Salmon processing line. (Photo: Bakkafrost)
Bakkafrost obtained lower profit in third quarter due to salmon price impact
Tuesday, November 14, 2017, 23:50 (GMT + 9)
Bakkafrost Group obtained profit of DDK 56.2 million (USD 8.8 million) in the third quarter this year, which represents a decline from DKK 346.4 million (USD 54.3 million) reported last year in the same period.
The group's salmon farming segment recorded an operational EBIT of DKK 216.7 million (USD 33.9 million), which is 26 per cent lower than in the same period last year (DKK 294.3 million) because of the salmon spot price decline.
In the analysed quarter, harvested volume was 11,585 tonnes gutted weight, compared to 10,664 tonnes in the third quarter of 2016.
The VAP (value added products) segment made an operational EBIT of DKK -4.5 million (USD -704,865), which is an improvement from the EBIT of DKK -46.7 million recorded last year.
“Although the price of salmon decreased in the quarter, Bakkafrost had a satisfactory result. The salmon spot price in the third quarter this year was significantly lower than in the same quarter last year. We still have a good outlook for the salmon market, but there is a risk for lower salmon prices in the future,” said the Group’s CEO Regin Jacobsen
The executive also explained that the farming service vessel, M/S Róland, started operation in this quarter, and that the Group is well equipped to combat sea lice with good solutions.
Jacobsen stressed that another positive trend in the quarter was the improvement in the VAP operation, after having experienced start-up issues in the first half of 2017. The decline in salmon spot prices had a positive impact, since this segment buys raw material to process.
The combined farming and VAP segments made an operational EBIT of DKK 212.2 million, which corresponds to NOK 23.02 per kg. The FOF segment (fishmeal, oil and feed) made an operational EBITDA of DKK 79.5 million.
On the other hand, the firm informed that the number of sea lice demanded more effort in the third quarter this year compared to the same period last year and caused reduction of growth in the quarter, which will most likely postpone some harvest quantity from the next quarters.
Bakkafrost announced plans to increase the value of offcuts from salmon harvested and processed in the new harvest/VAP factory. The new salmon meal and salmon oil plant, located in Fuglafjørður and operated by Havsbrún, is expected to start operation in the beginning of 2018.
The FOF segment will also invest in a new feed line, which will increase the capacity of the feed production.
(DKK 1 = USD 0.15664)