CHALLENGING FIRST QUARTER FOR BAKKAFROST
Challenging first quarter for Bakkafrost. The Bakkafrost Group delivered a total operating EBIT of DKK 248.1 million in Q1 2020. Harvested volumes for the Group were 17.9 thousand tonnes gutted weight, whereof 10.7 thousand tonnes were harvested in the Faroe Islands (FO) and 7.3 thousand tonnes in Scotland (SCT).
The combined Farming FO and VAP segments made an operational EBIT of DKK 192.1 million. The farming segment made an operational EBIT of DKK 202.9 million in the Faroe Islands (FO) and DKK 29.7 million in Scotland (SCT). Lower harvest volumes in the quarter had a negative effect on the operational EBIT. The VAP segment made an operational EBIT of DKK -10.8 million. The EBITDA for the FOF segment was DKK 40.2 million. (Figures in parenthesis refer to the same period last year unless otherwise specified)
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 Q1 2020 of DKK -148.0 million (DKK 212.8 million). The total volumes harvested in Q1 2020 were 17,935 tonnes gutted weight, whereof 10,667 tonnes were harvested in the Faroe Islands (13,707 tgw) and 7,268 tonnes in Scotland. In total, 3.3 million smolts were transferred during Q1 2020, whereof 2.3 million (1.7 million) were transferred in FO and 1.0 million were transferred in SCT.
Commenting on the result, CEO Regin Jacobsen said:
“Overall we are satisfied with the results from this challenging quarter. In times like these, we see the strength in our integrated value chain and in particular having significant production capacity and flexibility in our VAP segment. Swiftly, we have been able to shift volumes from the spot-oriented market towards the VAP segment for the retail market and hereby maintaining a high production.
“We are pleased that the integration of SSC into Bakkafrost is on track and of already seeing a positive development in the operation in Scotland; the tangible results, however, are not expected to materialize until late this year. Our staff in Scotland and the Faroe Islands are highly motivated and their cooperation is very good.
“The biological development is also good with strong growth in both the Faroe Islands and Scotland. The challenges this quarter have been: An unusually stormy January, which reduced the fishery of species, used as raw material by Havsbrún, hence reducing production – a severe storm in the end of February, causing a loss of around 1.2 million fish – and then the outbreak of the Covid-19 pandemic.
“Since February, Covid-19 has disrupted the salmon market resulting in a drastic drop in the salmon spot price and imposing logistical problems with air transport. Over a few weeks, the demand for salmon has changed in favour of products for the retail segment, but at great harm to the fresh-oriented HORECA segment.
“It will be interesting to see if the huge number of new consumers, buying salmon from the supermarkets, will be a part of an increased demand for salmon, when the HORECA segment re-opens during the next coming weeks and months.”
The combined FO farming and VAP segments made an operational EBIT of DKK 192.1 million (DKK 231.1 million) in Q1 2020. The operational EBIT per kg in Q1 2020 was DKK 18.01 (DKK 16.86), which corresponds to NOK 25.10 (NOK 21.99) for the combined FO farming and VAP segments.
The FO farming segment made an operational EBIT of DKK 202.9 million (DKK 229.7 million) in Q1 2020. The harvested volumes were lower, and the achieved prices were higher in Q1 2020, compared to Q1 2019. A severe storm that hit the Faroe Islands in late February, caused a loss due to mortality amounting to DKK 23.4 million.
The SCT farming segment made an operational EBIT of DKK 29.7 million in Q1 2020. The VAP segment made an operational EBIT of DKK -10.8 million (DKK 1.3 million) for Q1 2020. The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 40.2 million (DKK 65.3 million) for Q1 2020, and the EBITDA margin was 13.0% (23.0%). During Q1 2020, Havsbrún sourced 64,807 tonnes (115,530 tonnes) of raw material.
The Group was impacted by the significant market disruption from Covid-19 especially towards the end of the quarter.
The net interest-bearing debt amounted to DKK 988.5 million at the end of Q1 2020 (DKK 522.0 million). Undrawn credit facilities amounted to DKK 2,465.3 million at the end of Q1 2020. The equity ratio was 66% at 31 March 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. Due to the uncertainty imposed by the Covid-19 pandemic, the Board of Directors have decided by postpone the decision on dividend payment for 2019 until Bakkafrost’s H1 presentation on 25 August 2020, at which time the Board of Directors expect the level of uncertainty to have reduced.