes (EBIT) of DKK 168.3 million (USD 25.7 million, EUR 22.6 million) in the third-quarter of this year, a decrease from DKK 251.8 million (USD 38.5 million, EUR 33.8 million) in Q3 2016.
Bakkafrost’s farming segment delivered an operational EBIT of DKK 139.6 million (USD 21.4 million, EUR 18.7 million) in the last quarter – a drop from DKK 216.7 million (USD 33.2 million, EUR 29.1 million) in Q3 2017.
In total, it harvested 7,217 metric tons (MT) gutted weight of salmon in the last quarter, down from 11,585 MT in Q3 2017. The total harvested volume for the first nine months of this year was 32,356 MT, down from 43,145 MT a year ago. Its harvest guidance for 2018 as a whole has been reduced by 3,000 MT to 46,000.
The company’s value-added processing (VAP) segment, which produced 1,425 MT of products (down 73 percent from 5,209 MT in Q3 2017), posted an operational EBIT of DKK 2.8 million (USD 428,360, EUR 375,363), up from DKK a loss of 4.5 million (USD -688,436, EUR -603,257) in Q3 2016.
In its interim report, Bakkafrost said the reduced salmon spot prices over the three-month period had a positive effect on its VAP segment’s profits as it buys the raw materials at spot prices.
“The activity in the third-quarter this year has been somewhat lower, compared to the same quarter last year. The quarter has also been affected by the elevated mortality level at farming site A-81 Kolbanagjógv in September, which resulted in higher costs and a negative effect on next year’s harvest volumes,” Bakkafrost CEO Regin Jacobsen said.
Approximately 700,000 fish with an average weight of 500 grams live weight died within a couple of hours of a poisonous species of algae being registered at A-81 Kolbanagjógv. The fish had been released into this site between June and August this year.
The company's farming segment had a net expense of DKK 7.2 million (USD 1.1 million, EUR 965,203) due to the incident.
Bakkafrost said that it had not observed any similar situations at A-81 Kolbanagjógv, nor at any of its other farming sites before or after the incident. The remaining fish at farming site A-81 Kolbanagjógv have not been affected by the incident and are “performing well.”
Meanwhile, the company’s fishmeal, oil, and feed segment delivered earnings before interest, taxes, depreciation and amortization (EBITDA) of DKK 41.4 million (USD 6.3 million, EUR 5.5 million) in the last quarter, down from DKK 79.5 million (USD 12.2 million, EUR 10.7 million) in Q3 2017, with its sales of fishmeal reaching 23,468 MT. Some 20,783 MT of this feed was used internally.
Also in the last quarter, its subsidiary Bakkafrost U.S. closed its acquisition of East Coast salmon importer North Landing.