The Bakkafrost Group delivered a total operating EBIT of DKK 223.5 million in Q1
2021. Total harvested volumes were 21.0 thousand tonnes gutted weight (tgw).
Faroe Islands (FO): 14.0 tgw, Scotland (SCT): 7.0 tgw. The combined FO farming
and VAP segments made an operational EBIT of DKK 218.3 million. The FO farming
segment made an operational EBIT of DKK 143.3 million. The SCT farming segment
made an operational EBIT of DKK -6.2 million. The VAP segment made an
operational EBIT of DKK 75.0 million. The EBITDA for the FOF segment was DKK
The Group made a profit for Q1 2021 of DKK 407.7 million (DKK -148.0 million).
Commenting on the result, CEO Regin Jacobsen said:
"Overall, we are satisfied with the results from this quarter. The salmon market
has been severely hampered by the Covid-19 pandemic, but during this quarter we
have also seen clear signs of improvements in the market. The global supply of
salmon in this quarter increased by nearly 16%, compared to the first quarter
last year. Despite such increase in supply, salmon prices increased during the
quarter. The demand for salmon has been very strong in the retail segment and
during this quarter we have also seen demand from the food service segment
picking up again. We expect this positive development to continue as Covid-19
mass vaccination progresses in the key markets for salmon. All in all, the
salmon market outlook is good for the rest of 2021 as the global supply is
expected to decrease somewhat, compared to the same period last year.
We are especially pleased with the strong results from the VAP segment. Once
again, we have seen the benefit of having a flexible value chain which is of
great importance to us to maintain our competitive position.
The farming segment in the Faroe Islands has performed well and the biology has
been strong with good growth and low feed conversion factor. Quarter by quarter
our average smolt size increases which also was the case in this quarter. In
Scotland, the farming performance is gradually improving, and we expect to see
some increase in average smolt size by the end of this year.
Our level of activity has been high in the first quarter of 2021. This applies
to our production as well as to our ongoing investment projects in the Faroe
Islands and Scotland. This creates indirect activities and jobs in the local
communities where we operate and prefer to source from. The importance of this
has been especially high during the Covid-19 pandemic. In this quarter alone,
our sourcing from local suppliers in the Faroe Islands amounted to DKK 298
Total harvested volumes for Q1 2021 were 21,027 tonnes gutted weight. FO: 14,025
tgw (10,667 tgw), SCT: 7,002 tgw (7,268).
In total, 4.0 million (3.3 million) smolts were transferred during Q1 2021. FO:
2.3 million (2.3 million), SCT: 1.6 million (1.0 million).
The combined FO farming and VAP segments made an operational EBIT of DKK 218.3
million (DKK 192.1 million) in Q1 2021. The operational EBIT per kg in Q1 2021
was DKK 15.56 (DKK 18.01), which corresponds to NOK 21.48 (NOK 25.10) for the
combined FO farming and VAP segments.
The FO farming segment made an operational EBIT of DKK 143.3 million (DKK 202.9
million) in Q1 2021. The harvested volumes were higher, and the achieved prices
were lower in Q1 2021, compared to Q1 2020.
The SCT farming segment made an operational EBIT of DKK -6.2 million (DKK 29.7
million) in Q1 2021. Costs of DKK 8 million relate to incident-based mortality
in Q1 2021.
The VAP segment made an operational EBIT of DKK 75.0 million (DKK -10.8 million)
for Q1 2021.
The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 48.3 million (DKK
40.2 million) for Q1 2021, and the EBITDA margin was 15.0% (13.0%).
During Q1 2021, Havsbrún sourced 48,547 tonnes (64,807 tonnes) of raw material.
The Group has been impacted by the market disruption from Covid-19 from late Q1
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. The financial position of Bakkafrost is
strong with a solid balance sheet, a competitive operation and available credit
facilities. The Annual General Meeting, convened on 9 April 2021, decided to pay
out a dividend of DKK 3.65, corresponding to NOK 4.96 per share. The total
dividend of DKK 215.9 million (NOK 293.3 million) was paid out on 30 April 2021.
The net interest-bearing debt amounted to DKK 1,938.8 million at the end of Q1
2021, compared to DKK 1,752.8 million at year-end 2020. Undrawn credit
facilities amounted to DKK 1,487 million at the end of Q1 2021.
The equity ratio was 68% at 31 March 2021, compared to 66% at the end of 2020.
The global harvest of Atlantic salmon was 14.4% higher in Q1 2021, compared to
Q1 2020, according to the latest estimate from Kontali Analyse. Despite
increased supply and continued market disruption caused by the Covid-19
pandemic, the market has been strong and able to absorb the increase supply and
with higher prices towards the end of the quarter.
Looking forward the market dynamics will still be affected by the Covid-19
situation. However, market conditions have improved during this quarter, and
further improvement is expected as Covid-19 mass-vaccination progresses in key
Supply is shrinking short term. In Q2 2021, the global harvest growth of
Atlantic salmon is expected to be negative with 1-2%, compared to Q2 2020. In
second half of 2021 there will be no growth in supply, compared to second half
of 2020. Overall, the market supply of salmon in 2021 is expected to increase
around 5%, compared to 2020.
