STRONG Q3 RESULTS FOR BAKKAFROST
Strong Q3 results for Bakkafrost despite challenges. Faroese fish farmer and processor, The Bakkafrost Group, delivered a total operational EBIT of DKK 303.4 million in the third quarter of 2019.
Harvested volumes were 12.9 thousand tonnes gutted weight. The combined farming and value added processing (VAP) segments made an operational EBIT of DKK 257.3 million. The farming segment made an operational EBIT of DKK 231.5 million. The salmon spot prices decreased significantly in Q3 2019, compared to the previous quarter. The price decrease had a negative effect on the operational EBIT in the farming segment, while it had a positive effect on the operational EBIT in the VAP segment. The VAP segment made an operational EBIT of DKK 25.9 million. The EBITDA for the FOF segment was DKK 94.5 million.
The Group made a profit for Q3 2019 of DKK 180.9 million (DKK 355.9 million last year). For the first nine months of 2019, the profit was DKK 582.4 million (DKK 966.9 million last year).
Commenting on the result, CEO Regin Jacobsen said: “Despite 10% lower salmon spot prices during the third quarter for 2019, compared to the same quarter last year, Bakkafrost has delivered strong operational results this quarter. The average size of the harvested salmon has been exceptionally high, which has put us in a very good position to withstand the difficult market situation. The biological performance has been very good with high growth rates for the salmon. Sea lice and mortality rates have been amongst the lowest for many years. This is a result of committed and skilled employees and a strong effort on a continuous improvement of the biology and the welfare of the salmon.”
The total volumes harvested in Q3 2019 were 12,938 tonnes gutted weight (7,217 tgw). Total harvested volumes in the first nine months of 2019 were 39,254 tonnes gutted weight (32,356 tgw). The guidance for harvest in 2019 is maintained at 54,500 tonnes gutted weight.
2.4 million (3.3 million) smolts were transferred during Q3 2019. During the first nine months of 2019, 7.7 million (9.2 million) smolts were transferred. 0.8 million smolts – out of the 13.5 million smolts, which were expected to be released in 2019 – will be postponed for release in Q1 2020 in order to reduce the risk associated with smolt release during the coldest weeks of the year. Thus, the new expected smolt release for 2019 is 12.7 million smolts.
The combined farming and VAP segments made an operational EBIT of DKK 257.3 million (DKK 142.4 million) in Q3 2019. The operational EBIT per kg in Q3 2018 was DKK 19.89 (DKK 19.73), which corresponds to NOK 26.25 (NOK 25.34) for the combined farming and VAP segments. For the first nine months of 2019, the combined farming and VAP segments made an operational EBIT of DKK 791.8 million (DKK 735.5 million).
The farming segment made an operational EBIT of DKK 231.5 million (DKK 139.6 million) in Q3 2019. The harvested volumes were higher, but the achieved prices were lower in Q3 2019, compared to Q3 2018. For the first nine months of 2019, the operational EBIT was DKK 764.7 million (DKK 761.3 million).
The VAP segment made an operational EBIT of DKK 25.9 million (DKK 2.8 million) for Q3 2019. For the first nine months of 2019, the operational EBIT was DKK 27.1 million (DKK -25.8 million).
The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 94.5 million (DKK 41.4 million) for Q3 2019, and the EBITDA margin was 19.5% (11.7%). The EBITDA was DKK 218.1 million for the first nine months of 2019 (DKK 193.9 million), corresponding to an EBITDA margin of 20.8% (19.8%).
During Q3 2019, Havsbrún sourced 17,845 tonnes (7,496 tonnes) of raw material, and for the first nine months of 2019, Havsbrún sourced 243,484 tonnes (255,987 tonnes) of raw material.
On 25 September 2019, Bakkafrost signed a Share Purchase Agreement to acquire 68.6% of the outstanding shares in the Scottish Salmon Company (SSC) from Northern Link Ltd. The closing date is 8 October 2019. Following the signing of the Share Purchase Agreement Bakkafrost acquired additional 9.2% of the shares in SSC in Q3 2019.
SSC is a fully integrated salmon farming business operating exclusively in Scotland with 60 sites across the West Coast and Hebridean Islands. The company is engaged in nearly all stages of the value chain ensuring full traceability and total supply chain integrity. The current annual production capacity is 50,000 tonnes. SSC produced 29,913 tonnes gutted weight in 2018 and exported to 26 countries with a focus on North America and the Far East. SSC has developed a range of strong flagship brands, including Native Hebridean Salmon, Tartan Salmon Label Rouge and Lochlander Salmon. The company has over 600 employees.
Bakkafrost has chosen to increase the company’s share capital for the acquisition of SSC. The acquisition is therefore carried out without substantial increase in Bakkafrost’s external financing.
The net interest-bearing debt amounted to DKK -1,271.5 million, and thus positive, at the end of Q3 2019 (DKK 495.5 million at year-end 2018). Undrawn credit facilities amounted to DKK 1,481.0 million at the end of Q3 2019.