Operational EBIT of DKK 206 million in third quarter
The Bakkafrost Group delivered a total operating EBIT of DKK 206 million in Q3 2015, compared with DKK 209 million in Q3 2014. Harvested volumes were 13 thousand tonnes gutted weight in Q3 2015. Result after tax in Q3 2015 was DKK 168 million.
The total volumes harvested in Q3 2015 were 12,982 tonnes gutted weight, which is an increase of 19%, compared with Q3 2014. The farming segment delivered an operational EBIT of DKK 183 million in Q3 2015. The VAP segment, which produced 3,745 tonnes in Q3 2015, made an operational EBIT of DKK 9 million. The FOF segment delivered an EBITDA of DKK 42 million in Q3 2015.
Commenting on the result, CEO Regin Jacobsen said:
“The margins fell in this quarter and relates mainly to increased costs. Although higher costs, all segments delivered positive results in the quarter. With the delivery of the live fish carrier “Hans á Bakka” in the third quarter, Bakkafrost made a significant step forward in Bakkafrost’s strategy to reduce biological risk and improve efficiency. The outlook for the market remains tight because of none expected supply growth in 2016.”
Bakkafrost released 2.8 million smolts in Q3 2015, which is in line with the company’s smolt release plan.
Havsbrún’s sourcing of raw material the first nine months of 2015 has been similar to the first nine months in 2014. Havsbrún has purchased 10 thousand tonnes of raw material in Q3 2015. Havsbrún’s purchase of raw material in the first nine months of 2015 amounts to 171 thousand tonnes.
The live fish carrier “Hans á Bakka” was delivered to Bakkafrost in Q3 2015. The capacity is 450 tonnes of live fish, and the ship is equipped with state of the art technology. The investment in “Hans á Bakka” will increase transport capacity and at the same time reduce biological risks. Following the delivery, finalising instalment of equipment and required tests were carried out in Q3 2015.
Bakkafrost’s net interest bearing debt at the end of Q3 2015 was DKK 182 million, compared with DKK 233 million at year-end 2014. Bakkafrost had undrawn credit facilities of approximately DKK 802 million at the end of Q3 2015, and the equity ratio was 63%.
OUTLOOK
Market
The global demand in the salmon market continues with strong growth rates. The markets are affected differently by the currency development during the year. Expected global supply growth in 2015 is around 4% and 0% in 2016. Production capacity is close to full utilization and further expansion relates to high investments.
Farming
Bakkafrost expects to harvest 50,000 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.
Bakkafrost expects to harvest 48,000 tonnes gutted weight in 2016 and expect to release 10.5 million pieces of smolt in 2016.
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 78% of the VAP capacity for the rest of 2015.
Fishmeal, -oil and feed (FOF)
The outlook for the production of fishmeal and fish oil is dependent on the availability of raw material. The quotas for catching blue whiting in the North Atlantic are expected to be reduced, and therefore the production of fishmeal and fish oil is most likely to reduce in volume in 2016 from relatively high volumes in 2015.
The major market for Havsbrún´s fish feed is the local Faroese market, including Bakkafrost’s internal use of fish feed.
Havsbrún’s sales of fish feed in 2015 is expected to be at 79,000 tonnes. Depending on the purchase from external customers, the sales of fish feed in 2016 is expected to be 80,000 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.
Please find enclosed the Company’s Q3 2015 report and presentation.
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, Strendur, Kollafjørður, and secondary processing (VAP) in Glyvrar and Fuglafjørður. The headquarter is located in Glyvrar, and the company has a total of around 700 employees.
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