Increasing smolt production - reducing value adding processing

Increasing smolt production - reducing value adding processing



Q3 Financial Report:

(Figures in parenthesis refer to the same period last year unless otherwise specified)

The Bakkafrost Group delivered a total operating EBIT of DKK 269 million (DKK 325 million) in Q3 2023 and made a profit of DKK 219 million (DKK 249 million)

According to Bakkafrost’s revised segment structure, the business segment’s operational EBIT were as follows:

·       FOF (Op EBITDA):        DKK    316 million    (DKK   119 million)

·       Freshwater FO:            DKK      47 million    (DKK     86 million)

·       Freshwater SCT:          DKK      17 million    (DKK     11 million)

·       Farming FO:                 DKK    108 million    (DKK   274 million)

·       Farming SCT:               DKK -282 million    (DKK -180 million)

·       Services:                      DKK      21 million    (DKK     15 million)

·       Sales & Other:             DKK      78 million    (DKK     43 million)

Commenting on the result, CEO Regin Jacobsen said:

“Our Fishmeal, oil and feed segment has delivered yet another strong quarter, but we are not satisfied with the results from the farming segments in this quarter.

Past years we have had increasing growth rates of the fish in the Faroese farming sites, peaking last year. In this quarter, the growth rates have been surprisingly low, mainly in fish coming from one specific batch of smolt subjected to poor water quality in the hatchery in August 2021, which was caused by start-up issues. The impact on growth unveiled in this quarter demonstrating the importance of having consistent high-quality smolt. This is something we have worked hard on and succeeded in, however dampening volume output from our hatcheries during the process. Maintaining a consistent smolt quality and size is one of the main priorities, as we now increase the large-smolt production with the completed expansions at the Norðtoftir, Glyvradal and Viðareiði hatcheries in the Faroes and Applecross well under way in Scotland. We have now also signed a contract for the construction of a large new hatchery in Skálavík in the Faroe Islands.

In Scotland, we released the first trial batch of large smolt from Applecross earlier this year and are now ramping up the production of high-quality large smolt. To reduce the biological risk, we have revised our short-term strategy for Scotland. We will rely on our own large high quality smolt. Applecross hatchery will next year deliver close to all smolt, and early trial with 500g smolt in Scotland will be performed in Q1 2024. High risk sites will not be stocked or in production during Q3, until the risk has reduced by large high-quality smolt.

Both in the Faroe Islands and Scotland, we have decided to delay harvest into Q1 2024 to optimize average size of harvested fish. Since mid-September, the biology is significantly improved in Scotland and is significantly improved in the Faroe Islands. This is similar to the approach we chose for Scotland last year, which proved very successful.

Sea lice levels are all-time low both in Scotland and Faroe Islands. The dual freshwater treatment have been successful both for sea lice and to reduce the consequences of biological threats such as jellyfish. Jellyfish has been one of the main challenges in Scotland this quarter.

The salmon market is strong and supply growth low for the coming quarters. The Chinese market has gained momentum and we have also increased our market share to US customers. We expect strong salmon prices in H1-2024.

Due to the changes to the Faroese revenue tax, we will reduce production of value-added products for the contracted retail market. Therefore, we have only secured contracts for next year for 9% of the total harvest, compared to 22% the same time last year. This will have negative impact on the activity in this segment in 2024.



During Q3 2023, the FOF segment sourced 109,685 tonnes (76,182 tonnes) of raw material. The Op EBITDA margin was 30% (18%), and fish feed sales amounted to 35,903 tonnes (37,805 tonnes).


For the first nine months of 2023, the FOF segment’s Op EBITDA was 23% (20%). During the first nine months of 2023, Havsbrún sourced 413,485 tonnes (251,763 tonnes) of raw material.


In Q3 2023, the Freshwater segments in the Faroe Islands and Scotland released a total of 5.8 million (6.6 million) smolts combined:

·       Freshwater FO:    3.3 million (4.1 million),

·       Freshwater SCT:   2.5 million (2.4 million).


For the first nine months of 2023, the freshwater segments have released a total of 16.3 (17.0) million smolts:

·       Freshwater FO:    9.0 million (9.4 million),

·       Freshwater SCT:   7.3 million (7.5 million).


In Q3 2023, the Freshwater FO segment made an operational EBIT per kg released smolt of 34.67 DKK/kg (51.69 DKK/kg), corresponding to 53.04 NOK/kg (69.88 NOK/kg). The Freshwater SCT segment made an operational EBIT per kg released smolt of 59.79 DKK/kg (42.55 DKK/kg), corresponding to 91.46 NOK/kg (57.52 NOK/kg).


