CHALLENGING THIRD QUARTER FOR BAKKAFROST

Challenging third quarter for Bakkafrost. Bakkafrost Group made a profit for Q3 2021 of DKK 131.3 million (DKK 176.8 million). For the first nine months of 2021, the profit was DKK 967.2 million (DKK 500.5 million).

Commenting on the result, CEO Regin Jacobsen said:

“The results in this quarter have been weakened by several factors in Scotland and in the Faroe Islands. In the Faroes, we made a deliberate decision to advance harvest of the A72 Haraldsund farming site to regain synchronised production plans with the neighbouring site A-72 Viðareiði. This resulted in higher costs, lower harvest weights and price achievements in this quarter. This is an once-off and going forward we will benefit from having the sites synchronised with better control of biological risks and enhanced operational efficiency.

“The results have also been negatively affected by delays in the installation of new delousing equipment on M/S Martin, which is our main delousing farming supply vessel in the Faroes. These delays were in part caused by Covid-related supply issues and caused loss of precious time and momentum in our preventive delousing operation. In turn, this has led to higher mortalities in this quarter.

“In Scotland we have had significant biological challenges at some of our farming sites where the fish had reduced gill health. At the end of the quarter, sudden biological issues occurred, such as blooms of micro-jellyfish, which caused significant mortalities. It was to some relief that we in September could deploy our new farming supply vessel, Bakkanes, into operation in Scotland to do treatments.

“As we progress further with our planned investments in Scotland, the biological risk will be reduced with more preventive and treatment vessel capacity to protect gill health of the fish. Already in 2022, we will have more freshwater treatment capacity available and once our new hatcheries will be completed and produce large smolt this will be game-changing for the operation. The improvements will be gradual, and it will take some years to achieve the transformation, we are planning for.

Regarding the market, we have seen a further normalisation after the Covid-19 caused disruption.

“Compared to the same quarter last year, the global supply increased around 6% in this quarter, prices have increased 14% and Bakkafrost has increased the sale to the foodservice industry to 65% of the harvested volume in the Faroe Islands, much in line with our strategy.

“On the Capital Markets Day 14-15 September 2021, we announced our 6.2bn DKK investment plan for 2022-2026. The main purpose of this is to reduce risk, transform the operation in Scotland and to ensure sustainable growth in the Faroe Islands and Scotland. In addition, our investment plan will create jobs in rural areas in the Faroes and in Scotland.”

“Total harvested volumes for Q3 2021 were 21,851 tonnes gutted weight. FO: 14,937 tgw (11,135 tgw), SCT: 6,914 tgw (10,476). Total harvested volumes in the first nine months of 2021 were 71,075 tgw (60,424 tgw). FO: 46,523 tgw (34,743 tgw), SCT: 24,550 tgw (25,681 tgw).

In total, 7.0 million (6.2 million) smolts were transferred during Q3 2021. FO: 3.8 million (3.6 million), SCT: 3.2 million (2.6 million). In the first nine months 2021, 16.2 million (15.2 million) smolts were transferred. FO: 9.3 million (8.7 million), SCT 7.0 million (6.5 million).

“The combined FO farming and VAP segments made an operational EBIT of DKK 146.2 million (DKK 118.4 million) in Q3 2021. The operational EBIT per kg in Q3 2021 was DKK 9.79 (DKK 10.63), which corresponds to NOK 13.59 (NOK 15.24) for the combined FO farming and VAP segments. For the first nine months of 2021, the combined FO farming and VAP segments made an operational EBIT of DKK 712.9 million (DKK 444.9 million).

“The FO farming segment made an operational EBIT of DKK 135.1 million (DKK 96.6 million) in Q3 2021. The harvested volumes were higher, and the achieved prices were higher in Q3 2021, compared to Q3 2020. For the first nine months of 2021, the operational EBIT was DKK 621.5 million (DKK 385.3 million).

“The SCT farming segment made an operational EBIT of DKK -81.3 million (DKK -28.4 million) in Q3 2021. Costs of DKK 68.6 million relate to incident-based mortality in Q3 2021. For the first nine months of 2021, the operational EBIT was DKK -35.7 million (DKK 30.1 million).

“The VAP segment made an operational EBIT of DKK 11.1 million (DKK 21.8 million) for Q3 2021. For the first nine months of 2021, the operational EBIT was DKK 91.4 million (DKK 59.6 million).

“The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 111.2 million (DKK 69.5 million) for Q3 2021, and the EBITDA margin was 20.0% (14.4%). The EBITDA was DKK 216.9 million (DKK 159.6 million) for the first nine months of 2021, corresponding to an EBITDA margin of 17.7% (15.1%).

During Q3 2021, Havsbrún sourced 17,224 tonnes (24,101 tonnes) of raw material, and in the first nine months of 2021, Havsbrún sourced 125,060 tonnes (211,420 tonnes) of raw material.

The Group has been impacted by the market disruption from Covid-19 from late Q1 2020.

The net interest-bearing debt amounted to DKK 1,986 million at the end of Q3 2021, compared to DKK 1,753 million at year-end 2020. Undrawn credit facilities amounted to DKK 1,439 million at the end of Q3 2021.

“The equity ratio was 67% on 30 September 2021, compared to 66% at the end of 2020.