“For Bakkafrost, we still think that the fundamentals for our investment in Scotland are present.”
On Sunday evening, Faroese salmon producer Bakkafrost admitted that extraordinary mortality rates have resulted in a loss of DKK 174.6 million (€23.4 million) in total for October and November, mainly caused by biological difficulties in Scotland.
Following the profit warning, SalmonBusiness has spoken to the Bakkafrost CEO, Regin Jacobsen, to discuss the problems with the company’s Scottish operations – and what he intends to do to solve them.
“There, there have been a number of incidents in the UK with with algae blooms, and hydrozoa (microscopic jellyfish) which have caused a significant impact on our operations in the second half of this year. It started in September, and continued in October and November. We think that it has improved during the end of November and into December,” a weary sounding Jacobsen said.
According to figures provided by Salmon Scotland, mortalities in one site, Druimyeon Bay, operated by the Scottish Salmon Company, a subsidiary of Bakkafrost, have been as high as 66 per cent in October, while East Tarbert Bay, also in the Inner Hebrides, recorded a mortality rate of over 45 per cent for the same month.
“This is the issue that we are seeing in Scotland,” explained Jacobsen. “We have lost a lot of growth. And a lot of fish – and that impacts our ability to reach the volume that we had estimated and also, of course, it costs causes a loss of value. And that’s why we have the write down of our profits in Scotland in the fourth quarter. So that’s why we gave this update.”
A bumpy road
Jacobsen continued, “We said already – when we did the presentation of the third quarter in early November – that there would be a continuing impact into the fourth quarter. So, this is an update on that message in our presentation.”
“When we did the acquisition of the Scottish Salmon Company back in the end of 2019 we expected this would be a bumpy road. And it has it has really proven to be so,” Jacobsen admitted.
“However, we we think that the measures we are taking take on the plan that we we have for this bumpy road will eventually give a healthy operation in Scotland.”
‘It takes time’
“We are investing heavily in equipment to mitigate these impacts. So for Bakkafrost, we still think that the fundamentals for our investment in Scotland are present. We see a significant possibility for us with the Scottish region with the premium salmon we can produce there and with investments in infrastructure capabilities to handle the issues in Scotland and eventually this will pay off.”
Are these expensive problems to solve?
“Over the coming five years we are going to invest DKK 3 billion (£345 million) in the infrastructure in Scotland. We are already investing heavily. but It takes time to build the kinds of infrastructure needed. We will in 2022 see some of the impacts that we are doing the big impacts will be from 2023 and onwards,” concluded the Bakkafrost CEO.