The Bakkafrost Group delivered a total operating EBIT of DKK 88.5 million in Q4
2020. Total harvested volumes were 25.3 thousand tonnes gutted weight (tgw).
Faroe Islands (FO): 16.0 tgw, Scotland (SCT): 9.3 tgw. The combined FO farming
and VAP segments made an operational EBIT of DKK 142.6 million. The SCT farming
segment made an operational EBIT of DKK -54.1 million. The EBITDA for the FOF
segment was DKK 48.1 million.
The Group made a loss for Q4 2020 of DKK -37.7 million (DKK 219.5 million). For
2020, the profit was DKK 462.8 million (DKK 801.9 million).
Commenting on the result, CEO Regin Jacobsen said:
"This has been yet another quarter marked by the Covid-19 pandemic which has
depressed the global market for salmon. The negative effects of the pandemic on
the salmon market continued during this quarter when many countries experienced
their second wave of Covid-19. This has been challenging to our customers as
well as to intercontinental logistics. Especially the food service sector has
been depressed while retail has developed strongly. Again, during this quarter
we have benefited from our flexible value chain and diverted larger harvest
volumes into our VAP segment, producing high-quality retail products. Despite
the challenges caused by the Covid-19 pandemic, we have been able to maintain a
high production during the whole of 2020, including Q4. Under such challenging
market conditions, it is also positive that the industry - including Bakkafrost
- has demonstrated financial resilience.
Our farming operation in the Faroe Islands has been strong in this quarter and
the implementation of our large-smolt strategy is progressing above expectation.
We are pleased to have announced our expected harvest volume target from 2021
which shows that our large investments past years are now beginning to
materialise in growth as well as biological risk reduction.
In Scotland, the farming operation has been challenging in this quarter and
during second half of the year. Historically, this has been a recurring pattern
which we expect to be able to relieve going forward. We have learnt a lot during
2020 and have already made many improvements in the farming operation. However,
the real game-changer will be when we have implemented our large-smolt strategy
in Scotland. We are still firm in our belief that we will succeed in this
turnaround of the operation in Scotland and look forward sharing more
information about this on our Capital Markets Day 14-15[th] September 2021.
All in all, the global salmon market - measured in volume - has grown during the
fourth quarter. The growth has been especially strong in the US and EU. We are
hopeful about this development as this could contribute to a stronger market
with even more consumers having an appetite for salmon, once the pandemic is
behind us. With the vaccination progress that is being made in many countries,
we expect that the salmon market will improve significantly during 2021."
Total harvested volumes for Q4 2020 were 25,262 tonnes gutted weight. FO: 15,957
tgw (17,930 tgw), SCT: 9,305 tgw (7,925). Total harvested volumes in 2020 were
85,686 tgw (65,109 tgw). FO: 50,700 tgw (57,184 tgw), SCT: 34,986 tgw (7,925).
In total, 9.4 million (10.7 million) smolts were transferred during Q4 2020. FO:
5.5 million (5.0 million), SCT: 3.9 million (5.7). For 2020, 24.6 million (18.3
million) smolts were transferred. FO: 14.3 million (12.7 million), SCT 10.3
The combined FO farming and VAP segments made an operational EBIT of DKK 142.6
million (DKK 374.9 million) in Q4 2020. The operational EBIT per kg in Q4 2020
was DKK 8.94 (DKK 20.91), which corresponds to NOK 12.92 (NOK 28.25) for the
combined FO farming and VAP segments. For 2020, the combined FO farming and VAP
segments made an operational EBIT of DKK 587.5 million (DKK 1,166.7 million).
The FO farming segment made an operational EBIT of DKK 62.5 million (DKK 338.3
million) in Q4 2020. The harvested volumes were lower, and the achieved prices
were lower in Q4 2020, compared to Q4 2019. For 2020, the operational EBIT was
DKK 447.8 million (DKK 1,103.0 million).
