The Bakkafrost Group delivered a total operating EBIT of DKK 257 million for Q4 2015, compared with DKK 227 million for Q4 2014. Harvested volumes were 13.7 thousand tonnes gutted weight in Q4 2015. Result after tax in Q4 2015 was DKK 319 million.
The total volumes harvested in Q4 2015 were 13,675 tonnes gutted weight and 50,565 tonnes gutted weight for the whole 2015. The farming segment delivered an operational EBIT of DKK 215 million for Q4 2015, which corresponds to NOK 19.67 per kg. The VAP segment made an operational EBIT of DKK 24 million. The FOF segment delivered an EBITDA of DKK 45 million for Q4 2015.
Commenting on the result, CEO Regin Jacobsen said:
“2015 was an eventful year for Bakkafrost. In the summer, the live fish carrier “M/S Hans á Bakka” was delivered to Bakkafrost, which we consider a milestone for the salmon farming industry in the Faroes. The activity was high, both regarding operation and investments, and all in all the result was good. Large harvested volumes of salmon, the good sourcing situation of raw material in the FOF segment and the good result in the VAP segment was the reason for the record high operational EBIT of DKK 1,001 million for 2015.”
Bakkafrost released 4.9 million smolts in Q4 2015 and 11.3 million smolts for the whole 2015.
Havsbrún’s sourcing of raw material in the fourth quarter was good. Havsbrún has purchased 64 thousand tonnes of raw material in Q4 2015. Havsbrún’s purchase of raw material in 2015 amounts to 235 thousand tonnes, compared to 193 thousand tonnes in 2014.
The Board of Directors proposes to the Annual General Meeting that DKK 8.25 per share shall be paid out as dividend. This corresponds to approximately DKK 403.1 million. The Annual General Meeting will be convened on 8 April 2016.
In December 2015, Bakkafrost secured the refinancing of its bank loan that would have matured at the end of 2016. The new financing agreement both extends and restructures Bakkafrost’s credit facilities. The new bank loan is a multicurrency revolving credit facility for a period of five years, totalling DKK 850 million. In addition to the DKK 850 million credit facility, the new financing agreement has an accordion increase option of maximum DKK 750 million.
Bakkafrost’s net interest bearing debt at the end of Q4 2015 was DKK 391 million, compared with DKK 233 million at year-end 2014. Bakkafrost had undrawn credit facilities of approximately DKK 890 million at the end of Q4 2015, and the equity ratio was 66%.
The global demand in the salmon market continues with strong growth rates. The markets are affected differently by the currency development during the year. The market balance will be tighter in 2016, compared to 2015. Global supply of Atlantic salmon is expected to decrease by 3% in volume during 2016, compared to 2015. Production capacity is close to full utilization and further expansion relates to high investments.
The outlook for the farming segment is good. Biology and veterinary situation is the most important risk area for Bakkafrost. The Group is focusing on this risk with new investments and procedures to diminish the risk. Sea lice is an area, which has demanded more effort and is a part of the biological risk. Bakkafrost’s new live fish carrier, M/S Hans á Bakka, has freshwater treatment equipment installed. M/S Hans á Bakka’s operations using freshwater has shown to be effective against sea lice and therefore these operations will be an important part of Bakkafrost’s treatment against sea lice. The biological situation is good, and the price outlook in the market place is good.
Bakkafrost expects to harvest 48,000 tonnes gutted weight in 2016. Bakkafrost’s forecast for smolt release in 2016 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 60% of the VAP capacity for 2016. This corresponds to around 25% of the expected harvested volumes for 2016.
Fishmeal, -oil and feed (FOF)
The outlook for the production of fishmeal and fish oil is dependent on the availability of raw material. The quotas for catching blue whiting in the North Atlantic are expected to be reduced and therefore, the production of fishmeal and fish oil is most likely to reduce in volume in 2016 from relatively high volumes in 2015.
The major market for Havsbrún´s fish feed is the local Faroese market including Bakkafrost’s internal use of fish feed.
Havsbrún’s sales of fish feed in 2016 is expected to be at 80,000 tonnes.
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. Whereof the future investment plan for the next two years is DKK 570 million.
The investment of the new harvest/-VAP factory will be finalised in 2016. The harvest operation is expected to start in Q2 2016, while the VAP operation will start in H2 2016. There will be some extra costs during the start-up period, but the investment is expected to result in operational savings of DKK 70-90 million per year with gradual effect from 2017.
Bakkafrost plans to increase the smolt capacity, making Bakkafrost self-supplied with smolts at a size of 200-300g each before end 2017. The benefits are shorter production time at sea as well as reduced biological risk. The expansion of the hatchery in Viðareiði, which started in 2015, will be finalised in Q2 2016. The expansion will fourfold the capacity of this hatchery. An investment in a new hatchery site is expected to start in 1H 2016.
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 Q4 2015 report and presentation.
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.
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 725 full-time employees.
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