Bakkafrost to increase production by more than 40 per cent

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Plans for massive investment in Scotland.

The Faroese salmon farming standard bearer is arranging a capital market day today, and the presentation material shows that Bakkafrost plans to invest DKK 6.2 billion  (€834 million) in the period 2022 and 2026. It will increase the company’s salmon production by more than 40 per cent.

This increase in production will be achieved through a combination of developing unused licenses and making better use of existing licenses by launching larger smolts.

A more robust framework
The pressure will primarily be on Scotland, which has been weaker than the rest of the industry for years.

A more robust framework for reducing the risk in seawater combined with a shorter seawater cycle is expected to be a game changer for biological performance and result in significant growth. Bakkafrost also plans to invest in improving processing plants to strengthen efficiency, productivity and quality and with a focus on improving the capabilities that support Bakkafrost’s overall brand strategy and to better meet the needs of the end-user market.

The company says the implementation of the investment plan will be transformative for its Scottish business and aims to become the most sustainable and profitable producer in Scotland, where it has underperformed in the past.

PHOTO: Ole Alexander Saue

Collaborator
Bakkafrost will use its ‘One Company’ approach in the implementation of the ambitious plan, and draw on experience, expertise and success from similar projects in the past.

The company is working with the Scottish authorities to continue the investment plan in Scotland to ensure sustainable growth.

Bakkafrost plans to continue the development of its efficient and well-invested value chain in the Faroe Islands, with a view to maintaining its strong biological results and facilitating planned growth over the next five years and beyond.

The investment plan is expected to be financed through a combination of operational cash flow and available financing. The company will maintain its dividend practice.

Proven
Bakkafrost will not take the lead in developing new production methods:

“The conventional salmon farming industry operates close to capacity. As a result, the industry will invest significant resources in the development of alternative farming methods and investment offshore. Common to these projects are far higher capital requirements compared to conventional salmon farming. Consequently, high-margin assumptions are required to achieve a
satisfactory return. This indicates a disciplined introduction of capacity from such projects. Bakkafrost’s value chain is well prepared to embark on such projects when the conventional capacity has been utilised and proven technology becomes available,” the presentation material states.

With limited capacity, it is expected these improvements will be brought about through conventional and alternative farming methods over the next five years. Meanwhile, Bakkafrost expects the tight market for its salmon products to continue.