Continued low volumes to Russia dampen Bakkafrost results

Only 3% of the total volume this quarter has been exported to Eastern Europe compared to the usual 30%.

In a press release today,  Faroese salmon farmer Bakkafrost has posted a weak first quarter with EUR 36 million in operational EBIT.

Commenting on the result, CEO Regin Jacobsen said: “The disrupted market balance from Q4 2018 into Q1 2019 resulted in a weaker than expected result in the farming segment in the first part of Q1 2019. We are  pleased, however, to experience a better market development and more activity in the VAP segment.”

According to the company, Russia should have been open end of February but there are still very low volumes are going into Russia.

“EBIT/kg at DKK 16.8 (EUR 2.23), 16% behind our forecast. Low volumes to Russia seems to be the main reason behind this as only 3% of the total volume this quarter has been exported to Eastern Europe, vs. 7% in the fourth quarter 2018 (30% a year ago),” wrote SpareBank 1 Markets’ Salmon analyst Tore Tønseth in a financial statement. Bakkafrosts’ EBIT was 13-18% below their estimate.

Bakkafrost has a full-year volume guidance at 54,500 tonnes.

“We expect to cut our 2019 EBIT estimate with 3-4% after this report and are likely to stick with our Sell recommendation. Bakkafrost is operationally performing very well, but we continue to find the pricing of the company too demanding. We also believe the stock market has underestimated the risk related to Russian market access,” added Tønseth. The bank has a “SELL” recommendation on the salmon farmer.


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