Earnings call transcript: Bakkafrost’s Q2 2025 sees revenue dip, stock rises

Bakkafrost (BAKKA), the salmon farming company with a market capitalization of $2.6 billion, reported its second-quarter 2025 earnings, revealing a decrease in revenue to 1.6 billion dollars and a negative profit after tax of 138 million Danish krone. According to InvestingPro data, the company’s revenue has declined 3.7% over the last twelve months, while maintaining a healthy gross profit margin of 56.7%. Despite the financial challenges, the company raised its harvest guidance for 2024, which positively influenced its stock price, rising by 2.16% to $43.66. The stock currently trades near its 52-week low of $38.33, suggesting potential value opportunity. InvestingPro analysis indicates the stock is currently undervalued, with analysts setting a consensus high target of $56.78. For detailed valuation metrics and 12 more exclusive ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro. The company is focusing on its long-term growth strategy, aiming to achieve a harvest of 165,000 tonnes by 2028. With an overall Financial Health Score of 2.24 (rated as ’FAIR’ by InvestingPro), and a strong current ratio of 4.79, the company appears well-positioned to execute its growth plans. The company maintains a conservative debt profile with a total debt to capital ratio of 0.20, providing financial flexibility for future expansion.

Key Takeaways

• Bakkafrost’s Q2 revenue decreased to 1.6 billion dollars.
• The company reported a negative profit after tax of 138 million Danish krone.
• Stock price increased by 2.16% following raised harvest guidance.
• Global salmon sales volumes increased by 17%.
• The company aims for a long-term growth target of 165,000 tonnes by 2028.

Company Performance

Bakkafrost’s overall performance in Q2 2025 showed a mixed picture. The company experienced a decline in revenue and a negative profit after tax, reflecting the challenges in its Scottish operations and a drop in salmon prices. Trading at an EV/EBITDA multiple of 18.5x and offering a dividend yield of 3.06%, the stock presents a complex investment case. The performance in the Faroe Islands remained strong, contributing to the company’s optimistic outlook for future growth. Unlock deeper insights into Bakkafrost’s valuation and growth prospects with InvestingPro’s exclusive financial metrics and expert analysis.

Financial Highlights

• Revenue: 1.6 billion dollars, a decrease compared to previous periods.
• Operational EBIT: 65 million dollars.
• Profit after tax: Negative 138 million Danish krone.
• Net debt: Approximately 3.8 billion euros.

Outlook & Guidance

Bakkafrost has raised its harvest guidance for 2024 to 104,000 tonnes, up from the previous forecast of 97,000 tonnes. The company expects a 2% supply growth in 2026 and is focusing on investments in robust smolt and efficient feed to support its long-term growth target of 165,000 tonnes by 2028.

Executive Commentary

"The Faroese farming remains the backbone of the group," stated Reijn, Operational Executive, highlighting the company’s reliance on its strong performance in the Faroe Islands. He also emphasized, "We are firmly on track with robust operations, a clear strategy, and the investment needed to secure sustainable growth."

Risks and Challenges

• Challenges in Scottish operations may continue to impact profitability.
• Fluctuations in salmon prices could affect revenue.
• High net debt levels pose financial risk.
• Sea lice and other environmental factors remain operational challenges.
• Market competition and regulatory changes could impact future growth.

Q&A

During the earnings call, analysts inquired about the potential volume impacts from issues at the Scottish smolt facility and the cost development expectations for Scottish operations. Bakkafrost addressed these concerns by explaining the volume guidance upgrade for the Faroe Islands and outlining strategies to manage costs effectively.

The company’s strategic focus on improving operational efficiency and expanding its market presence, particularly in the Faroe Islands, is expected to drive future growth despite current challenges.

Full transcript - P/f Bakkafrost (BAKKA) Q2 2025:

CFO/Financial Executive, Bakkafrost: A profit warning in July 15, and this is in line with what we are presenting today. So in the second quarter, we had revenues for $1,600,000,000 and an operational EBIT of 65,000,000 The Ferry’s harvest in the quarter was 16,000 tonne, 5,800 tonne up from the same quarter last year. In Scotland, we harvested 7,000 tonne, which was 4,300 tonne lower than the same quarter last year. At our FOF division, feed sales increased by 14% in the quarter to 37,500 tonne. We sold 5,000 tonne of fish oil.

