Bakkafrost announces ‘satisfying’ 2Q results

Glyvrar, Faroe Islands-based farmed salmon producer Bakkafrost on Tuesday announced “satisfying” second-quarter financial results in which all segments had positive margins.

“The salmon price has been satisfying during Q2 2012 taking into account that we have seen a massive increase in the supply of salmon,” said CEO Regin Jacobsen. “The outlook is also good as we don’t expect the same increase in the supply from fourth quarter 2012 and forward, which means that the market will be more in balance.”

Bakkafrost reached quarterly operating EBIT of DKK 77.7 million (USD 12.9 million). Salmon prices in the quarter were stronger than anticipated as the world supply of salmon increased by 30 percent from the second quarter of 2011 to the second quarter 2012.

The strong result also enables the group to continue its investment program. In 2012, investments of around DKK 115.0 million (USD 19 million) will be made, including maintenance investments of around DKK 80.0million (USD 13.2 million). Investments will be made in all parts of the value chain.

Bakkafrost expects to harvest between 42,000 to 44,000 metric tons (MT) gutted weight in 2012, compared to 36,343 MT gutted weight in 2011. This means that in the second half of 2012 Bakkafrost plans to harvest between 20,500 and 22,500 MT gutted weight. In addition to this Faroe Farming is expected to harvest 6,000 MT gutted weight in 2012 of which 1,173 MT were harvested in the first half of 2012.

In the short term, supply of farmed Atlantic salmon is expected to increase quarter on quarter, which may put the spot price under pressure, but from fourth quarter 2012, the market is expected to be more in balance.

Bakkafrost aims to sell around 50 to 60 percent of the harvested salmon on the spot market as fresh whole salmon and 40 to 50 percent as VAP products sold on long-term contracts prices. This stabilizes the Group’s cash flow in a volatile salmon market. For the remainder of 2012 the Company has contracted nearly the full capacity of VAP products and has started to commit contracts for 2013.

Bakkafrost is the largest salmon farmer in the Faroe Islands. The Group is fully integrated from feed production to smolt, farming, VAP and sales. The Group has production of fishmeal, fish oil and salmon feed in Fuglafjørður. The Group operates licenses on 16 farming sites located in 15 different fjords. The Group has primary processing in Klaksvík, Kollafjørð and Strendur and secondary processing (VAP) in Glyvrar and Fuglafjørður.

For more detailed information on Bakkafrost’s Q2 results, click here.


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