Bakkafrost cancels dividend: “The uncertainty is still high”

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Challenging market in the second quarter for the Faroese big fish.

Bakkafrost delivered an EBIT of DKK 181.9 million (EUR 24.4 million) in the second quarter of the year. The slaughter volume was 20,878 tonnes of salmon, divided into 7,937 tonnes in Scotland and 12,609 tonnes in the Faroe Islands. It appears from a stock exchange announcement on Tuesday morning.

An operating profit of DKK 206 million (EUR 27.7 million) in the quarter was expected in advance, according to TDN Direkt.

“H1 2020 has been severely affected by the Covid-19 pandemic. Together with increased transportation costs and currency movements, this has had a negative impact on our financial results,” said Bakkafrost CEO Regin Jacobsen.

“We are, however, pleased to have positive results in all segments: VAP, FOF and the farming segments in the Faroe Islands and Scotland. We are also grateful that we have been able to keep our employees safe during the pandemic and of having been able to maintain the supply of healthy and safe salmon products to our customers.”

“In this quarter we are especially content with the strong results from our VAP segment which has produced higher volumes than ever before in order to serve the increased demand from our retail customers. The flexibility in our integrated value chain has proven its value and demonstrated our ability to adapt quickly to changes in market dynamics,” he added.

“We are also pleased by the benefits that are now beginning to materialize in the operation in Scotland as well as from our large investment programme. The new hatchery at Strond is now in full operation delivering a substantive share of our required smolt volume in the Faroe Islands and with steady increase in average smolt size. The farming segment will greatly benefit from this improvement over the coming quarters. In Scotland, we have taken important steps to implement the strategy with the initiated expansion of the Applecross hatchery. Finally, our new biogas plant has commenced operation and will during the coming months start producing clean energy and contribute to achieving our ambitious carbon reduction target to halve our CO2 emission by 2030.”

“Looking forward, we expect the Covid-19 pandemic to continue for some time, challenging the global market for salmon and making the outlook hard to predict. We believe, however, that the long-term outlook is still good as the fundamentals in the protein market have not changed,” Jacobsen said.

Last spring, Bakkafrost decided to postpone the annual decision on dividends, due to Covid-19, until the presentation of the second quarter report in August. Despite an equity ratio of 69 per cent, the board has chosen not to propose a dividend for the financial year 2019, as the uncertainty is still considered too high.

Bakkafrost guides a harvest volume of 50,000 tonnes in the Faroe Islands and 39,000 tonnes in Scotland in 2020. For next year, the harvest volume will be increased to 62,500 tonnes in the Faroe Islands and 44,000 tonnes gutted weight in Scotland.

The company has signed contracts covering 33 percent of salmon sales in the second half of the year. These contracts normally have a duration of 12 months.