Fish meal was also lower than in the same quarter last year, 9,000 tonne in this quarter. Sourcing in this quarter was very strong, 160,000 tonne of marine raw material were sourced in this quarter compared to 90,600 tonne last year. Cash flow from operations were negative with $2.00 $4,000,000 and all segments had positive EBITS except for the Scottish Freshwater and Farming segments. We also paid out dividends in the quarter amounting to DKK $5.00 1,000,000, corresponding to DKK 8.44 per share that was paid out in May. So moving on to markets and sales.

The market has been negatively impacted on the price side in this quarter. The average price for four to five kilo salmon was NOK74.64 per kilo, which is a 33% reduction compared to last year and a 20% reduction compared to previous quarter. There’s been a downward trend throughout the whole quarter and also continuing into the third quarter. The large increase in supply, especially from Norway, but also from other regions, which have contributed to the supply growth, have put prices under pressure and also reduced the price premium normally achieved for larger fish. So that has been significantly lower in this quarter.

According to the latest update from Kantali, global sales volumes in this quarter increased 17% compared to the same period last year, and sale to all markets increased. EU increased the consumption or the sales of the EU increased with 31,000 tonne, corresponding to 13%, which was around half of the European supply increase. So a larger share of the European supply has been exported to other markets, mainly China and to The U. S. The U.

S. Sale increased with around 17,000 tonne, corresponding to 12%, significantly above The U. S. Well, the American supply increase, so more imported volumes. Tariffs have not had any significant impact on trade flows in this quarter.

So U. S. Demand has still been strong. In China, sales to China has grown strongly. China took 52% more volumes in this quarter.

A significant portion of that increase is Selmer from Norway. Norway has consistently supplied China with around 10,000 to 11,000 tonne of whole fish equivalents during the quarter, up from around 8,000 tonne in the previous quarter on average. The global harvest in the quarter increased 18%, so there were some inventory movements. Growth was mainly delivered by the 24% increase from Europe and Norway, as mentioned, in particular, with a 27% increase. Seawater temperatures have been higher in Norway.

Biological performance has overall been good. And a significantly lower share of production grade fish coming from Norway. That share has dropped from 30% to 17%. Feed sales have also been strong in Norway, 16% up in the second quarter, however, slightly down in July as the number of fish in the water in Norway has reduced. It’s around 3% less in at the July compared to last year.

In Scotland, harvest have dropped slightly, 3% down. But also there, we have increased feed sales with 8% and a slight increase on the average weight also to 4.5 kilo for Scotland as a whole. Baccarfoss, however, we have increased our harvest weight with 45% and which corresponds to 5.9 kilo in this quarter. In The Faroes, we have had very strong growth. Harvest has increased by 51%.

That’s mainly driven by baccarat. Our biology has been very good, the best ever actually, or at least in the last decade or so. Large fish, low mortality and a thirty percent thirty one percent increase in our feeding in The Faroes as a whole, and also strong continuing into the third quarter. Harvest from The Americas, Chile was up with 15%, also 50% on feed sales And Canada was down with 19% on harvest volumes. So moving on to financials and starting with the P and L.

So the revenue decreased, as mentioned, to DKK1575 billion. Operational EBIT down from DKK388 million last year for the group to DKK65 million in this quarter. We had fair value adjustments of minus $187,000,000 and revenue taxes amounted to minus $25,000,000 in this quarter compared to minus 84,000,000 in last year. That is, of course, a result of the lower salmon prices. Profit after tax was negative with DKK 138,000,000.

Our adjusted earnings per share in this quarter were minus On the balance sheet, we have increased our Property, Plant and Equipment with $185,000,000 since year end. That amounts now to $6,900,000,000 Fair value of biological assets amounted to $2,600,000,000 and inventory have increased quite significantly, $322,000,000 in the quarter to $993,000,000 This is mainly driven by the sourcing at Habsburg, where we have produced a lot of fishmeal into inventory. Receivables have dropped $316,000,000 Cash and cash equivalents were $2.00 $5,000,000 at the end of the quarter and the equity ratio, 59%. And moving on to cash flow. From operations, as previously mentioned, negative with $2.00 $4,000,000 Cash flow from investments were negative with $238,000,000 and positive from financing with $397,000,000 meaning a net change in cash of minus $45,000,000 In this quarter, we have increased our net debt to around €3,800,000,000 The dividend payment of $5.00 €1,000,000 and the changes in working capital are the main drivers behind that.

