Bakkafrost chief executive Regin Jacobsen presenting the Q1 results this morning.

Bakkafrost Scotland back in the black for Q1

Doubled harvest volume, higher prices, and lower mortality for salmon farmer


Regin Jacobsen, chief executive of Faroese salmon farmer Bakkafrost, has highlighted the application of best practices as the main reason for a dramatic turnaround in the fortunes of the company’s Scottish operations.

Bakkafrost Scotland made an operating profit of DKK 155 million (£18.1m) in the first quarter of 2023, a difference of DKK 208m compared to Q1 2022 when it made an operating loss of DKK 53m.

The Scottish operation harvested 8,100 gutted weight tonnes in the first quarter of this year, more than double the 4,000 gwt harvest in Q1 2022, and incident-based mortality costs were much lower at DKK 2m (Q1 2022: DKK 24m). Spot prices were also 31% higher than in Q1 2022.

Bakkafrost Scotland took delivery of a new wellboat, the 4,000m³-capacity Ronja Star, last autumn as part of an increased focus on fish welfare, and the investment has paid dividends.

Strong operations

“We saw early signs of improvements in Q4, where the application of best practices significantly improved the operations,” said Jacobsen in a press release.

“Through this quarter and so far this year, we have maintained strong operations in Scotland. Premium high-quality salmon with our One Company strategy has materialised in our sales and branding and created extra value. Our customers recognise the high quality of our fish, whether it is [of] Faroese or Scottish origin.”

Bakkafrost pointed out that its farms in Scotland are still subject to higher biological risk than those in the Faroe Islands, and that it has yet to demonstrate whether the positive development of biology in the past two quarters can be maintained during the traditionally more challenging periods in the autumn.

Bakkafrost Scotland had lower mortality in Q1 2023 (orange line), thanks in large part of the extra treatment capacity provided by the Ronja Star wellboat. But the big test is yet to come, says the company.

Large smolts

Risk is expected to be reduced by Bakkafrost's large-smolt strategy in Scotland.

“As demonstrated in the Faroe Islands, large high-quality smolt will have a lower risk exposure in the marine environment due to shorter production cycles in the sea and the robustness of the smolt,” stated the company.

“Therefore, it is Bakkafrost's topmost priority in Scotland to build new modern hatcheries. The ongoing expansion of the Applecross hatchery is progressing but slightly delayed, and the Applecross-4 expansion is expected to be operational with fish in the tanks in May 2023 – two months behind schedule.

“The first batch of large smolt delivered from Applecross-4 is planned for Q3 2023 – one quarter later than planned - and will contribute to increasing the mean weights and quality of the smolt stocked in Scotland in 2023.”

500g target

Bakkafrost is gradually increasing the size of smolts stocked in marine pens, starting from a low starting point.

In Q1 2023, the average weight of Bakkafrost’s released smolts in Scotland was 111g, which is 9% higher than in Q1 2022. The company’s hatchery construction programme will give it an annual production capacity of around 18 million smolts of around 500g in 2026.

In addition to building hatchery capacity, Bakkafrost plans to build a new processing plant to strengthen processing capabilities and increase flexibility in operation.

The Bakkafrost group’s total harvested volumes for Q1 2023 were 19,100 gwt (21,400 gwt):

  • Faroe Islands: 11,000 (17,500 gwt),
  • Scotland: 8,100 (4,000).

The group expects to harvest 68,000 gwt in the Faroes and 30,000 gwt in Scotland this year.

Lower in Faroes

“As expected, we have had low harvest volumes in the Faroe Islands this quarter, which impacted the financial results,” said Jacobsen.

“The biological performance has been good and exceptionally strong when it comes to growth rates and feed conversion. We have had lower average harvest weights in the quarter due to our strong effort to push mortality levels down, as we also have done with sea lice levels. This led to earlier harvest at a lower weight. With the new capabilities gained with our new farming service vessel, Bakkafossur, we expect to increase harvest weights while we continue to secure good fish welfare and low sea lice levels.”

In total, 3.8 million (4.2 million) smolts were transferred during Q1 2023:

  • Faroe Islands: 2.1 million (2.0 million),
  • Scotland: 1.7 million (2.3 million).

The group delivered a total operating EBIT of DKK 565m (DKK 418m) in Q1 2023 and made a profit of DKK 467m (DKK 405m). The combined Faroes farming and value-added products segments made an operational EBIT of DKK 321m (DKK 442m).

Bakkafrost Scotland's Q1 results were hugely improved, although not as strong as the Faroes division.
Bakkafrost Scotland's EBIT per kilo showed a NOK 45.9 turnaround between Q1 2022 and Q1 2023.