Q3 EBIT close to quartered but revenue up for Bakkafrost

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Faroese salmon farmer and Scottish Salmon Company owner says larger smolt strategy will be a “game-changer”.

In a statement on the Oslo Stock Exchange, Bakkafrost posted its Q3 results. Operational EBIT was down EUR 14 million, compared to EUR 40 million the period before. Q3 revenue was EUR 150 million, up from EUR 133 million last year.

In 2019, Bakkafrost acquired the majority of the Scottish Salmon Company, which is now consolidated into the Faroese company’s accounts. It said that a large-smolt strategy will be a “game-changer” for the farming operation in Scotland and that it plans in investing in three large hatcheries in the coming years to become self-sufficient with large smolts.

“During this quarter, the global salmon market has again been affected by the Covid-19 pandemic, putting pressure on the salmon industry and affecting the financial returns across the industry negatively. Throughout the third quarter, we have, however, been able to maintain a steady supply to our customers. In the VAP segment, the supply has been higher than in a normal third quarter due to a strongly increased demand from our retail customers in Europe and the US. The sales to Russia have picked up again as well in this quarter,” wrote CEO Regin Jacobsen.

“The biology in the Faroe Islands has performed strongly, and the harvested fish has had a high quality. This is partly a result of our investments in our ability to produce larger smolts. Our investments in increased hatchery capacity – latest with the completion of the Strond hatchery – has enabled us to increase the average smolt size significantly, and this increase will continue as we have now commenced the expansion of the hatcheries at Norðtoftir and Glyvradalur. In 2022, we expect to reach our target average smolt size of 500g,” he added.

Bakkafrost’s expected harvest volume in 2020 in the Faroe Islands is 50,000 tonnes, while the expected harvest in Scotland is 39,000 tonnes. The company will increase harvest volumes of salmon in 2021 (106,500 tonnes combined), compared with 2020 (89,000 tonnes).

The salmon farmer’s investment program for the period from 2020 to 2022 in the Faroe Islands, will amount to around EUR 241 million, including maintenance CAPEX, and will “reinforce Bakkafrost’s integrated business model and ensure a capacity across the value chain to be able to produce 100,000 tonnes gutted weight of salmon in the Faroe Islands”.

“The aim of the investment program is to minimise the biological risk, increase efficiency, and create sustainable organic growth. Bakkafrost’s focus on producing larger smolts plays a key role in achieving this goal,” it added.