Bakkafrost issues profit warning for Q2 2023

Glyvrar, Faroe Islands-based Bakkafrost is warning its shareholders about lower earnings in the second quarter of 2023 due to low harvest volumes.

In a notice issued via the Euronext Oslo exchange, where its stock is traded, Bakkafrost warned its preliminary Q2 2023 results “indicate a lower-than-expected” earnings before interest and tax (EBIT) of DKK 353 million (USD 53.3 million, EUR 47.4 million). Its Q2 2022 EBIT was DKK 587 million (then USD 78.5 million, EUR 78.9 million), and its Q1 2021 EBIT was DKK 407 million (then USD 54.4 million, EUR 54.7 million).

“The main drivers for the results are the extraordinarily low harvest volumes in the Faroese farming segment and the reduced average weight of the harvested fish,” Bakkafrost CEO Regin Jacobsen said. “In addition, the Scottish farming segment has had lower harvest weights in Q2 compared to the previous quarter, primarily caused by biology-led harvest at some sites and early harvest at some sites to reduce biological risk ahead of Q3.”

Jacobsen acknowledged a falloff in salmon prices from their all-time highs also contributed to lower earnings.

“In general, price achievements for fresh salmon have reduced during the quarter,” Jacobsen said. “The low harvest volume in the Faroese farming segment harmed the cost of harvested fish as fixed costs were less diluted on the harvest volume. Also, exceptional mortality costs have been recorded in the quarter. In the Faroes, this amounted to around DKK 32 million [USD 4.8 million, EUR 4.3 million] and covered seawater as well as freshwater, where accident-driven mortality events occurred during the start-up of the new expansions of the Glyvradal and Norðtoftir hatcheries.”

An accident at Bakkafrost’s Applecross 4 hatchery expansion in Scotland also drove up mortalities, and that combined with viral issues at some of its marine farming sites in Scotland to cost the company DKK 43 million (USD 6.4 million, EUR 5.7 million).

Bakkafrost has revised its 2023 full-year harvest volume for the Faroe Islands to 63,000 MT head-on gutted (HOG), but has left its projection for its annual harvest in Scotland at 30,000 MT HOG.

Its full Q2 2023 report will be released on 22 August, 2023.

Bakkafrost posted its second-highest-ever quarterly EBIT in Q1 2023 at DKK 565 million (USD 83.2 million, EUR 75.9 million). The company has been making significant capital investments  as part of its “One Company” strategy.

Photo courtesy of Bakkafrost