The Farming segments achieved lower prices in Q3 2023 than in Q3 2022. The Farming FO segment had similar harvest volume as in Q3 2022 whereas the Farming SCT segment had lower harvest volume in Q3 2023 compared to Q3 2022. In Q3 2023, the Farming SCT segment had incident-based costs of DKK 184 million (DKK 121 million).


The total combined harvest in Q3 2023 of the farming segments in the Faroe Islands and Scotland was 20,840 tonnes gutted weight (24,950 tgw):

·       Farming FO:         16,740 tgw (16,850 tgw),

·       Farming SCT:        4,100 tgw (8,100 tgw).

For the first nine months of 2023, the farming segments have harvested a total of 55,939 tonnes gutted weight (66,129):

·       Farming FO:         36,403 tgw (47,410 tgw),

·       Farming SCT:        19,536 tgw (18,719 tgw).


In Q3 2023, the Farming FO segment made an operational EBIT/kg of 6.47 DKK/kg (16.29 DKK/kg), corresponding to 9.90 NOK/kg (22.02 NOK/kg). The Farming SCT segment made an operational EBIT/kg of -68.70 DKK/kg (-22.25 DKK/kg), corresponding to -105.09 NOK/kg (-30.07 NOK/kg).


The Services segment made an operational EBIT/kg of 0.99 DKK/kg (0.59 DKK/kg), corresponding to 1.52 NOK/kg (0.80 NOK/kg). The operational EBIT margin for the segment was 10% (7%).


The Sales & Other segment had a revenue of DKK 2,188 million (2,298 million) and an operational EBIT margin of 4% (2%). The operational EBIT/kg was 3.73 DKK/kg (1.72 DKK/kg), corresponding to 5.70 NOK/kg (2.33 NOK/kg).


The net interest-bearing debt amounted to DKK 3,045 million at the end of Q3 2023, compared to DKK 2,664 million at year-end 2022. Undrawn credit facilities amounted to DKK 2,339 million at the end of Q3 2023.

The equity ratio was 61% at the end of Q3 2023, compared to 62% at the end of 2022.


The performance according to the previously used business segment structure can be found in Appendix of the Q3 2023 Interim Report. 





Reduced supply in Q3 2023
The supply of salmon reduced by 1.4% in Q3 2023 compared to Q3 2022, incl. inventory movements. Without inventory movements, the reduction was 2.8%, according to the latest estimate from Kontali Analyse.

Salmon prices increased 9% in EUR
Salmon spot prices (in EUR) were 9.2% higher this quarter compared to Q3 2022. Prices in Q3 2023 were affected by reduced supply and strong demand for salmon from certain markets such as the China and the US.

No growth in 2023
In Q4 2023, the global supply is expected to grow around 4%, excluding inventory movements. For the full year 2023, the global supply is expected reduce around 0.5%, excluding inventory movements. In H1 2024, the supply growth is expected to be around 3%, excluding inventory movements.

Bakkafrost has a strong focus on ensuring a well-balanced flow to the different markets to increase diversification and mitigate market risk. Bakkafrost operates in the main salmon markets, Europe, the USA, and the Far East. Since the beginning of the war in Ukraine, Bakkafrost has stopped all trading with Russia.


In the Faroe Islands, the new freshwater treatment capability, delivered by the new wellboat Bakkafossur, has significantly improved Bakkafrost’s ability to control sealice giving all-time low sealice levels, also in Q4. Bakkafossur has also significantly improved Bakkafrost’s ability to treat large fish without inducing mortality on the fish. Past years, Bakkafrost has had increasing growth rates of the fish in the Faroese farming sites, peaking last year. In this quarter, the growth rates have been lower than expected, mainly in fish coming from one specific batch of smolt subjected to poor water quality in the hatchery in August 2021, which was caused by start-up issues. The impact on growth unveiled in this quarter demonstrating the importance of having consistent high-quality smolt.

The lower growth in the Faroe Islands in Q3 2023 will affect the expected harvest volume for Q4 2023, which expected to be around 16,600 tonnes gutted weight, as some of the previously planned harvest volume will be moved to Q1 2024 and harvested at higher harvest weights. Given the good fish health status and strong capabilities provided by Bakkafossur, more value can be obtained from these fish by letting them grow large for harvest in Q1 2024. A small remaining portion of the fish from the batch subjected to poor water quality will be harvested in Q4 2023.