And we had €1,600,000,000 in undrawn credit facilities at the end of the quarter. And finally, before handing over to Rain to go through the operations and outlook, I want to point your attention to Note three in the accounts, which disclose how we have changed our internal invoicing between the farming segment and the sales and other segments. In short, we have removed the freight cost, which previously was both expensed and invoiced back. So it was both a cost and an income to the farming segment. That was due to the previous revenue tax regulation in the Faroes.

With the changes that were introduced on the January 1, we have decided to remove that freight element to provide more transparency and give a clearer picture of the true costs in the farming segment. So we have included an appendix also in the report, which shows the comparable figures for last year if the same method was applied last year. And with that, I will hand it over to Reijn.

Reijn, Operational Executive, Bakkafrost: Thank you, and good morning. And we will start with the segment. In this quarter, the FOF segment delivered strong feed sales, but lower external sales of fish meal and oil. The growth in The Faroes is, of course, the primary driver for this. The marine raw material sourcing was also very strong, 160,000, which is 77% up from last year.

Last year, we had the strike, which was not this year, so we had good sourcing this year. Feed sales increased 14% to 37.5 Kt versus 33 last year.

CFO/Financial Executive, Bakkafrost: 100 External sales declined, fish mill 9,000 versus 15,000

Reijn, Operational Executive, Bakkafrost: and only marginal sales of marine oil or fish oil. Inventories have been built, so we have more fish meal especially on in inventory. The operational EBIT from the FOS segment was SEK89 million versus SEK112 million last year, which is 21% down. And the margin was 13%. Looking at the prices of these raw materials, which are, of course, drivers for the farming cost, the feed cost, fish meal have increased slightly in the quarter, but fish oil continued to drop.

Vegetable ingredients have moved slightly up. So overall, there is an overall downward trend in raw materials for feed, which of course is positive for feed cost and will will continue to lower farming cost going forward. Moving to the freshwater operations. In The Faroes, the ramp up after our expansion in Glyrada De Nordhofter continued in the second quarter with new production records. 5,400,000 smolts are transferred in this quarter versus 4,500,000 last year.

Full year transfers are still maintained at 18.5 grams versus 17.1 grams last year. The average smalt weights are increasing four sixty four gram in this quarter versus three ninety one grams last year, which is significantly reducing biological risk and supporting the higher productivity. Operations continue to deliver high quality and robust smalt, which is a key driver for the low risk in our marine operations and productivity in Backefrost and Faroes. The operational EBIT increased to 85,000,000 versus DKK 74,000,000 last year, 15% up, and the margin is 36% versus DKK 40,000,000 last year. On note, we can report about a very strong biology, a robust smalt.

And the main indicator here is the ninety days mortality post stocking, which is now all time so survivability is all time high, mortality is all time low. And that means that ninety seven percent, ninety eight percent during the first ninety days after transfer, all inclusive everything, absolutely everything, which is record high levels. With improved capacity utilization, robust smolt and strong survivability, cost per smolt is trending down and expected to continue in future in the future and coming months. So the ferrous freshwater division has stepped up to a new level, delivering smalt of unprecedented quality and robustness, which is the strongest foundation for our farming in the future. Coming to Freshwater Scotland which is another story.

In the second quarter, the transfers in Scotland were lower, SEK 900,000.0 smalt versus SEK 1,500,000.0 last year. However, the average weight was SEK 1 170 gram compared to 95 gram last year. And smalt produced internally at Applecross reached two forty three gram versus 95 last year. The financial impact of the issues in the quarters of the mortality was SEK52 million, and the operational EBIT was minus SEK72 million in the quarter. Cost per smalt is obviously very much impacted by the volume, which is not yet where it must be.

The overall target for 2025 is now after the incident at Applecross taken down to 6,000,000 to 7,000,000 smolt, about 200 gram to marine farms, which is compared to 6,000,000 last year at 100 gram or 109 gram. The construction is coming to an end. The last part, AP7, is expected to be complete now in 2025. All other units are now in operation and being scaled up. Talking a bit about this impact at Applecross.

