Bakkafrost share price slides after profit warning

Shares in Faroese salmon farming giant Bakkafrost closed Monday trading 14 percent lower after the company on Sunday issued a profit warning ahead of the release of its second quarter financial results.

Bakkafrost shares ended the first trading session of the week at NOK 549 (€48.69/$54.70), having ended last week at NOK 637.50 (€56.55/$63.50).

Preliminary results for the quarter indicate a "lower-than-expected" operational profit (EBIT) of around DKK 353 million (€47.4 million/$53.2 million) for the group, it said.

The main drivers for the results were "extraordinarily" low harvest volumes for its Faroese farming division and a reduced average weight of the harvested fish.

In addition, the Scottish farming division had lower harvest weights in the quarter, primarily caused by "biology-led harvesting" at some sites and early harvesting at others to reduce the biological risk ahead of the third quarter.

The low harvest volume in the Faroe Islands harmed the cost of harvested fish because fixed costs were less diluted on the volume.

Exceptional mortality costs were also recorded in the quarter.

In the Faroes, these mortalities amounted to around DKK 32 million (€4.3 million/$4.8 million), and covered seawater as well as freshwater operations, where "accident-driven" mortality events occurred during the start of the new expansions of the Glyvradal and Nordtoftir hatcheries.

In Scotland, mortality costs amounted to DKK 43 million (€5.8 million/$6.5 million) caused by accident-driven mortality during the start of the Applecross 4 hatchery expansion and due to elevated mortality caused by viral deceases at some marine farming sites.

Company CEO Regin Jacobson said Bakkafrost decided to release the update because the result that will be presented on Aug. 22 will be lower than the consensus among analysts.

"I feel that they have not sufficiently taken into account that we will deliver reduced quantities."