In the Faroese freshwater farming, Bakkafrost has for a long time worked intensely with optimising the production of large smolt, which is more complex than smaller sizes. Since the first generation of large smolt was delivered from the Strond hatchery, Bakkafrost has made significant improvements to the quality and performance of the large smolt. This effort to optimise smolt quality has however had a dampening effect on the output volume of smolt. Currently, the large-smolt production is transitioning into a phase emphasising consistent size and high quality of the smolt while upscaling production volumes. The hatcheries at Norðtoftir and Glyvradal in the Faroe Islands are steadily ramping-up production after being expanded in capacity. On 3rd November, Bakkafrost signed a contract to build a new large hatchery in Skálavík, Faroe IsIands, which will add additional production capacity of around 7 million smolt at 500g. Once completed within the next three years, the annual smolt production capacity in the Faroe Islands will be 24 million smolts of 500g, as described in the 2024-2028 investment programme.

The Scottish marine operation had a challenging biological development in this quarter. The main challenge was micro-jellyfish combined with primary (predisposing) factors and secondary (subsequent) complications leading to increased mortality. As previously disclosed, the biological challenges arrived earlier than in recent years, but have in return eased off earlier as well. Hence, from mid-September, the biology improved significantly. The upscaled freshwater dual treatment capacity in Scotland, had a positive impact on fish gill health and ensured low sealice levels. This has reduced the potential impact of the biological threats during the quarter.

To leverage the improved biological development since mid-September, Bakkafrost plans to reduce Q4 2023 harvest volume to under 1,000 tonnes, allowing fish to grow larger, similar to Bakkafrost's approach in Scotland in Q4 2022. This shift will push some harvest volume into Q1 2024, enhancing market value through higher average weights and better prices.

In order to address the biological risks, Bakkafrost has made strategic adjustments to its short-term plans and production strategy for the Scottish farming operation. A comprehensive risk assessment has been conducted for all farming sites, evaluating the feasibility of stocking and farming these sites using various strains, hatcheries, and smolt sizes. Based on this evaluation, Bakkafrost will prioritise and advance the utilisation of large, high-quality smolt from the Applecross hatchery over external sources. Consequently, Applecross will supply nearly all of the required smolt to the marine sites in 2024.

Additionally, there are plans for an early trial involving 500g smolt, set to be released in Q1 2024. Some farming sites may not be restocked or remain productive during Q3 until the risks have been mitigated through the use of large, high-quality smolt. This approach will reduce the biomass at risk in Q3 and result in an increased harvest during the first half of the year.

The Scottish freshwater operation is scaling up the production of large high-quality smolt at Applecross, after the release of the first trial-batch of 250g smolt in May 2023. In Q4 2023, the first full batch of large smolt (200-300g) is expected to be transferred to marine, and in Q1 2024 the first trial batch of 500g smolt is planned to be transferred as a first trial with 500g smolt in Scotland. During 2024, as the Applecross 5 & 6 expansions will be finalised, the increased production capacity from Applecross will enable around 9.1 million smolts to be released from Applecross in 2024, compared to a total of 9.3 million smolt to be released in 2024. From 2025 Applecross will deliver all smolts for Scotland at around 200-300g. 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. In Q3 2023, the average weight of released smolt in Scotland was 112g, which is 5% higher than in Q3 2022.

Smolt release

Bakkafrost has guided for a smolt release in the Faroe Islands of around 16 million large smolts in 2023. Due to the increased available hatchery capacity provided by the Norðtoftir and Glyvradal hatcheries, Bakkafrost plans to let some of the smolts, that were scheduled for transfer in Q4 2023, stay in the hatcheries during January and February, before transferring them in March 2024. This reduces the biological risk and gives better growth in a stable environment in the hatcheries, compared to low seawater temperatures and winter storms in January and February. Consequently, the transferred number of smolts in the Faroe Islands is expected to be around 14.4 million smolt in 2023, increasing to around 18 million smolt in 2024.

In Scotland, the smolt release in 2023 is expected to be around 10.5 million smolts and around 9.3 million smolts in 2024 with an average weight around 240g. The number and the average weight of smolts released are key elements of predicting Bakkafrost's future production.

Million smolt transferred





















In the freshwater hatchery operation, Bakkafrost has a focus on ensuring stable growth and continuous improvements of smolt quality. In the Faroes Islands, it is important to harmonise the size and quality of the smolt as it leads to better utilisation of marine farming sites and increased harvest weights.

In 2023, Bakkafrost expects to harvest around 53,000 tonnes gutted weight in the Faroe Islands and 20,000 tonnes gutted weight in Scotland, giving a total of around 73,000 tonnes gutted weight. 5-6,000 tonnes of the previously guided harvest volume for Scotland in 2023 (30,000 tonnes) has previously been flagged as being at risk due to biological challenges. The further reduction of harvest in 2023 is to benefit from the improved biological situation since mid-September, keeping the healthy fish in the sea for longer to grow them larger and more valuable.