The SCT farming segment made an operational EBIT of DKK -54.1 million (DKK 18.1
million) in Q4 2020. For 2020, the operational EBIT was DKK -24.0 million (DKK
18.1 million). Costs of DKK 39 million relate to incident-based mortality in Q4
The VAP segment made an operational EBIT of DKK 80.1 million (DKK 36.6 million)
for Q4 2020. For 2020, the operational EBIT was DKK 139.7 million (DKK 63.7
The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 48.1 million (DKK
57.7 million) for Q4 2020, and the EBITDA margin was 13.4% (17.1%). The EBITDA
was DKK 207.7 million for 2020 (DKK 275.8 million), corresponding to an EBITDA
margin of 14.6% (19.9%).
During Q4 2020, Havsbrún sourced 71,887 tonnes (35,180 tonnes) of raw material,
and in 2020, Havsbrún sourced 283,307 tonnes (278,664 tonnes) of raw material.
The Group has been impacted by the market disruption from Covid-19 from late Q1
The net interest-bearing debt amounted to DKK 1,752.8 million at the end of Q4
2020, compared to DKK 1,018.7 million at year-end 2019. Undrawn credit
facilities amounted to DKK 1,677 million at the end of Q4 2020.
The long-term goal of the Board of Directors is that 30-50% of earnings per
share shall be paid out as dividend. Bakkafrost’s financial position is strong
with a solid balance sheet, a competitive operation and available credit
facilities. The Board of Directors proposes to the Annual General Meeting that
DKK 3.65 (NOK 5.01*) per share shall be paid out as dividend. The Annual General
Meeting will be convened on Friday the 9th of April 2021.
The equity ratio was 66% at 31 December 2020, compared to 65% at the end of
- The dividend per share in NOK is subject to changes depending on the exchange
rate between NOK and DKK, which will be announced after the Annual General
The global harvest of Atlantic salmon was 10.8% higher in Q4 2020, compared to
Q4 2019, according to the latest estimate from Kontali Analyse. The market was
affected negatively by the market disruption caused by the Covid-19 pandemic.
Looking forward the market dynamics will still be affected by the Covid-19
situation which imposes greater than normal uncertainty to the market
development estimates. However, market conditions could improve during 2021 as
Covid-19 mass-vaccination progresses in key markets. In Q1 2021, the global
harvest of Atlantic salmon is expected to increase around 4%, compared to Q1
2020. In 2021, the global harvest of salmon is expected to increase around 2-3%,
compared to 2020. Due to the effects of inventory movements, the market supply
of salmon in 2021 is expected to increase around 5-6%, compared to 2020.
The increase in supply of salmon in 2021 is mainly expected to occur during the
first half of the year. During the second half of 2021, the global supply of
salmon is expected to be tight due to the growth in global harvest volumes being
forecasted below 1%, according to Kontali Analyse.
Bakkafrost operates in the main salmon markets, Europe, USA, the Far East and
Russia. The Covid-19 pandemic has caused global market disruptions and a shift
from foodservice to retail. These changes will remain for some time. However,
some normalisation of the market situation is expected during 2021. It is
uncertain what “new normal” the market will settle at, once the Covid-19
pandemic has passed. During the pandemic, new and innovative business models
have emerged, especially in food service, and it is not unlikely that some of
these are here to stay. Due to our highly flexible value chain, Bakkafrost is
well positioned to adapt to these changes. Bakkafrost also maintains a strong
focus on ensuring a well-balanced flow to the different markets to increase
diversification and mitigate the market risk.
Overall, the biological performance of the harvested fish in the Faroe Islands
has been strong during Q4 2020. The growth has been strong with very low feed
conversion ratio. The quality of the harvested fish has improved even more and
is exceptionally high. Mortality, mainly linked to sea lice treatments, has been
somewhat higher than normal and this is an area of priority for 2021.
The average size of transferred smolt continues to increase in the Faroe
Islands, and Bakkafrost is well on track in pursuing the large-smolt strategy.
