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Bakkafrost harvested fewer fish and made a smaller profit in Q4 2017 than in Q4 2016 but chief executive Regin Jacobsen was pleased. Photo: Bakkafrost
Bakkafrost harvested fewer fish and made a smaller profit in Q4 2017 than in Q4 2016 but chief executive Regin Jacobsen was pleased. Photo: Bakkafrost

Faroese salmon farmer Bakkafrost's chief executive Regin Jacobsen has welcomed the company's results for the final quarter in 2017, despite harvest volumes and operating profit being lower than in Q4 2016.

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He said: "Bakkafrost had an excellent performance in the quarter, considering that the salmon spot price has decreased over 25%, compared to the same quarter last year."

Overall, the Bakkafrost group made an operating profit of DKK 331.2 million (£39.4m) in Q4 2017, compared to DKK 349.6m in Q4 2016, although a reduction of the value of the company's fish in the sea to reflect the  fall in spot prices meant the company finished the quarter with an on-the-books loss of DKK 21.9m (£2.6m).

Bakkafrost's raw material division, Havsbrún, had record results. Photo: Bakkafrost
Bakkafrost's raw material division, Havsbrún, had record results. Photo: Bakkafrost

For 2017 as a whole, the operating profit was DKK 1,308.2 million (£155m), compared to DKK 1,314.5m in 2016.

First VAP profit since 2015

The fall in salmon prices helped Bakkafrost's Value Added Products division, which made an operating profit of DKK 36.5m (£4.3m), its first positive margin since 2015.

The farming division made an operating profit of DKK 228.8m (£27.2m) in Q4, a significant drop on the DKK 401,642,000 (£47.7m) made when more fish were sold at higher prices in Q4 2016.

The total volumes harvested in Q4 2017 were 11,470 tonnes gutted weight (12,940 tgw in Q4 2016) – a decrease in volumes of 11%. All harvest in Q4 2017 was from the West region.

Total harvested volumes for 2017 were 54,615 tgw (47,542 tgw), in line with the forecast for 2017.

13.9 million smolts in 2018

Bakkafrost transferred 3.4 million smolts (3.3m in Q4 2016) in Q4 2017, and 9.9m smolts (11.7m) were transferred in 2017. This is slightly lower than Bakkafrost’s smolt transfer plan for 2017, which was 10.5 million smolts. It expects to release 13.9m smolts in 2018.

Jacobsen said the company's raw material offshoot, Havsbrún, had a record year in raw material sourcing during its 50 year history.

FOF (fishmeal, oil and feed) segment made earnings before interest, tax, depreciation and amortisation of DKK 93.6m (DKK 71.1m) for Q4 2017, and the EBITDA margin was 25.5% (21.5%). The EBITDA was DKK 266.1m  for 2017 (DKK 247.9 million), corresponding to an EBITDA margin of 20.4% (21.4%). Havsbrún sourced 50,852 tonnes (34,680 tonnes) of raw material during Q4 2017, and for 2017, Havsbrún sourced 342.456 tonnes (201,222 tonnes 2016) of raw material.

'Exciting project'

In Q4 2017, Bakkafrost signed an agreement with research institute P/F Fiskaaling and the Faroese Ministry of Foreign Affairs and Trade to take over responsibility for the Faroese brood stock programme from P/F Fiskaaling from April 1, 2018.

"Looking forward, we are excited about the agreement we have made with P/F Fiskaaling and the Faroese Authorities about the Faroese brood stock programme, said Jacobsen. "To develop the Faroese brood stock programme will demand effort and resources for Bakkafrost, but we believe this might be an exciting project, which can benefit us in the long run.”

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