In 2024, Bakkafrost expects to harvest around 66,000 tonnes gutted weight in the Faroe Islands and 25,000 tonnes gutted weight in Scotland, giving a total of around 91,000 tonnes gutted weight. The quarterly harvest profile is outlined in in the table below. Biological, environmental and market conditions can affect the expected harvest profile.

Expected harvest profile as a % of total harvest pr. region:
















The estimates for harvest volumes and smolt releases in both geographies are dependent on biological development.

Sales & VAP (Value added products)

Bakkafrost's highly flexible value chain includes state-of-the-art VAP processing capacity, which enables the company to adapt effectively to rapidly changing market situations.

As a result of changes in the Faroese revenue tax, Bakkafrost has adjusted the strategy for contracted VAP (Value-Added Products) to reduce contract exposure for 2024. 

For 2024, Bakkafrost has signed contracts covering around 9% of the expected harvest volumes in the Faroe Islands and Scotland combined, compared to 22% at same time last year.

FOF (Fishmeal, oil and feed)

The outlook of fishmeal and fish oil production is dependent on the availability of raw materials.

The ICES 2024 recommendation for blue whiting is 1,530 thousand tonnes, which represents a 12.5% increase from the recommendation for 2023.

In 2024 Bakkafrost expects continued high production volumes of fishmeal and normalisation of fish oil production volumes.

The major markets for Havsbrún’s fish feed are the internal Faroese and Scottish Farming segments.


On the Capital Markets Day on 6 June 2023, Bakkafrost announced a 6.3bn DKK investment plan for 2024-2028. The investments will enable a transformation of the operation in Scotland and provide sustainable growth in the Faroe Islands as well as Scotland.

The main purpose of the investments in Scotland is to replicate Bakkafrost’s successful operation in the Faroe Islands. Bakkafrost will build 2 large energy-efficient hatcheries in Scotland, enabling the implementation of Bakkafrost’s large smolt strategy and giving an annual production capacity above 15 million smolts at 500g. Having large smolt in Scotland will transform the performance, lower the biological risk and increase harvest volumes. In addition to building hatchery capacity, Bakkafrost plans to build a new processing plant to strengthen processing capabilities and increase flexibility in operation. Bakkafrost will also invest in more service vessel capacity to improve the mitigation of biological risk and improve the cost of operation. Further, Bakkafrost will make investments in marine site development.

The investments in the Faroe Islands include increasing annual hatchery production capacity to around 24 million smolts at 500g, cost-efficient repurposing of old hatcheries into broodstock operation, expansion of feed production capacity and growing sustainably by optimization of existing sites and new technology.

With the investment plan, Bakkafrost expects to sustainably grow the total annual harvest volumes to 165,000 tonnes in 2028. Over the same period, the total annual production capacity in Bakkafrost’s value chain will reach 200,000 tonnes gutted weight.


The global salmon product market's long-term balance is likely to favor Bakkafrost. Bakkafrost has a long value chain and a cost-efficient production of high-quality salmon products and will likely maintain financial flexibility going forward.

In March 2022, Bakkafrost secured a 700 mEUR sustainability-linked credit facility (expandable by 150 mEUR) with a 5-year term and 2-year extension options. This facility, along with Bakkafrost's strong equity ratio, bolsters the Group's financial strength for organic growth and cost reduction in Scotland, while also facilitating M&A and future organic growth opportunities, and upholding an unchanged dividend policy.

Events after the Reporting Period

On 3 November 2023, Bakkafrost entered into a binding agreement for the construction of a new hatchery at Skálavík in the Faroe Islands. The capacity of the hatchery is 28,600 m3, enabling production of around 7 million smolt of 500g. The hatchery is included in the previously announced 2024-2028 investment programme and will be financed within the group’s current financing facilities.

Please find the Company’s Q3 2023 report and the Q3 2023 presentation enclosed.


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

·       Høgni Dahl Jakobsen, 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 and the second-largest salmon farmer in Scotland. 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 the Faroe Islands and primary and secondary processing in the Faroe Islands, Scotland and Denmark. The Group operates sea farming and broodstock operations in both the Faroe Islands and Scotland. The Group has built a biogas plant in the Faroe Islands. The headquarter is located in the Faroe Islands, and the Group has sales and administration offices in Grimsby (UK), Edinburgh (Scotland), Boulogne-Sur-Mer (France), New Jersey (US) and Munkebo (DK). The Bakkafrost Group has 1,778 employees (full-time equivalents).


This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. Copies of this announcement are not being made and may not be distributed or sent into the United States, Australia, Canada or Japan.

Press Contacts:
Regin Jacobsen CEO
+298 23 50 01