Commenting on the results, CEO Regin Jacobsen said: "2013 is the best year ever for the Bakkafrost Group. The salmon market has been stronger than expected, with the new markets taking the lead. In 2013 we announced our five year investment plan, which will prepare the company for the future. Recently we have tested the veterinary early warning system in the Faroe Islands. The outcome has proved a good system and we still have a strong biology."
The Group made a profit for the quarter of DKK 137.9 million (DKK 148.2 million). For 2013, the profit was DKK 589.2 million (DKK 281.3 million).
The total volumes harvested in Q4 2013 were 11,097 tonnes gutted weight (13,044 tgw). The total harvested volumes for 2013 were 41,268 tonnes gutted weight (44,341 tgw).
The combined farming and VAP segment made an operational EBIT of DKK 124.9 million (DKK 95.8 million) in Q4 2013. For 2013 the combined farming and VAP segment made an operational EBIT of DKK 551.9 million (DKK 311.0 million).
The farming segment made an operational EBIT of DKK 130.8 million (DKK 84.3 million). The reason for the improved result is due to higher prices as the harvested volumes are lower. On the other hand result and volumes are lower than expected because of the early harvest on the first site with the suspicion of Neoparamoeba perurans. For 2013, the operational EBIT was DKK 642.3 million (DKK 274.0 million).
As expected, the VAP segment had a loss on its operations in Q4 due to high salmon spot prices. The VAP segment made an operational EBIT of DKK -5.9 million (DKK 11.5 million) for Q4 2013. For 2013, the accumulated losses amounted to DKK -90.5 million (DKK 37.0 million).
The third segment – fishmeal, oil and feed – made an operational EBITDA of DKK 21.3 million (DKK 18.4 million) in Q4 2013 and for 2013 the operational EBITDA amounted to DKK 125.8 million (DKK 84.5 million). The increase in the EBITDA is primarily due to higher production of fishmeal and fish oil.
Outlook
Market:
The salmon marked have proved to be strong recent years. Therefore the outlook for the salmon market in 2014 is good. Global supply of salmon in 2014 is expected to increase 4-6 per cent. Based on historical numbers, the salmon marked is in balance, when the supply increases by 6-8 per cent per year. This together with an average NOS (Independent exporters purchase price, spot from farmers) price in 2013 of NOK 39.07 per kg gives indications of salmon prices in the same price range as in 2013 in average.
As the supply of salmon is expected to be low first half of 2014 it is expected that the market will be tight, while more salmon will be harvested in the second half.
Bakkafrost expects to sell around 55 per cent of the harvested volume of salmon in the spot market in 2014 and around 45 per cent as VAP. The market place is one of Bakkafrost’s most significant risk areas. To reduce the exposure to the market risk, Bakkafrost has a geographical approach and a market price approach. To diversify the geographical market risk, Bakkafrost sells its products to some of the largest salmon markets in the world, US, the Far East, Europe and Russia.
Farming:
The outlook for the farming segment is good. The biological situation is good and the price outlook in the spot market is good. Bakkafrost expects to harvest 45,000-48,000 tonnes gutted weight in 2014 and Faroe Farming, which Bakkafrost holds 49 per cent in, expects to harvest around 5,000 tonnes in 2014.
Feed:
The major market for Havsbrún´s fish feed is the local Faroese market. It is expected that the total consumption of fish feed in the Faroe Islands will be approximately 90,000-95,000 tons in 2014. Depending on the purchase from external customers in the Faroe Islands and abroad, the sale of fish feed will be approximately 83,000-87,000 tonnes.
