“Difficult market conditions” dampen Bakkafrost results

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Bakkafrost delivered an operational EBIT of EUR 31 million, after having harvested 12,234 tonnes of salmon in the last quarter of 2018.

“Difficult market conditions and limited market access for a period resulted in a weaker than expected result in the farming segment for the fourth quarter. We are pleased, however, to experience more activity in the VAP segment, due to increased contracts for our VAP products,” wrote CEO Regin Jacobsen.

Interruptions
The “limited market” is the fact that the Glyvrar – Bakkafrost’s main processing plant – was denied access to the lucrative Russian market in the last quarter. This contributed to an interruption in deliveries to other markets from the new Sudurøy plant due to the issuance of certificates to these markets.

“The market disruptions are more or less solved as volumes to VAP contracts now have increased, the certificates to the harvest factory in Suðuroy are in place, and access to the Russian market is expected shortly,” said Bakkafrost in a stock exchange announcement on Tuesday.

In total, Bakkafrost harvested 44,591 tonnes gutted weight in 2018. The company has harvest guidance volume of 54,500 tonnes of salmon for 2019.

Strong balance
The Faroese Parliament changed the revenue tax for farming operations in the Faroe Islands from 4.5% to 5.0% in December 2018. The change will be effective from 1 January 2019.

The Bakkafrost Board proposes a dividend of DKK 8.25 for the fiscal year 2018. The long-term goal of the Board of Directors is that 30-50% of earnings per share shall be paid out as dividend. The equity ratio was 70% at 31 December 2018, compared to 70% at the end of 2017.