Bakkafrost Group posted total operational earnings before interest and taxes (EBIT) of DKK 325 million (USD 42.8 million, EUR 43.7 million) for Q3 2022 – more than quadrupling the DKK 71 million (USD 9.3 million, EUR 9.5 million) delivered a year previously.
In the quarter, the Faroe Islands-based salmon-farming firm achieved a Q3 2022 profit of DKK 249 million (USD 32.8 million, EUR 33.5 million), up from DKK 131 million (USD 17.3 million, EUR 17.6 million). However, Bakkafrost CEO Regin Jacobsen said that while the group was satisfied with the results from its farming in the Faroe Islands in the quarter, it was disappointed in its Scottish farming segment's performance.
Its combined Faroe Islands farming and value-added processing segments delivered an operational EBIT of DKK 444 million (USD 58.5 million, EUR 59.7 million) in the three-month period, up from DKK 146 million (USD 19.2 million, EUR 19.6 million) in Q3 2021. The farming segment posted an operational EBIT of DKK 443.8 million (USD 58.4 million, EUR 59.6 million), and its VAP segment, which produced 6,636 metric tons (MT) of skinless and boneless portions of salmon, posted an operational EBIT of DKK 276,000 (USD 37,000, EUR 37,000) in the most-recent quarter, down from DKK 11.1 million (USD 1.5 million, EUR 1.5 million) in Q3 2021.
Bakkafrost's Scotland farming segment’s operational EBIT fell from a loss of DKK 81.3 million (USD 10.7 million, EUR 10.9 million) to an even larger loss of DKK 137.2 million (USD 18.1 million, EUR 18.4 million).
Bakkafrost’s fishmeal, oil, and feed (FOF) segment delivered earnings before interest, taxes, depreciation and amortization (EBITDA) of DKK 120.5 million (USD 15.9 million, EUR 16.2 million) in Q3 2022, up from the DKK 111.2 million (USD 14.6 million, 14.9 million) achieved in Q3 2021, with its sales of fishmeal reaching 37,805 MT. Some 1,363 MT of this feed was sold to external customers.
Jacobsen said Bakkafrost was continuing to see a strong biological performance in the Faroe Islands, with strong growth, all-time low sea lice levels, and increased average harvest weights. He also highlighted “the positive results” that have come from the large-smolt production regime in the Faroe Islands.
“This has resulted in more robust smolt with better biological performance," he said. "Declining mortality levels in the farming operation from the smolt produced after the changes were implemented demonstrate the impact of these changes for our farming operation in general and large-smolt production in the Faroe Islands and Scotland.”
But Jacobsen said the group was not satisfied with the biological performance in Scotland, where mortality rates have been higher than expected in this quarter.
“This reminds us that we still face challenges while we await larger and better quality smolt,” he said. “In Q2 2023, we will reach an important milestone in Scotland as we expect to release the first batch of large smolt from our Applecross hatchery. In the meanwhile, good biological risk mitigation is important and freshwater treatment capacity plays an important role here.”
In total, Bakkafrost harvested 24,950 MT gutted weight of salmon in the three-month period, up from 21,851 in Q3 2021, with the Faroe Islands providing an increased 16,850 MT, and Scotland a higher 8,100 MT. Consequently, Bakkafrost's total harvested volume for the first nine months of 2022 was 66,100 MT, down from 71,100 MT in the corresponding period of last year. Bakkafrost's Faroese farms contributed 47,400 MT to that total and its Scotland farms contributed 18,700 MT.
For the full-year 2022, Bakkafrost’s harvest volume for the Faroe Islands is expected to be around 68,000 MT, with Scotland producing 25,000 MT, thereby giving the group a total of 93,000 MT gutted-weight. In 2023, it expects to harvest around 98,000 MT, with 68,000 MT coming from the Faroes and 30,000 MT from Scotland.
Bakkafrost said the overall market supply of salmon increased 4.1 percent in the quarter compared with Q3 2021, and that salmon spot prices were 27 percent higher in the period. Jacobsen said the market saw “large variations” in the quarter.
“The tight supply and high prices in the beginning of the quarter was replaced by significantly higher volumes supplied to the market in the second half of the quarter and at lower prices, however still well above previous years,” he said. “Despite high inflation on food the demand for salmon is still strong, which is reflected in contract prices for next year. Looking ahead into 2023, the supply growth in the salmon market will be tight, with low single-digit growth.”
Photo courtesy of Bakkafrost
