Bakkafrost Q3 2024 Report

Overview

Bakkafrost (BAKKA.OL), a salmon farming company based in the Faroe Islands, faced a challenging third quarter, with decreased revenues and operational EBIT compared to the previous year. The company's revenue was NOK 1.737 billion, with operational EBIT at NOK 173 million, both showing declines.

Despite these challenges, including a drop in external fish oil sales and declining global salmon prices, Bakkafrost maintains an optimistic outlook, focusing on improving smolt robustness and managing costs effectively. Expansion investment plans have been delayed while the long-term production target remains in place.

Key Takeaways

• Year-over-year decline in Q3 revenue and operational EBIT.
• Increased harvest volumes in both the Faroe Islands and Scotland.
• Feed sales rose by 16%; however, external fish oil and fish meal sales fell dramatically.
• Global salmon prices decreased, impacting earnings.
• Reduction in net interest-bearing debt; increased investments in property, plant, and equipment.
• Negative operational EBIT reported in Scotland.
• Expectation of improved feed prices and increased stocking in Q4.

Company Outlook

• Targeting a total expected harvest of 89,600 tonnes for 2024.
• Long-term goal of reaching 165,000 tonnes by 2028, with an aim for 100,000 tonnes group-wide in 2025.
• Transitioning to larger smolt to enhance fish robustness and health.
• Investment expansion plans delayed, reducing investments by DKK 800 million this year and next.

Bearish Highlights

• Significant drop in operational EBIT due to negative fair value adjustments.
• Negative profit after tax of DKK 160 million.
• Scotland's farming margin remains negative amid ongoing operational challenges.

Bullish Highlights

• Increased Faroese farming margin backed by higher biomass.
• Stable development anticipated in the FOF segment due to lower fish oil costs.
• Anticipation of positive margins in Scotland by 2025 owing to cost management and better fish health.

Misses

• External fish oil sales plummeted to 8 tonnes from 8,000 tonnes year-over-year.
• Significant decrease in fish meal sales also noted.

Q&A Highlights

• CEO Regin Jacobsen shared optimism regarding the market outlook for Scotland.
• Expected significant feed cost reductions due to dropping oil prices.
• Gradual decrease in cost prices and stable market conditions anticipated in Q4.

Amid these challenges, Bakkafrost remains focused on improving smolt robustness and efficient cost management. Despite delaying investment expansions, the firm is confident in overcoming operational hurdles and aims for steady growth ahead.