The second quarter was impacted by a major incident in the D1 module at Applecross, significant mortality and a full clean out of the stock. Insufficient biosecurity during construction works triggered a severe disease outbreak, leading to culling of most of the fish in the affected module. The direct financial impact was 52,000,000 Danish kroner. But of course, also lost fish will have impact. The freshwater division in Scotland is now being integrated into the freshwater unit in Faroes and organized under one group freshwater director.

A new local management at Applecross supported by experienced staff from the Faroe Islands is now on place. As production scales up over the coming quarters and operational control improves, we expect a gradual recovery on biological performance and capacity utilization. This will reduce our Scottish operations, which so far has been unacceptably high, the risk in our operations. The biological cycle from egg to two fifty gram is around twelve months. The current biomass at Applecross or at our freshwater division in Scotland is currently 13,000,000 individuals.

This includes 4,500,000 from the June batch this year. Another 4,500,000 will be hatched in October. With new management, we aim to successfully scale up the small production in Scotland over the next twelve months, enabling the planned transfer in 2026. The new management team is reviewing all procedures and operations, and we will report back at the next quarterly presentation. Farming in the Faroe Islands.

In this quarter, we harvested 16,000 tonnes versus 10.2 tonnes last year, 57% up. The average weight of the harvested fish was 5.2 kilos versus 5.5 last year, slightly lower, but solid numbers. The operational level was NOK4 million versus NOK206 million last year, 31 versus DKK 20.19 per kilo last year. The decline is fully explained by the significant drop in summer price. Biological performance was very robust and remains very robust.

Strong growth, efficient sea lice transfers, sea lice management and low mortality. Survival rates are the best levels we have seen in The Faroes in a decade. Feeding in the quarter was 46% up. Growth trend continues into the third quarter with 31% improved in the first seven weeks of the third quarter or 31% growth compared with last year. Growth at record high levels supported by stable seawater temperatures and good biology.

Survivability at the decade high levels, which is key for productivity. Farming costs 12% down versus the same quarter last year, driven by reduced risk, improved productivity and volume growth. So the Faroes farming operation remains the backbone of Bakkaprost, delivering strong growth, excellent survivability and a solid biological platform for future operations. And if you look at the note on our inventory, you see that the biomass supports good growth, which is also, of course, the reason for our guidance upgrading guidance for this year and supports also a very strong platform for next year, which we will revisit when we come to next quarter presentation. Looking to Scotland.

In this quarter, we harvested 7,000 tonnes versus 11.4 last year, 38% down. The average weight was 5.9 kilos versus 4.1. This is 45% up, all time high for a second quarter. However, the operational EBIT in the quarter was minus NOK 127,000,000 versus plus NOK 111,000,000, so minus NOK 28.36 per kilo versus plus NOK 15, so a big difference. The negative result was mainly driven by lower salmon price macro price, lower volume and DKK39 million, which is expensed as extraordinary mortality.

The biological performance is a bit of a mixed bag in this quarter. The strong growth and large fish is a very good indicator and creates good value for baccarat. But there were two farms which were impacted by mortality events, fluoroculosis, CMS and PD, which had heavy impact on these sites. The harvested volume shows a sharp reduction versus last year. The average weights are very good in progress, and we see that we can grow large fish in Scotland and also high quality fish, which have been sold to the market at really, really good prices.

And we see also that our key performing indicators in Scotland are now moving in the right direction with really good growth, also good feed conversion ratio, which are good improvements. But ring side cost is, of course, heavily impacted by the low volume, which will be coming up when we have our risk in better control. Looking at smolt in pipeline. The first large batch of large smolt was transferred from Applecross back in January. This fish was not exactly where we want them to be, but they have been performing really, really exceptional.

They were transferred in January and the will are expected to be harvested already in January year. So they were transferred at around 200 gram or 180 gram, and are expected to be harvested already in twelve months. That’s a really, really game changer and will be a milestone when they are harvested. So operations remain in a transition, I would say, at the moment, as we need more robust and large malt to enter the sea. But we are just now expected to see this start.

