All three segments delivered good results
Bakkafrost delivered a total operational EBIT of DKK 235 million in Q1 2015. This is an increase of 27%, compared with the operational EBIT in Q1 2014, which was DKK 186 million. Result after tax in Q1 2015 was DKK 132 million.
The total volumes harvested in Q1 2015 were 9,726 tonnes gutted weight, which is an increase of 5%, compared with 9,269 tonnes harvested in Q1 2014. The farming segment delivered an operational EBIT of DKK 195 million in Q1 2015. The value added product segment, which produced 4,525 tonnes in Q1 2015, made an operational EBIT of DKK 22 million. The fishmeal, oil and feed segment delivered an operational EBIT of DKK 55 million in Q1 2015.
Commenting on the result, CEO Regin Jacobsen said:
“We are satisfied with the good result in Q1 2015 and the positive development in all our three segments, which all delivered good results. Bakkafrost started producing feed with cleaned fish oil, and the first farming site got its ASC certification this quarter. These developments show that Bakkafrost continuously works to improve its operations. Bakkafrost is undertaking significant investments, which are proceeding well. Our new wellboat “Hans á Bakka” is expected to be delivered in June this year and will be in the Faroe Islands around two weeks later. The big construction at Glyvrar is proceeding according to plan, and the buildings are beginning to take shape.”
Bakkafrost released 2.2 million smolts in Q1 2015, which is in line with the company’s smolt release plan.
The catch of pelagic fish around the Faroe Islands has been good in Q1 2015. Havsbrún has purchased 75 thousand tonnes of raw material during the first three months in 2015.
Bakkafrost’s net interest bearing debt at the end of Q1 2015 was DKK 227 million, compared with DKK 233 million at year-end 2014. Bakkafrost had undrawn credit facilities of approximately DKK 971 million at the end of Q1 2015, and the equity ratio was 61%.
OUTLOOK
Market
The salmon market’s global demand growth has increased the last years due to high growth rate in emerging markets and a stable growth in other markets. A market balance seems to request a yearly supply growth around 9%. Global supply growth is expected to be limited in 2015 to around 5% and only 2-4% in 2016. Production capacity is close to full utilization and further expansion relates to high investments.
Farming
Bakkafrost expects to harvest 49,000-51,000 tonnes gutted weight in 2015. Bakkafrost’s forecast for smolt release in 2015 is 10.4 million pieces. The estimates for harvesting volumes and smolt releases is as always dependent on the biological situation.
Value added products (VAP)
Bakkafrost’s long-term strategy is to sell around 40-50% of the harvested volumes of salmon as value added products on fixed price contracts. The contracts last for 6 to 12 months. Bakkafrost has signed contracts covering around 80% of the VAP capacity for the rest of 2015.
Fish oil, -meal and feed (FOF)
The outlook for the production of fishmeal and fish oil has improved as the available raw material for the production has increased. The quotas for catching blue whiting in the North Atlantic have increased. With increased quotas, Bakkafrost is optimistic that the raw materials needed for our production of high quality salmon feed will be available.
Depending on the purchase from external customers, the sale of fish feed is expected to be 83,000-87,000 tonnes.
Investments
Bakkafrost has announced an investment plan for the period until 2017, latest updated in August 2014. The purpose of the investment plan is to continue to have one of the most costs efficient value chains in the farming industry, carry out organic growth, increase flexibility and reduce the biological risk to meet the future consumers’ trends and to be more end-customer orientated.
The total investments for the period 2014-2017 were announced to be DKK 1,370 million including maintenance CAPEX. Investments in 2015 are expected to be DKK 550 million.
Financial
Improved market balances in the world market for salmon products and costs effective production will likely improve the financial flexibility going forward. A high equity ratio with the Group’s bank financing and the issuance of bonds makes Bakkafrost’s financial situation strong. This enables Bakkafrost to carry out its investment plans to further focus on strengthening the Group, M&A’s, organic growth opportunities and fulfil its dividend policy in the future.
Contacts:
Regin Jacobsen, CEO of P/F Bakkafrost: +298 235001 (mobile)
Gunnar Nielsen, 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.
About Bakkafrost:
Bakkafrost is the largest salmon farmer in the Faroe Islands. 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. The Group operates licenses on 14 farming fjords. The Group has primary processing in Klaksvík and Kollafjørð and secondary processing (VAP) in Glyvrar and Fuglafjørður. The headquarter is located in Glyvrar, and the company has a total of 700 employees.
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