Bakkafrost operates in the main salmon markets, Europe, USA, the Far East and
Russia. The Covid-19 pandemic has caused global market disruptions and a shift
from foodservice to retail. These changes will remain for some time, however
some normalisation of the market situation is expected during 2021. Due to our
highly flexible value chain, Bakkafrost is well positioned to adapt to these
changes and maintains a strong focus on ensuring a well-balanced flow to the
different markets to increase diversification and mitigate the market risk.
Farming Overall, the biological performance of the harvested fish in the Faroe
Islands has been strong during Q1 2021. The growth has been strong with very low
feed conversion ratio and the quality of the harvested fish has been good.
The average size of transferred smolt continues to increase in the Faroe
Islands, and Bakkafrost is well on track in pursuing the large-smolt strategy.
In Q1 2021, the average weight of the transferred smolt was 382g (309g in Q1
2020) and is expected to increase to around 400g in 2021 and 500g in 2022. The
main driver behind this development is the massively increased production
capacity delivered by the Strond hatchery which is in full operation producing
large and high-quality smolts. To add further capacity, the existing hatcheries
at Norðtoftir and Glyvradalur are being expanded. This work is well under way
and the increased production output will be available already in 2022, enabling
Bakkafrost to produce 20 million smolts of 500g in the Faroe Islands.
The gradual improvement of the farming operation in Scotland is continuing.
Several investments are made in the marine farming operation, however the main
priority is on the planned expansion of freshwater capacity. This will be
achieved with the construction of 3 large hatcheries, based on the same template
used in the Faroe Islands. This will enable implementation of the same large
-smolt strategy as pursued in the Faroe Island. The effect on the farming
operation in Scotland will be gradual over the next years. Once fully
implemented, the large-smolt strategy will be a game changer for the farming
operation. The Applecross hatchery is one of the 3 future hatcheries and
expansion of this hatchery is done in phases. One expansion phase will be
complete this summer which will bring additional capacity and improved RAS
Bakkafrost focuses on reducing biological risk continuously and has over the
past years made significant investments to diminish this risk, but also to
improve efficiency and ensures sustainable growth. The large-smolt strategy
occupies a central role in this in the Faroe Islands as well as in Scotland.
Bakkafrost expects to release around 14.5 million smolts in 2021 in the Faroe
Islands, compared to 14.3 million smolts in 2020, 12.7 million smolts in 2019
and 12.6 million smolts in 2018. The smolt release in Scotland is expected to be
11.0 million smolts in 2021, compared to 10.4 million smolts in 2020, 12.4
million smolts in 2019 and 8.6 million smolts in 2018. The number and average
weight of smolts released are key elements production of predicting Bakkafrost’s
Bakkafrost’s harvest volumes for 2021 in the Faroe Islands are expected to be
66,000 tonnes gutted weight and 40,000 tonnes gutted weight in Scotland. Hence
the total harvest volume is expected to be 106,000 tonnes gutted weight,
compared with 85,686 tonnes harvested in 2020.
The estimates for harvest volumes and smolt releases in both geographies are
dependent on the biological development.
VAP (Value Added Products)
Bakkafrost has made large investments in building a highly flexible value chain
which includes a state-of-the-art VAP factory with high capacity. This enables
Bakkafrost to adapt well to the rapidly changing market situations, which is a
great advantage during market disruptions as the one seen during the Covid-19
pandemic. Due to the flexibility and large capacity of the VAP factory,
Bakkafrost has been able to meet the significantly increased demand from the
retail segment by redirecting volumes into the VAP segment.
For 2021 Bakkafrost has signed contracts covering around 28% of the expected
harvest volumes in the Faroe Islands and Scotland combined. Bakkafrost’s long
-term strategy is to sell around 40% of the harvested volumes of salmon as VAP
products at contracts.
The contracts are at fixed prices, based on the salmon forward prices at the
time they are agreed and the expectations for the salmon spot price for the
contract period. The contracts last for 6 to 12 months.
FOF (Fishmeal, oil and feed)
The outlook for production of fishmeal and fish oil is dependent on the
availability of raw material.
The ICES 2021 recommendation for blue whiting is 929 thousand tonnes, which is a
20% reduction from the recommendation for 2020. As of 30. December 2020 the
Marine Stewardship Council (MSC) has suspended the certification of all Atlanto
-Scandian blue whiting. During 2020, Bakkafrost has built up inventory of
certified fish meal to ensure continued ASC-certification of the Faroese farming
sites in 2021.
Bakkafrost expects a decrease in production volumes of fishmeal and fish oil in
2021, compared to 2020.
Havsbrún’s sales of fish feed for 2021 is expected to be 120,000 tonnes,
depending on external sales.