So gradual improvement in biology, lower risk and strong cost performance is expected to be seen as we will gradually ramp up during the next twelve months from Apotros. Coming to the Service segment. In this quarter, the Service segment delivered solid results driven by efficient sea lice mitigation and major improvements in smalt transfer. And smalt transfer is a part of this segment to transfer the small from the hatcheries to the farms. And the reason why I emphasize this is because this is a really this is the start of the small, and this is very important to have a good and healthy and strong marine operation.

In this quarter, this segment delivered EBIT of DKK70 million compared with DKK12 million last year, so 42% up. And this is DKK1.16 per kilo versus DKK87 million earlier last year. So small transfer is a key area. If you compare with a few years back, we used to transfer around 1,000 tonne per year. Last year, we transferred 7,000, so we have seven doubled this number.

But this will increase to 12,000 tonnes shortly as numbers on average weight in Faroes are increasing. So we are going to double that volume in short time. So we have converted one of our vessels, Maarten, for this job, and this has now been ongoing for twelve months. So conversion of Maarten tripled our capacity. Originally, this was an offshore vessel, and we have repurposed 10 of the tanks for small transfer, and this has improved our operations significantly.

So this is a system designed in house, fully automated to control oxygen, CO2 and key water parameters, which ensure all the best fish welfare and survivability in the transfer. The benefit of the conversion is optimized capacity to match transfer volumes, gentle handling via pressure based transfer, no pumping, guaranteed water quality throughout the journey and high cost effective because repurposing existing assets. So the performance so far has been that we have transferred 5,000 tonnes with Maarten and the survivability in all transfers have been above 97%. So this is also part of the driver for higher survivability and a better start for the fish in the in the water. So strong fish welfare and and early start of feeding after seed transfer.

And now, as we speak, Bacanese, which is the sister vessel to Martin, has been undergoing the same conversion and has and is operating in Scotland and has now started operation in Scotland with the same purpose to transfer smolts from up across to the sites where we have used third party vessels, different vessels with very mixed bag of results. So Bacanese went back to Scotland July and is now in full operation to do this, and we expect this will also be one of the drivers for improved results in Scotland going forward. So coming to sales market. Operating as one company enabled record high sales from Scotland to both The U. S.

And China in this quarter. Volumes to value added products increased sharply with 50% more ferrous production allocated to VAP compared to last year. Overall, sales volumes increased and revenues were positively impacted by the improved premium realization. The operational EBIT improved to 97,000,000 versus minus CHF 57,000,000 last year. So plus 97,000,000 versus minus 57,000,000 last year.

And this corresponds to a margin of 4% compared with minus two percent last year. And the difference is quite important. It’s plus 65 versus minus NOK 4. So the difference is NOK 10. So it’s a big difference.

And this is driven by good premium. So we have managed to lift our premium from minus $1.37 to plus $5.84 per kilo despite the challenging market conditions. Western Europe market continues to be our largest market, but U. S. And China grew most strongly in this quarter, supported by our one company approach and challenging and being able to channel large fish from Scotland to the overseas markets.

China volumes doubled, though lower premiums because of the pressure of supply to this market segment. Retail and branding efforts have gained attraction. Heimland brand, which is our baccaratas brand, is now present in retail and catering chains both in Europe, U. S. And Asia, which strengthened our premium position.

So our marketing and sales have really done well in the quarter. So and despite this global pressure of salmon prices, our One Company strategy and stronger branding has managed to increase the value and better premium capture lifted our results significantly in this quarter. So I would like to go through this, which I normally don’t, there’s a big change in the value, especially from the market. So this waterfall, if you look at the Faroes, we see that the big change from Danish kroner, DKK 20 per kilo to only DKK 24 is a decline of around DKK 20. And the main driver was the price reduction, which is DKK 22, actually more.

And this is offset by a positive reduction or in cost price, which benefits with NOK 5 per kilo in Faroes. So even under heavy pressure, the Faroes operations have remained profitable, demonstrating resilience and strong biology and cost control, which, of course, is very much in focus when you are forced to be in this challenging water as we are at the moment. When you look at the Scottish operation, we see that the EBIT per kilo dropped from $9.07 9 last year to minus SEK 18.13. So it’s a drop of SEK 28 per kilo. And the price effect is SEK 27 per kilo.

