Salmon farmer warns of reduced £40.7m operating profit for Q2
Smaller harvest in Faroes and problems in hatcheries hit Bakkafrost’s bottom line
Faroes and Scotland salmon farmer Bakkafrost has warned that preliminary results show that it made a lower-than-expected operating profit of DKK 353 million (£40.7m) in the second quarter of this year.
The company said the main drivers for the results were extraordinarily low harvest volumes in the Faroese farming segment and the reduced average weight of the harvested fish.
In addition, the Scottish farming segment had lower harvest weights in Q2, compared to the previous quarter, primarily caused by biology-led harvest at some sites and early harvest at some sites to reduce biological risk ahead of the current quarter.
In general, price achievements for fresh salmon had reduced during Q2, Bakkafrost said. The low harvest volume in the Faroese farming segment lifted ex-cage costs as fixed costs were less diluted on the harvest volume.
Mortality costs
There were also exceptional mortality costs in the quarter.
In the Faroes, this amounted to around DKK 32m and covered seawater as well as freshwater, where accident-driven mortality events occurred during the start-up of the new expansions of the company’s Glyvradal and Norðtoftir hatcheries.
Bakkafrost Scotland incurred exceptional costs of DKK 43m caused by accident-driven mortality during the start-up of its Applecross 4 hatchery expansion and elevated mortality caused by viral deceases at some marine salmon farms.
Figures supplied by Bakkafrost Scotland to the Scottish Government’s Fish Health Inspectorate show that the company lost more than 1 million fish in the “1st feed to 5g” in May at Applecross because of water quality issues. On 22 May Bakkafrost reported mortality of nearly 800,000 fish with an average weight of 4.5g due to issues with the pH balance of the water in the parr unit caused by a lag between the pH buffer and probe feedback. The remaining 216,000 stock in the unit were culed the following week.
Bakkafrost told the FHI that changes had been made to probes and protocols for improved real time feed back to reduce lag and improve response.
Fungus infections were also an issue at Applecross and Bakkafrost’s Couldoran hatchery in May, pushing the death toll up to more than 1.4 million for the month.
Reduced harvest estimate
Bakkafrost harvested 8,700 gutted weight tonnes in the Faroe Islands in Q2, down from 13,101 gwt in Q2 last year. The company harvested 7,300 gwt in Scotland, up from 6,646 gwt in Q2 2022.
The company has reduced its expected 2023 full-year harvest volume for the Faroe Islands by 5,000 gwt to 63,000 gwt. The expected 2023 full-year harvest volume for Scotland is unchanged at 30,000 gwt.
The full Q2 2023 report will be released on 22 August.