In Q4 2020, the average weight of the transferred smolt was 343g and is expected
to increase to around 400g in 2021 and 500g in 2022. The main driver behind this
development is the massively increased production capacity delivered by the
Strond hatchery which is in full operation producing large and high-quality
smolts. To add further capacity, expansion of the existing hatcheries at
Norðtoftir and Glyvradalur have commenced. As these expansions are made to
already existing hatcheries, the increased production output will be available
already in 2022, enabling Bakkafrost to produce 20 million smolts of 500g in the
The farming operation in Scotland is gradually improving, however the second
half of the year is in general a more challenging period in the Scottish farming
operation. In Q4 2020, the mortality has been exceptionally high in some farming
sites. Challenging 3rd and 4th quarters may be expected for the next couple of
years or so but with gradually reduced severity as the large-smolt strategy is
being implemented in the Scottish farming operation. Once fully implemented, the
large-smolt strategy will be a game changer for the farming operation. To
achieve this, Bakkafrost plans to invest in 3 large hatcheries in the coming
years to become self-sufficient with large smolts.
Bakkafrost focuses on reducing biological risk continuously and has over the
past years made significant investments to diminish this risk, but also to
improve efficiency and ensures sustainable growth. The large-smolt strategy
occupies a central role in this in the Faroe Islands as well as in Scotland.
Bakkafrost expects to release around 14.5 million smolts in 2021 in the Faroe
Islands, compared to 14.3 million smolts in 2020, 12.7 million smolts in 2019
and 12.6 million smolts in 2018. The smolt release in Scotland is expected to be
11.0 million smolts in 2021, compared to 10.4 million smolts in 2020, 12.4
million smolts in 2019 and 8.6 million smolts in 2018. The number and average
weight of smolts released are key elements of predicting Bakkafrost’s future
Bakkafrost’s harvest volumes for 2021 in the Faroe Islands are expected to be
66,000 tonnes gutted weight and 40,000 tonnes gutted weight in Scotland. Hence
the total harvest volume is expected to be 106,000 tonnes gutted weight,
compared with 85,686 tonnes harvested in 2020.
The estimates for harvest volumes and smolt releases in both geographies are
dependent on the biological development.
VAP (Value Added Products)
Bakkafrost has made large investments in building a highly flexible value chain
which includes a state-of-the-art VAP factory with high capacity. This enables
Bakkafrost to adapt well to the rapidly changing market situations, which is a
great advantage during market disruptions as the one seen during the Covid-19
pandemic. Due to the flexibility and large capacity of the VAP factory,
Bakkafrost has been able to meet the significantly increased demand from the
retail segment by redirecting volumes into the VAP segment.
For 2021 Bakkafrost has signed contracts covering around 28% of the expected
harvest volumes in the Faroe Islands and Scotland combined. Bakkafrost’s long
-term strategy is to sell around 40% of the harvested volumes of salmon as VAP
products at contracts.
The contracts are at fixed prices, based on the salmon forward prices at the
time they are agreed and the expectations for the salmon spot price for the
contract period. The contracts last for 6 to 12 months.
FOF (Fishmeal, Oil and Feed)
The outlook for the production of fishmeal and fish oil is dependent on the
availability of raw material.
The ICES 2021 recommendation for blue whiting is 929 thousand tonnes, which is a
20% reduction from the recommendation for 2020. As of 30. December 2020 the
Marine Stewardship Council (MSC) has suspended the certification of all Atlanto
-Scandian blue whiting. During 2020, Bakkafrost has built up inventory of
certified fish meal to ensure continued ASC-certification of the Faroese farming
sites in 2021.
Bakkafrost expects a decrease in production volumes of fishmeal and fish oil in
2021, compared to 2020. Havsbrún’s sales of fish feed for 2021 is expected to be
120,000 tonnes, depending on external sales.
The major market for Havsbrún´s fish feed is the local Faroese market, including
Bakkafrost FO’s internal use of fish feed, and the feed used in the Scottish
Bakkafrost’s investment programme for the period from 2020 to 2022 in the Faroe
Islands, will amount to around DKK 1.8 billion, including maintenance capex, and
will reinforce Bakkafrost’s integrated business model and ensure a capacity
across the value chain to be able to produce 100,000 tonnes gutted weight of
salmon in the Faroe Islands. The aim of the investment programme is to minimize
the biological risk, increase efficiency and create sustainable organic growth.