So it’s more or less the same or NOK 1 difference. But in this area, we see that cost improvements have actually benefited with NOK 5.8 per kilo. But then we have lost value with exceptional mortality and other items on production cost on that. So Scotland is showing the most dramatic turnaround in the group from profitable to deeply negative in this year, underlying the urgent need of robust, large, small and a good and improved biology in Scotland. When we look at the performance per region, we see the contrast between Faroe Islands and Scotland.

The operational performance in Faroes was an EBIT of SEK211 million versus SEK274 million last year. The EBIT per kilo declined from DKK13.15 million from DKK26.86 driven by lower salmon prices. In Scotland, the operational EBIT turned to minus DKK146 million versus plus DKK113 million. The EBIT per kilo dropped to minus DKK20.70 million from plus DKK10, a swing of more than DKK30 per kilo. And this is caused by exceptional mortality, lower volumes and underutilized capacity.

So the Faroese operation remains solid, profitable, also with lower salmon prices. The Faroese farming remains the backbone of the group, while the Scottish result is urgently needed the completing of the transition to robust large smalt. So coming to the outlook for the industry and for Bacafrost. We see a reduced growth ahead. Global supply growth will slow down in the 2025 compared to the strong growth in the first half of the year.

And especially the availability of hadongutted salmon for the spot market will come down to a totally different level compared with last year. Good biology in Norway have supported strong growth so far this year, but supply is expected to slow in the second half as MAB restrictions and fewer fish in the water limit harvest. In Faroes, volumes are significantly higher year on year, driven by larger and more robust small, strong survivability and solid growth in the first half of the year. In Scotland, marine operations remain mixed, but improvements are emerging with higher volumes expected going forward. So Europe overall, we see that the growth is behind us on the supply side this year.

Arvest is now expected to come down to maybe 2% to 3% in the second half and close to 0% in 2026. In Chile’s and Americas, the supply will pick up in the second half after a week ’24, and they will probably be peaking in the fourth quarter. North America remains stable with normal seasonal patterns. So overall, for 2025, harvest will be higher than 2024, but growth which will be much reduced in the second half. And looking into 2026, we expect around 2% supply growth and a more muted outlook on the from the supply side.

For Bacafrost, we are raising our guidance for this year to 104,000 tonnes versus 97,000, Faroe Islands from 77,000 up to 82,000, Scotland from 20,000 to 22 And this is, of course, because of our strong development so far this year in Faroes and in Scotland. The biomass is higher and the in Scotland, especially, the average weight of the harvested fish has been high, so the numbers are still available. Harvest profile reflects our derisking strategy in Scotland, where 58% of Faroese volume will be harvested in the second half. So it’s the opposite. In 2025, the small transfer is expected to be 18,500,000 in Faroes, which is same as before, but we are lowering our guidance to 6,000,000 to 7,000,000 for Scotland after the issues.

So totally 24,500,000 to 25,500,000 which is 10% up from last year. Larger, more robust malt underpins lower risk, stronger survival and higher productivity. On the contracts, we still remain with around 10% to 15% of our sales on contracts, balancing stability with flexibility to capture market premiums. At a later point, we will be open for increasing contracts when market conditions are the right. Fish meal oil and feed production is broadly similar as last year.

Lower raw material prices will benefit farming costs in the second half of this year. The strategy for Backefrost is unchanged. Growth target is 165,000 tonnes by 2028. Sustainability growth focus on robust, malt, efficient feed and fish welfare. Key objectives are progressing, which are mainly at the moment the Skalawik hatchery, the Hasturun expansion, which are critical for our long term resilience.

Yes, I guess I said 165 by ’28. So that’s so from our CMD update in June, our target is 01/1962 by 02/1930. So I had that wrong. Our long term investment plan is still the update from the Capital Market Day. We have made some small adjustments in the investments in 2025, where some of the investments will be postponed to 2026.

But the strategic focus is still the same and the journey is still the same: to reduce the risk, to increase productivity and drive organic growth. The key projects include large malt capacity in Faroes and Scotland, feed capacity and new harvest and processing facilities in Scotland. Given this current market environment, part of the ’25 investments have been moved into ’26. But we are quite excited about the outlooks for ’26. This creates a smoother, more balanced investment profile without altering our long term ambition.

