a afrost sat sfie th esp te rop

THE Bakkafrost Group announced positive results for the second quarter of this year, although its value added products (VAP) section has struggled during the period.

The Bakkafrost group delivered a Q2 EBIT (earnings before interest and tax) of 307.1 million Danish kroners (DKK). This compares with DKK 303 million for the same period last year.

Harvest volumes were 13,000 tonnes gutted weight. The company transferred 1.9 million smolts in Q2 2016.

The farming segment made an operational EBIT of DKK 357.9 million for Q2 2016, which corresponds to DKK 34.47 per kg. The VAP segment made an operational EBIT of DKK -68.4 million for Q2 2016.

The high spot prices in Q2 2016 had a negative effect on the operational EBIT in the VAP segment. The combined farming and VAP segments made an operational EBIT of DKK 289.5 million for Q2 2016, which corresponds to NOK 27.88 per kg.

The FOF segment (fishmeal, oil and feed) made an operational EBITDA of DKK 45.4 million for Q2 2016.

CEO Regin Jacobsen said: ‘We are very satisfied with the result for Q2 2016. The salmon spot price has been record high in the quarter and the biological performance has been good.

‘The VAP segment has struggled, but we maintain our strategy to sell a share of our production as value added products.

‘The development in our fishmeal, fish oil and fish feed segment in the quarter was also good.

‘The five year investment plan was updated in June on our Capital Market Day, and the hatchery in Viðareiði is starting production at the moment, the new harvest plant has started operation, and the construction of the new hatchery in Strond has commenced.’

Market outlook

The global demand in the salmon market continues with strong growth rates. The market balance will be tighter in 2016, compared to 2015. Global supply of Atlantic salmon is expected to decrease by approximately four per cent in volume during 2016, compared to 2015. The decrease is expected to be eight to nine per cent in the second half of 2016. Production capacity is close to full utilisation and further expansion relates to high investments. Farming

The outlook for the farming segment is good. The estimates for harvesting volumes and smolt releases are, as always, dependent on the biological situation.

Bakkafrost has acquired the remaining outstanding shares in Faroe Farming, effective from July 1, 2016, a salmon farming company operating in the southern part of the Faroe Islands.

Faroe Farming holds three farming licences in Suðuroy, and the total harvested volumes for 2015 were 4,681 tonnes gutted weight, and the harvested volumes for H1 2016 were 2,054 tonnes gutted weight.

Faroe Farming, consolidated into Bakkafrost, expects to harvest 1,000 tonnes gutted weight in the second half of 2016.

Together with Bakkafrost’s unchanged expected harvest (excl. Faroe Farming) of 48,000 tonnes gutted weight, the total harvest for Bakkafrost Group in 2016 will be 49,000 tonnes gutted weight.

The number of smolts released is one key element of predicting Bakkafrost’s future production. Bakkafrost forecasts a release of 10.4 million smolts in 2016, compared with 11.3 million smolts released in 2015 and 10.4 million smolts released in 2014.

The biological situation is Bakkafrost’s most important risk area. The suspicion of possible pathogenic ISA virus in on of Bakkafrost’s farming sites on July 14, 2016, draws the attention to the importance of good animal welfare and biology to reduce the biological risk. Bakkafrost is focusing on the biological risk continuously and has made several new investments and procedures to diminish this risk.

Value added products

Bakkafrost has signed contracts covering around 79 per cent of the VAP capacity for the rest of 2016. This corresponds to around 39 per cent of the expected harvested volumes for the rest of 2016.