The major market for Havsbrún´s fish feed is the local Faroese market, including
Bakkafrost FO’s internal use of fish feed, and the feed used in the Scottish
Bakkafrost’s investment programme for the period from 2020 to 2022 in the Faroe
Islands, will amount to around DKK 1.8 billion, including maintenance capex, and
will reinforce Bakkafrost’s integrated business model and ensure a capacity
across the value chain to be able to produce 100,000 tonnes gutted weight of
salmon in the Faroe Islands. The aim of the investment programme is to minimize
the biological risk, increase efficiency and create sustainable organic growth.
Bakkafrost’s focus on producing larger smolts plays a key role in achieving this
All in all, Bakkafrost is on track with the investment programme. The hatchery
at Strond is finalized, and the expansion of the hatcheries at Norðtoftir and
Glyvradalur are well underway and one of the planned expansion phases of the
hatchery at Applecross will be finalized during this summer. As these expansions
are made to existing hatcheries in operation, the added capacity will
materialize in increased output sooner, compared to if they were greenfield
projects. Hence the increased production from these hatcheries will be available
In Q2 2020, Bakkafrost commissioned a new 7,000 m3 well boat with hybrid
technology to reduce the carbon emission and ensure optimal energy consumption.
The vessel will be delivered in H1 2022 and will play an important role in
Bakkafrost’s large-smolt strategy and plans to grow beyond 100,000 tonnes in the
Faroe Islands with offshore farming, as well as adding freshwater treatment
Bakkafrost’s recently finished Biogas plant is an important stepping-stone on
Bakkafrost’s sustainable growth path, as it delivers an efficient and
sustainable solution to waste management. By converting the growing biological
waste from the increasing operation into clean energy, the biogas plant alone is
expected to save the environment from 11,000 tonnes of CO\2\ per year. The
Biogas plant is now operational, supplying electricity into the Faroese
electricity grid as well as providing heating for the residents in Tórshavn, the
capital of the Faroe Islands.
In addition to the planned investments in the value chain in the Faroe Islands,
Bakkafrost expects to make investments of around DKK 350-400 million per year
for 2020-2024 in the Scottish operation. A significant part of this will be
invested in building 3 large hatcheries to increase smolt capacity and become
self-sufficient with large smolt. The first of these hatcheries is the
Applecross hatchery. Other suitable sites for the next 2 large hatcheries are
Investments have also been made in expansion of the harvest capacity in Scotland
to increase the flexibility of the operation and accommodate the increased
harvest volumes expected in coming years.
Bakkafrost has announced that a Capital Market Day will be held on 14-15
September 2021, where more details on the investment plan for the Faroe Islands
and Scotland will be presented.
Despite the uncertainties imposed by the Covid-19 pandemic, long term market
balances in the world market for salmon products will most likely remain
favourable for Bakkafrost. Bakkafrost has a long value chain and a cost
-efficient production of high-quality salmon products and will likely maintain
the financial flexibility going forward.
During Q4 2019, Bakkafrost refinanced its bank facilities amounting to 352
million EUR with a further accordion option of 150 mEUR. In addition, bank
facilities amounting to 100 million GBP were ensured to refinance The Scottish
Salmon Company. In 2020 the two facilities were merged into one new EUR 463
million facility agreement (plus 150 million accordion option)
A high equity ratio together with Bakkafrost’s bank financing, makes
Bakkafrost’s financial situation strong. This enables Bakkafrost to carry out
its investment plans in the Faroe Islands as well as in Scotland, hereby
strengthening the Group, enabling M&A’s and organic growth opportunities as well
as to fulfil its unchanged dividend policy in the future.
Please find the Company’s Q1 2021 report and the Q1 2021 presentation enclosed.
Regin Jacobsen, CEO of P/F Bakkafrost: +298 235001 (mobile)
· Høgni Dahl Jakobsen, CFO of P/F Bakkafrost: +298 235060 (mobile)
This information is subject of the disclosure requirements pursuant to section 5
-12 of the Norwegian Securities Trading Act.
Bakkafrost is the largest salmon farmer in the Faroe Islands and the second
largest salmon farmer in Scotland. The Group is fully integrated from feed
production to smolt, farming, VAP and sales. The Group has production of
fishmeal, fish oil and salmon feed in Fuglafjørður (Faroe Islands). The Group
has primary processing in Glyvrar and Vágur (Faroe Islands), and secondary
processing (VAP) in Glyvrar (Faroe Islands). The Group operates sea farming in
Norðoyggjar, Eysturoy, Streymoy and Suðuroy (Faroe Islands) and in Scotland. The
Group has broodstock operations in Streymoy and Sandoy (Faroe Islands) and in
Scotland. The Group has a biogas plant in Streymoy (Faroe Islands). The
headquarter is located in Glyvrar (Faroe Islands) and has sales and
administration offices in Grimsby (UK), Edinburgh (Scotland) and in New Jersey
(US). The Bakkafrost Group has 1,699 employees (full-time equivalents).
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