Bakkafrost releases its results for the second quarter of 2024.
"We are not content with the financial performance this quarter, largely due to the strike in the Faroes," said Bakkafrost CEO Regin Jacobsen, presenting the Faroese salmon farmer's results for the second quarter.
But it was not all bad news, he said: "Conversely, we are highly satisfied with our current operational position, particularly within our Faroese freshwater division, where both efficiency and production volume of large high-quality smolt are steadily improving."
"We are also pleased with the condition of the biomass in the Faroes and Scotland. Growth is robust; there are no sea lice problems in either location, and gill health in Scotland is well managed," Jacobsen added.
Bakkafrost delivered a total operational EBIT of DKK 388 million (EUR 52.11 million / USD 58.19 million) in Q2 2024, an increase from DKK 353 million (EUR 47.39 million / USD 52.90 million) in the same period last year.
However, the company's financial performance was hampered by a strike in the Faroe Islands, which delayed harvests and led to lower sales prices after the strike.
"The strike in the Faroes significantly impacted quarterly results, partly by delaying planned harvest to after the strike and past a substantial market price drop. As a result, we harvested 4,000 tonnes post-strike at much lower prices and lower than planned harvest volumes for the quarter."
Bakkafrost's Faroe Islands operations saw revenues increase to DKK 1,187 million (EUR 159.46 million / USD 178.17 million) from DKK 1,082 million in Q2 2023. Operational EBIT slightly decreased to DKK 275 million (EUR 36.92 million / USD 41.26 million), down from DKK 282 million.
Meanwhile, in Scotland, Bakkafrost reported a surge in revenues of DKK 880 million (EUR 118.24 million / USD 132.13 million), significantly up from DKK 587 million achieved during the same period last year. Operational EBIT also improved significantly, reaching DKK 113 million (EUR 15.17 million / USD 16.94 million) from DKK 71 million.
The Farming segments in both regions faced lower prices compared to Q2 2023, but higher volumes were achieved. In Q2 2024, the total combined harvest from the Faroe Islands and Scotland reached 21,592 tonnes gutted weight, up from 16,001 tonnes in the same period last year.
In its freshwater operations, Bakkafrost reported that in the Faroe Islands, 4.0 million smolts were released, up from 3.6 million in Q2 2023, while in Scotland, 1.5 million smolts were released, down from 3.1 million last year.
Bakkafrost faced a setback in its Faroe Islands operations at the end of May, when the ISA virus was detected in two pens at one of its farming sites. However, Jacobsen said the outbreak was dealt with successfully.
"Despite having to conduct an early and small harvest, we are very pleased with the effective containment of the outbreak, preventing further spread. This underscores the importance of robust farming practices and risk management procedures," Jacobsen said.
Meanwhile, in Scotland, where the company had previously faced significant biological problems, operations were running well, Jacobsen said.
"Our de-risking strategy for marine farming operations in Scotland has been effective, resulting in significantly fewer biological issues and lower mortality than in previous years," he explained.
"With 75% of the planned harvest for the year already completed in Scotland, we have mitigated the risk for Q3 as planned. The ramp-up at the Applecross hatchery in Scotland is progressing well after addressing cooling system issues identified in Q1 2024. We anticipate achieving an average smolt weight of over 200 grams in Scotland by Q4 2024," Jacobsen added.
Bakkafrost expects to harvest approximately 63,500 tonnes gutted weight in the Faroe Islands and 25,000 tonnes in Scotland in 2024.
"Looking ahead, the market appears softer compared to H1. To maintain a strong competitive position, we are focused on managing costs and adjusting capacity to our needs," the CEO said.
"Accordingly, in Scotland, we have initiated several cost-saving measures and capacity adjustments, including the closure of the processing facility at Marybank in July 2024."
Bakkafrost has also adjusted its investment priorities, particularly in Scotland, leading to a reduction in capital expenditure by around DKK 300 million in 2024 and DKK 500 million in 2025, compared to initial plans.
However, Jacobsen said the company maintains a strong financial position, supported by a EUR 700 million sustainability-linked credit facility, and indicated it will continue to pursue its dividend policy, with a payout of DKK 8.70 per share decided at the April 2024 Annual General Meeting.
