Q2 2015 - Good performance and positive market conditions result in good operating EBIT

The Bakkafrost Group delivered a total operating EBIT of DKK 303 million in Q2 2015. Compared with operating EBIT of DKK 212 million in Q2 2014, this is an increase of 43%. Result after tax in Q2 2015 was DKK 191 million.

The total volumes harvested in Q2 2015 were 14,182 tonnes gutted weight, which is a record high harvest in a quarter for Bakkafrost. The guidance for harvest volumes for 2015 is unchanged. The farming segment delivered an operational EBIT of DKK 248 million in Q2 2015. The VAP segment, which produced 5,064 tonnes in Q2 2015, made an operational EBIT of DKK 31 million. The FOF segment delivered an EBITDA of DKK 53 million in Q2 2015.


Commenting on the result, CEO Regin Jacobsen said:


“Bakkafrost harvested over 14 thousand tonnes in Q2 2015, which is the highest quarterly harvest ever for Bakkafrost. This together with good operational performance and positive market conditions resulted in a record high operating EBIT in Q2 2015. Bakkafrost’s focus on the operational performance is reflected in the investment of the new wellboat, “Hans á Bakka”. “Hans á Bakka” was delivered in July and started operating in August 2015, which marks a milestone in salmon farming in the Faroe Islands.”


Bakkafrost released 1.4 million smolts in Q2 2015, which is in line with the company’s smolt release plan.


The good catch of pelagic fish around the Faroe Islands in Q1 2015 continued into Q2 2015. Havsbrún has purchased 86 thousand tonnes of raw material in Q2 2015. Havsbrún’s purchase of raw material in first half 2015 amounts to 161 thousand tonnes.


Bakkafrost’s net interest bearing debt at the end of Q2 2015 was DKK 302 million, compared with DKK 233 million at year-end 2014. Bakkafrost had undrawn credit facilities of approximately DKK 721 million at the end of Q2 2015, and the equity ratio was 61%.

 

OUTLOOK

Market


The salmon market’s global demand growth has increased the last years due to high growth rate in emerging markets and a stable growth in other markets. Expected global supply growth in 2015 is around 4-5% and 2-3% in 2016. Production capacity is close to full utilization and further expansion relates to high investments.


Farming


Bakkafrost expects to harvest 49,000-51,000 tonnes gutted weight in 2015. Bakkafrost’s forecast for smolt release in 2015 is 10.4 million pieces. The estimates for harvesting volumes and smolt releases is as always dependent on the biological situation.


Value added products (VAP)


Bakkafrost’s long-term strategy is to sell around 40-50% of the harvested volumes of salmon as value added products on fixed price contracts. The contracts last for 6 to 12 months. Bakkafrost has signed contracts covering around 75% of the VAP capacity for the rest of 2015.


Fish oil, -meal and feed (FOF)


The outlook for the production of fishmeal and fish oil has improved as the available raw material for the production has increased. The quotas for catching blue whiting in the North Atlantic have in-creased. With increased quotas, Bakkafrost is optimistic that the raw materials needed for our production of high quality salmon feed will be available.


Havsbrún’s sales of fish feed in 2015 is expected to be at 73,000 – 77,000 tonnes. This is a reduction from the previous outlook at 83,000 – 87,000 tonnes, as the sale of fish feed to external customers has been reduced. The expected feed purchase from Bakkafrost’s farming segment in 2015 is unchanged.


Investments


Bakkafrost has announced an investment plan for the period until 2017, latest updated in August 2014. The purpose of the investment plan is to continue to have one of the most costs efficient value chains in the farming industry, carry out organic growth, increase flexibility and reduce the biological risk to meet the future consumers’ trends and to be more end-customer orientated.


The total investments for the period 2014-2017 were announced to be DKK 1,370 million including maintenance CAPEX. Investments in 2015 are expected to be DKK 550 million.


Financial


Improved market balances in the world market for salmon products and costs effective production will likely improve the financial flexibility going forward. A high equity ratio with the Group’s bank financing and the issuance of bonds makes Bakkafrost’s financial situation strong. This enables Bakkafrost to carry out its investment plans to further focus on strengthening the Group, M&A’s, organic growth opportunities and fulfil its dividend policy in the future.


Please find enclosed the Company’s Q2 2015 report and presentation.

Contacts:


Regin Jacobsen, CEO of P/F Bakkafrost: +298 235001 (mobile)

Gunnar Nielsen, 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.

 

About Bakkafrost:


Bakkafrost is the largest salmon farmer in the Faroe Islands. 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. The Group operates licenses on 14 farming fjords. The Group has primary processing in Klaksvík, Strendur, Kollafjørður, and secondary processing (VAP) in Glyvrar and Fuglafjørður. The headquarter is located in Glyvrar, and the company has a total of around 700 employees.


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2015
2014
2013

Press Contacts:

Regin Jacobsen
CEO
+298 23 50 01