Our strategy and commitment remain firm with robust biology, stronger balance and the clear investment priorities, Pacafrost is well positioned to deliver a sustainable growth and long term value. We are firmly on track with robust operations, a clear strategy and the investments needed to secure sustainable growth and long term value creation. We think we are on the right path. Thank you very much. And now we are open for questions.

Haemel Almiraj, Analyst: Haemel Almiraj.

Christian Odd, Analyst, Beatriz Securities: Could you

Haemel Almiraj, Analyst: say something about the knock on effects we should expect in 2026 on volume and cost from the issues in the smolt facility in Scotland?

Reijn, Operational Executive, Bakkafrost: Yes. As we are reducing our smolt guidance this year, Of course, that will have some impact some negative impact on the harvest next year. So I guess that it will be a more or less stable development on the volume from this year to next year, but we will revisit that on the next quarter presentation. But I think it’s fair to expect a level around the mid-20s next year as well as we don’t have the fish in the water.

Haemel Almiraj, Analyst: Thank you. And on the Faroe Islands, could you try to decompose the reasons behind the volume guidance upgrade? How much is better growth due to higher temps? And how much is lower mortality and other effects?

Reijn, Operational Executive, Bakkafrost: Yes, that’s a good question. We have, as you just pointed out, had good growth temperatures in the winter in Faroes with slightly higher temperatures, which are positive for the growth in Faroes and have been really good environment for good growth in The Faroes in the first and second quarter. But just as you mentioned, we have also had low mortality. So we are trending around ten percent or maybe even below ten percent on a full generation based mortality, which is down. We used to be maybe at fifteen percent.

So our mortality rates are around fifty percent down compared with earlier. And that, of course, gives us more fish for harvest rather than for loss. So that’s a part of the driver. And then a part is from growth. How much is from improved survivability and how much is from improved growth?

I don’t have a number on that. But those are the two drivers which gives us more growth this year and as things also looks at the moment also for next year.

Christian Odd, Analyst, Beatriz Securities: Christian Odd, Beatriz, Securities. Can you give some comments on cost development in Scotland ahead with as low volumes as you have there? Will it be quite stable Or do you see any improvements from the larger smolts?

Reijn, Operational Executive, Bakkafrost: We won’t see the so we expense the cost of the fish when they harvest it. So that means that for next year, we’ll probably maintain more or less the same level. There are a marginal drop in operational costs, but those are not so important compared with low utilization of assets. But as and we are not totally out of the challenging waters in Scotland yet. I guess because of the risks that we have had right now, we have to expect now with the change of management, we will have to revisit this subject on next quarterly presentation where I will give you more clear visibility into this.

So I guess that for the next three months, we will say, okay, things must be more or less unchanged. Hopefully, at the next presentation, I can give a bit more visibility. But I also mentioned the numbers at Abu Cross at the moment, 13,000,000 fish plus around 4,500,000, which is in biomass at the moment. And it’s around twelve months cycle to grow them to two fifty gram. So by this time of next year, we have depending on how good we now, we have been we have really been bad in our operations.

And if we can now manage to be better, then it’s normally, we would say that 62% of the eggs that you stock will be a smalt. So and some of this fish, which is now in the biomass, has been grown for a couple of months. And as this gradual growth will come, we will see a reduction in costs because there will be more fish to allocate the costs on. So we used we have said that 2025 was a transitional year. I expect that the transitional year will at least go another six months.

Hopefully, then second half of next year, we will be more we will have more fish in our biomass to allocate costs on. And then we should see a positive trend.

Christian Odd, Analyst, Beatriz Securities: Thank you. And in your sales and market segment in this quarter, you say you have a higher price premium, but how much of that EBIT is also driven by fixed price contracts?

Reijn, Operational Executive, Bakkafrost: As you know, our fixed price contracts have been taken down as a result of the changes in the tax situation in Faroes. And therefore, the total volume in fixed price contracts are around 15% of our total revenues, up from last year. But it’s a lower volume than it used to be. And if we had sticked to our normal strategy as it used to be, it would have been a benefit in this quarter. Thank you.

Any other question? No? Glenn, thank you very

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