Bakkafrost reports lower-than-expected salmon prices and shrinking margins for Q4 2024.
Bakkafrost, the Faroese salmon farmer, posted a decline in both revenue and profit for the fourth quarter of 2024, as weaker-than-expected salmon prices and a quieter-than-usual performance in its fishmeal and oil (FOF) division squeezed margins.
For the quarter, the company reported a total operational EBIT of DKK 280 million ($39.73 million), down from DKK 356 million ($50.63 million) in Q4 2023. The dip in earnings was largely attributed to lower market prices for salmon, compounded by reduced external sales of fishmeal and oil.
Segment Breakdown and Market Pressure
The company’s operations in the Faroe Islands saw revenues of DKK 1,184 million ($168.02 million), down from DKK 1,478 million ($208.83 million) year-on-year. Operational EBIT for the region also fell to DKK 310 million ($43.54 million) from DKK 461 million ($65.52 million) in the same quarter last year.
Meanwhile, Bakkafrost’s Scottish operations, which were impacted by a shift in production towards higher-quality smolt, posted a revenue increase to DKK 286 million ($40.03 million), compared to DKK 84 million ($11.75 million) in Q4 2023. However, the region still incurred an operational EBIT loss of DKK 31 million ($4.34 million), though an improvement from the loss of DKK 104 million ($14.56 million) the year prior.
Regin Jacobsen, CEO of Bakkafrost, commented on the results: “The Freshwater and Farming operations in the Faroe Islands had a strong development in this quarter. Biological performance remains robust, with solid growth, effective sea lice management, and harvesting of large fish. We are also pleased with the continued progress in our freshwater segment, which has set new production records for the second consecutive quarter of producing large, high-quality smolt. This improved efficiency is helping to reduce costs.”
Despite a strong full-year performance from the FOF segment, fourth-quarter earnings were hampered by a slowdown in fishmeal and oil sales, which fell to 41,919 tonnes, down from 53,552 tonnes in Q4 2023. The operational EBIT margin for the segment dropped significantly to 12% from 25% in the prior year.
Looking Ahead
Bakkafrost has projected a 5% increase in global salmon supply for 2025, with supply growth expected to rise by 4% in the first half of the year and 6% in the latter half. Despite the increase in supply, Jacobsen remains optimistic: “The market dynamics are changing with a larger share of high-quality fish expected to come to market this spring. This shift will alter the dynamics slightly, but Bakkafrost has the flexibility and adaptability to adjust its approach to these conditions.”
The company also confirmed that its de-risking strategy in Scotland will continue into 2025 as it seeks to further reduce mortality levels and optimize its farming operations.
Despite the challenges faced in Q4 2024, Bakkafrost maintains a solid balance sheet and a competitive operation. The Board of Directors has proposed a dividend of DKK 8.44 ($1.18) per share, which will be finalized at the Annual General Meeting on April 30, 2025.