Bakkafrost’s focus on producing larger smolts plays a key role in achieving this
All in all, Bakkafrost is on track with the investment programme. The hatchery
at Strond is finalized, and the expansion of the hatcheries at Norðtoftir and
Glyvradalur has commenced. As these expansions are made to existing hatcheries
in operation, the added capacity will materialize in increased output sooner,
compared to if they were greenfield projects. Hence the increased production
from these hatcheries will emerge from early 2022.
In Q2 2020, Bakkafrost commissioned a new 7,000 m3 well boat with hybrid
technology to reduce the carbon emission and ensure optimal energy consumption.
The vessel will be delivered in H1 2022 and will play an important role in
Bakkafrost’s large-smolt strategy and plans to grow beyond 100,000 tonnes in the
Faroe Islands with offshore farming, as well as adding freshwater treatment
Bakkafrost’s recently finished Biogas plant is an important stepping-stone on
Bakkafrost’s sustainable growth path, as it delivers an efficient and
sustainable solution to waste management. By converting the growing biological
waste from the increasing operation into clean energy, the biogas plant alone is
expected to save the environment from 11,000 tonnes of CO2 per year. The Biogas
plant is now operational, supplying electricity into the Faroese electricity
grid as well as providing heating for the residents in Tórshavn, the capital of
the Faroe Islands.
In addition to the planned investments in the value chain in the Faroe Islands,
Bakkafrost expects to make investments of around DKK 350-400 million per year
for 2020-2024 in the Scottish operation. A significant part of this will be
invested in building 3 large hatcheries to increase smolt capacity and become
self-sufficient with large smolt. The first of these hatcheries will be the
Applecross hatchery, which is being expanded and equipped with RAS technology.
Other suitable sites for the next 2 large hatcheries are currently being
Investments have also been made in expansion of the harvest capacity in Scotland
to increase the flexibility of the operation and accommodate the increased
harvest volumes expected in coming years.
Bakkafrost has announced that a Capital Market Day will be held on 14-15
September 2021, where more details on the investment plan for the Faroe Islands
and Scotland will be presented.
Despite the uncertainties imposed by the Covid-19 pandemic, long term market
balances in the world market for salmon products will most likely remain
favourable for Bakkafrost. Bakkafrost has a long value chain and a cost
-efficient production of high-quality salmon products and will likely maintain
the financial flexibility going forward.
During Q4 2019, Bakkafrost refinanced its bank facilities amounting to 352 mEUR
with a further accordion option of 150 mEUR. In addition, bank facilities
amounting to 100 mGBP were ensured to refinance The Scottish Salmon Company.
A high equity ratio together with Bakkafrost’s bank financing, makes
Bakkafrost’s financial situation strong. This enables Bakkafrost to carry out
its investment plans in the Faroe Islands as well as in Scotland, hereby
strengthening the Group, enabling M&A’s and organic growth opportunities as well
as to fulfil its unchanged dividend policy in the future.
Please find the Company’s Q4 2020 report and the Q4 2020 presentation enclosed.
Regin Jacobsen, CEO of P/F Bakkafrost: +298 235001 (mobile)
Høgni Dahl Jakobsen, 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.
Bakkafrost is the largest salmon farmer in the Faroe Islands and the second
largest salmon farmer in Scotland. 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 (Faroe Islands). The Group
has primary processing in Glyvrar and Vágur (Faroe Islands), and secondary
processing (VAP) in Glyvrar (Faroe Islands). The Group operates sea farming in
Norðoyggjar, Eysturoy, Streymoy and Suðuroy (Faroe Islands) and in Scotland. The
Group has broodstock operations in Streymoy and Sandoy (Faroe Islands) and in
Scotland. The Group has a biogas plant in Streymoy (Faroe Islands). The
headquarter is located in Glyvrar (Faroe Islands) and has sales and
administration offices in Grimsby (UK), Edinburgh (Scotland) and in New Jersey
(US). The Bakkafrost Group has 1,699 employees (full-time equivalents).
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