(Figures in parenthesis refer to the same period last year unless otherwise specified)
On the 8[th] of
The Group made a profit for Q1 2020 of
Commenting on the result, CEO
"Overall we are satisfied with the results from this challenging quarter. In times like these, we see the strength in our integrated value chain and in particular having significant production capacity and flexibility in our VAP segment. Swiftly, we have been able to shift volumes from the spot-oriented market towards the VAP segment for the retail market and hereby maintaining a high production.
We are pleased that the integration of SSC into Bakkafrost is on track and of already seeing a positive development in the operation in
The biological development is also good with strong growth in both the
The challenges this quarter have been: An unusually stormy January, which reduced the fishery of species, used as raw material by Havsbrún, hence reducing production - a severe storm in the end of February, causing a loss of around 1.2 million fish - and then the outbreak of the Covid-19 pandemic.
Since February, Covid-19 has disrupted the salmon market resulting in a drastic drop in the salmon spot price and imposing logistical problems with air transport. Over a few weeks, the demand for salmon has changed in favour of products for the retail segment, but at great harm to the fresh-oriented HORECA segment.
It will be interesting to see if the huge number of new consumers, buying salmon from the supermarkets, will be a part of an increased demand for salmon, when the HORECA segment re-opens during the next coming weeks and months."
The combined FO farming and VAP segments made an operational EBIT of
The FO farming segment made an operational EBIT of
The SCT farming segment made an operational EBIT of
The VAP segment made an operational EBIT of
The FOF segment (fishmeal, oil and feed) made an EBITDA of
The Group was impacted by the significant market disruption from Covid-19 especially towards the end of the quarter.
The net interest-bearing debt amounted to
Bakkafrost aims at giving the shareholders a competitive return on their investment, both through payments of dividends and by value growth of the equity through positive operations.
The long-term goal of the Board of Directors is that 30-50% of earnings per share shall be paid out as dividend. Bakkafrost's financial position is strong with a solid balance sheet, a competitive operation and available credit facilities. Due to the uncertainty imposed by the Covid-19 pandemic, the Board of Directors have decided by postpone the decision on dividend payment for 2019 until Bakkafrost's H1 presentation on
OUTLOOK
Market
The global harvest of
Looking forward the market dynamics will still be affected by the Covid-19 situation which imposes greater uncertainty to the market development estimates. In Q2 2020, the global harvest of
Bakkafrost operates in the main salmon markets,
Farming
The outlook for the farming segment in the
Bakkafrost focuses on reducing biological risk continuously and has made several new investments and procedures to diminish this risk. Bakkafrost focuses on using non-medical methods in treatments against sea lice and has invested in new technology to follow this strategy, including farming supply vessels for mechanical delousing and mechanical cleaning of nets in the pens.
The quality and performance of the smolts have also increased significantly, and there are clear signs that the large smolt and non-medical delousing strategies are working successfully in the
Overall, the biological performance in the Faroese and Scottish operations have been strong during Q1 2020 with good growth and low mortality rates, except for the mortality caused by the severe storm that hit our farming sites in the
Farming SCT has signed contracts for around 25% of the expected harvest volumes in Farming SCT in 2020. These contracts usually last for 12 months.
Bakkafrost expects to release 15.0 million smolts in 2020 in the
VAP (Value Added Products)
Bakkafrost has signed contracts covering around 47% of the expected Faroese harvest volumes in Q2 2020 and 40% of the harvest volume for 2020. Bakkafrost's long-term strategy is to sell around 40-50% of the Faroese harvested volumes of salmon as VAP products at fixed price contracts.
The VAP contracts are at fixed prices, based on the salmon forward prices at the time they are agreed and the expectations for the salmon spot price for the contract period. The contracts last for 6 to 12 months.
FOF (Fishmeal, Oil and Feed)
The outlook for the production of fishmeal and fish oil is dependent on the availability of raw material. The ICES 2020 recommendation for blue whiting is 1,162 thousand tonnes, which corresponds to an increase of 2%, compared to ICES's recommendation for 2019.
Bakkafrost expects a decrease in production volumes of fishmeal and fish oil in 2020, compared to 2019. Havsbrún's sales of fish feed in 2020 are expected to be 110,000 tonnes, depending on external sales.
The major market for Havsbrún's fish feed is the local Faroese market including Bakkafrost FO's internal use of fish feed.
Investments
Bakkafrost's investment programme for the period from 2020 to 2022, excluding investments in
Financial
Despite the uncertainties imposed by the Covid-19 pandemic, long term market balances in the world market for salmon products will most likely remain favourable for Bakkafrost. Bakkafrost has a long value chain and a cost-efficient production of high-quality salmon products and will likely maintain the financial flexibility going forward.
During Q4 2019, Bakkafrost refinanced its bank facilities amounting to 352 mEUR with a further accordion option of 150 mEUR. In addition, bank facilities amounting to 100 mGBP were ensured to refinance
A high equity ratio together with Bakkafrost's bank financing, makes Bakkafrost's financial situation strong. This enables Bakkafrost to carry out its investment plans in the
Covid-19 pandemic
Bakkafrost plays an important role in ensuring healthy food for the world's growing population, and this role is especially important in the difficult times the world is facing now.
Bakkafrost has implemented a range of measures to protect our workforce and ensure continuous production. New procedures and social distancing are implemented widely in the business, and production and office facilities have been modified where necessary to prevent infection. In the
Bakkafrost is taking all necessary steps to protect the business, and we are constantly adapting to the changing market conditions and shifting demands from customers.
As an extraordinary precautionary measure, in
Please find the Company's Q1 2020 report and the Q1 2020 presentation enclosed.
Contacts:
·
· Høgni
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
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