Bakkafrost Q3 2010: another quarter with strong margins

Bakkafrost Group's operational EBIT for Q3 2010 was DKK 47.3 million
(DKK 50.9 million in proforma Q3 2009). Operational* EBIT for the first 9 months of 2010 was DKK 156.4 million (DKK 142.1 million in proforma for the first 9 months of 2009), reports www.megafishnet.com with reference to Bakkafrost. 

The operational EBIT margin increased from 22.3% in proforma Q3 2009 to 26.7% in Q3 2010. For the 9 month period the margin increased from 21.6% to 27.5% The total harvested volume in Q3 2010 was 4,048
tonnes gutted weight (6,815 tonnes gutted weight in proforma Q3 2009 and 5,341 tonnes gutted weight in Q2 2010). For the first 9 months of 2010, the harvested volume was 15,133 tonnes gutted weight (21,715 tonnes
gutted weight for the first 9 months of 2009 proforma).

Commenting on the results, CEO Regin Jacobsen said: "We are satisfied with the result taking into account the low harvested volumes and thus low capacity utilisation. Going forward, the harvest will be at a significantly higher level, which gives the company a platform for better biological-, operational- and market planning".
The Board of Directors has decided to propose to the Annual General Meeting that if no M&As have taken place before the next Annual General Meeting, a high share of the earnings per share (EPS) from 2010 will be paid out as dividend. It is the Board of Directors view that 30-50% of EPS shall be paid out as dividend when the Group's equity ratio is above 60%. At the end of 3Q 2010, the equity ratio was 73%.

Bakkafrost's smolt release was guided to be approx 7 million pieces in 2010. This is now estimated to be 7.9 million pieces.

Operational* EBIT/kg in Q3 2010 was DKK 11.70 (NOK 12.49) (DKK 7.48 (NOK 8.77) in proforma Q3 2009).
Operational* EBIT/kg for the first 9 months of 2010 was DKK 10.34 (NOK 11.09) (DKK 6.54 (NOK 7.76) in the proforma figures for the first 9 months of 2009).

Bakkafrost Farming North (former Bakkafrost) had a calculated operational EBIT/kg of DKK 13.31 (NOK 14.22) in Q3 2010, and Bakkafrost Farming West (former Vestlax) had a calculated operational EBIT/kg of DKK 19.49 (NOK 20.81) in Q3 2010.
 
For the first 9 months of 2010, Bakkafrost Farming North (former Bakkafrost) had a calculated operational EBIT/kg of DKK 12.98 (NOK 13.87), and Bakkafrost Farming West (former Vestlax) had an operational EBIT/kg of DKK 13.10 (NOK 13.99).

The ratio of harvested fish sold on long-term contracts in 3Q was 62%. Bakkafrost intends to sell around 50% of its harvested fish as VAP products on long-term contracts in the future: this is expected to be reached, as the total quantity of harvested fish is expected to rise significantly.

Bakkafrost expects to harvest from its farming sites 23,000 tonnes gutted weight in 2010 and 35,000 tonnes gutted weight in 2011. In 3Q 2010, Bakkafrost accounted for 44% of the 9,200 tonnes gutted weight of the total exported volume of farmed fish from the Faroe Islands.

The Group's net interest-bearing debt at the end of Q3 2010 was DKK 80.4 million (DKK 251 million in proforma at year-end 2009 and DKK 65.1 million at the end of Q2 2010).

The planned operational changes post-merger of Vestlax into Bakkafrost are on track.

The company has a strong balance sheet with high equity ratio and high available credit facilities.