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During the period, the company achieved earnings before interest and taxes (EBIT) of DKK 353 million (EUR 47.4 million/USD 5.4 million), significantly lower than the previous year’s DKK 587 million (EUR 78.8 million/USD 85.5 million). Surprisingly, net profit was DKK -123 million, in contrast to the DKK 845 million previously achieved. But also figures that go along with the company’s plans, as Regin Jacobsen, the CEO, said: “overall, we are satisfied with this quarter’s results.”

Moreover, these results have been achieved in a complex context. The harvest volume of salmon in the Faroe Islands was low due to the planned load for 2023 and the lower average weights of the fish.

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Different segments have different performances

One of the most relevant parts of Bakkafrost is its different segments, as each has performed differently. Ocean fish farming (FO) and the production of value-added products (VAP) together generated an operating EBIT of DKK 216 million (EUR 29 million/ USD 31.5 million). Apart from them, there is also a third sector of fishmeal, fish oil, and fish feed (FOF), for which Jacobsen explained that in one of the most successful fields: “The first half of 2023 has been record-breaking with record supply leading to record fishmeal and fish oil production. Fishmeal and fish oil prices are also at record highs.”

First, the agriculture FO segment earned DKK 242 million (EUR 32.5 million /USD 35.3 million) in EBIT, while the agriculture SCT segment earned DKK 71 million (EUR 9.5 million/USD 10.3 million). However, the VAP segment performed less impressively, with an operating EBIT of DKK -26 million (EUR -3.5 million/USD -3.8 million). In addition, the FOF segment achieved an EBITDA of DKK 128 million (EUR 17.8/USD 18.7 million).

An increase in biomass, but problems in Scotland

Jacobsen also highlighted an important milestone: the increase in biomass in the Faroe Islands for the first time in 12 years. This promises a future with bigger and healthier salmon. However, in Scotland, the situation was more challenging due to environmental problems affecting fish mortality.

The biomass is healthy, and we expect an increasing average weight of harvested fish going forward.

The farming operation in Scotland performed well in the first five months of 2023, but towards the end of Q2, mortality levels increased due to environmental challenges. This development has continued into Q3 and can lead to lower harvest volumes in Scotland for 2023 than anticipated. We follow the situation closely and evaluate a range of risk-mitigating measures,” said Jacobsen.

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In particular, the company’s approach involves shifting towards cultivating larger smolts in Scotland to help mitigate risks. Furthermore, the company revealed its intention to broaden its activities and unveiled investment blueprints for 2024 to 2028. These plans encompass substantial financial commitments aimed at bolstering its operations.

Financing and market outlook

In financial terms, the company reports its net debt, available lines of credit, and dividends paid to shareholders. It also notes that its financial position is solid.

In the market outlook, a marginal increase in salmon supply is mentioned, as well as changes in prices. Concretely, their research points to moderate growth in the global salmon supply.

About Bakkafrost

Bakkafrost, the largest salmon farmer in the Faroe Islands and the second-largest in Scotland. The company is a fully integrated, managing the production process from feed creation to smolt, farming, value-added processing, and sales. With operations spanning the Faroe Islands, Scotland, and Denmark, it encompasses fishmeal, fish oil, and salmon feed production, etc. This vertically integrated approach allows Bakkafrost to maintain control and sustainability throughout its operations. Additionally, the company is committed to environmental responsibility, demonstrated by its investment in a biogas plant in the Faroe Islands.

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