BAKKAFROST FIRST HALF RESULTS HIT BY PANDEMIC
Bakkafrost first half results hit by pandemic. The Bakkafrost Group delivered a total operating EBIT of DKK 181.9 million in Q2 2020. Total harvested volumes were 20.9 thousand tonnes gutted weight (tgw). Faroe Islands (FO): 12.9 tgw, Scotland (SCT): 7.9 tgw. The combined FO farming and VAP segments made an operational EBIT of DKK 134.4 million. The FO farming segment made an operational EBIT of DKK 85.8 million. The SCT farming segment made an operational EBIT of DKK 28.8 million. Volumes increased and thus had a positive effect on the operational EBIT. The VAP segment made an operational EBIT of DKK 48.6 million. The EBITDA for the FOF segment was DKK 49.9 million.
On the 8th of October 2019, Bakkafrost acquired majority of the Scottish Salmon Company (SSC). From this date, SSC is a part of the Bakkafrost Group and is consolidated into Bakkafrost’s accounts. Unless otherwise stated, all figures presented in this press release include SSC from this date on. SSC’s figures prior to this date are not included in the figures for the Group for the full year 2019 or in other comparative figures prior to this date.
The Group made a profit for Q2 2020 of DKK 471.7 million (DKK 188.6 million). For H1 2020, the profit was DKK 323.7 million (DKK 401.4 million). Total harvested volumes for Q2 2020 were 20,878 tonnes gutted weight, whereof 12,941 tgw were harvested in the Faroe Islands (12,609 tgw) and 7,937 tgw were harvested in Scotland. Total harvested volumes in H1 2020 were 38,813 tgw (26,316 tgw), whereof 23,608 tgw were harvested in the Faroe Islands (26,316 tgw) and 15,205 tgw were harvested in Scotland (n/a). In total, 5.8 million (3.6 million) smolts were transferred during Q2 2020: 2.9 million (3.6 million) in the Faroe Islands and 2.8 million (n/a) in Scotland. In H1 2020, 9.1 million (5.3 million) smolts were transferred: 5.2 million (5.3 million) in the Faroe Islands and 3.9 million (n/a) in Scotland.
Commenting on the result, CEO Regin Jacobsen said:
“H1 2020 has been severely affected by the Covid-19 pandemic. Together with increased transportation costs and currency movements, this has had a negative impact on our financial results. We are, however, pleased to have positive results in all segments: VAP, FOF and the farming segments in the Faroe Islands and Scotland. We are also grateful that we have been able to keep our employees safe during the pandemic and of having been able to maintain the supply of healthy and safe salmon products to our customers.
“In this quarter we are especially content with the strong results from our VAP segment which has produced higher volumes than ever before in order to serve the increased demand on Consumer Packed Goods. The flexibility in our integrated value chain has proven its value and demonstrated our ability to adapt quickly to changes in market dynamics.
“We are also pleased by the benefits that are now beginning to materialize in the operation in Scotland as well as from our large investment programme. The new hatchery at Strond is now in full operation delivering a substantive share of our required smolt volume in the Faroe Islands and with steady increase in average smolt size. The farming segment will greatly benefit from this improvement over the coming quarters. In Scotland, we have taken important steps to implement the strategy with the initiated expansion of the Applecross hatchery. Finally, our new biogas plant has commenced operation and will during the coming months start producing clean energy and contribute to achieving our ambitious carbon reduction target to halve our CO2-emission by 2030.
“Looking forward, we expect the Covid-19 pandemic to continue for some time, challenging the global market for salmon and making the outlook hard to predict. We believe, however, that the long-term outlook is still good as the fundamentals in the protein market have not changed.“
The combined FO farming and VAP segments made an operational EBIT of DKK 134.4 million (DKK 303.4 million) in Q2 2020. The operational EBIT per kg in Q2 2020 was DKK 10.38 (DKK 24.06), which corresponds to NOK 15.34 (NOK 31.31) for the combined FO farming and VAP segments. For H1 2020, the combined FO farming and VAP segments made an operational EBIT of DKK 326.5 million (DKK 534.5 million).
The FO farming segment made an operational EBIT of DKK 85.8 million (DKK 303.4 million) in Q2 2020. The harvested volumes were slightly higher, and the achieved prices were lower in Q2 2020, compared to Q2 2019. For H1 2020, the operational EBIT was DKK 288.7 million (DKK 533.2 million).
The SCT farming segment made an operational EBIT of DKK 28.8 million in Q2 2020. For H1 2020, the operational EBIT was DKK 58.5 million.
The VAP segment made an operational EBIT of DKK 48.6 million (DKK 0.0 million) for Q2 2020. For H1 2020, the operational EBIT was DKK 37.8 million (DKK 1.3 million).
The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 49.9 million (DKK 58.4 million) for Q2 2020, and the EBITDA margin was 18.6% (20.6%). The EBITDA was DKK 90.1 million in H1 2020 (DKK 123.6 million), corresponding to an EBITDA margin of 15.6% (21.8%).
During Q2 2020, Havsbrún sourced 122,512 tonnes (110,109 tonnes) of raw material, and in H1 2020, Havsbrún sourced 187,319 tonnes (225,639 tonnes) of raw material.
In Q2 2020, Bakkafrost’s full-time employees from 2019, still employed in Bakkafrost, have received bonus shares with the value of 2% of their salary in 2019. In total, Bakkafrost allocated 14,368 shares to its employees. The total allocation amounted to DKK 6.2 million and was based on the closing share price on the allocation day, 3 June 2020.
The net interest-bearing debt amounted to DKK 1,116 million at the end of Q2 2020, compared to DKK 1,019 million at year-end 2019. Undrawn credit facilities amounted to DKK 2,323 million at the end of Q2 2020.
The equity ratio was 69% at 30 June 2020, compared to 65% at the end of 2019.
Bakkafrost aims at giving the shareholders a competitive return on their investment, both through payments of dividends and by value growth of the equity through positive operations. The long-term goal of the Board of Directors is that 30-50% of earnings per share shall be paid out as dividend.
Bakkafrost’s financial position is strong with a solid balance sheet, a competitive operation and available credit facilities, but due to the uncertainty imposed by the Covid-19 pandemic in Q1 2020, the Board of Directors have previously decided to postpone the decision on dividend payment for 2019 until Bakkafrost’s H1 presentation on 25 August 2020, at which time the Board of Directors expected the level of uncertainty to have reduced. The Board of Directors have now concluded that the uncertainty is still high and have therefore decided not to propose payments of dividends for 2019.