Good morning, and welcome to the presentation of Bakkafrost's results for the fourth quarter. My name is Høgni Jakobsen, CFO of Bakkafrost. First, I'll ask you to pay attention to our disclaimer regarding the forward-looking statement, which is included in the published presentation. This morning, we will start by a summary, providing a summary of the fourth quarter before we move on to markets and sales, financials, and then our CEO, Regin Jacobsen, will take over and go through the operations in the segments and outlook. In the fourth quarter, Bakkafrost had revenues of DKK 1,470 million, and their group operational EBIT was DKK 280 million. Fair value harvest was slightly higher than the same quarter last year, came out at 16,600 tons approximately. In Scotland, we harvested 3,840 tons, almost four times the volume the same quarter last year.
Our FOF division had a relatively quiet quarter, although feed sales were slightly down from last year, came out at 38,900 tons. Especially, the external sale of fish oil was reduced to only 11 tons compared to 5,400 tons in the fourth quarter of last year. And external fishmeal sale also dropped significantly, 87%, down to 1,600 tons compared to around 12,000 tons in the fourth quarter of last year. Havsbrún sourced 42,000 tons of marine raw material in this quarter, down from 54,000 tons last year. Last year, as we have talked about before, was an exceptional year for Havsbrún with more than 50% higher marine sourcing than in a normal good year.
Cash flow from operations in this quarter were positive with DKK 68 million, and all segments had positive EBIT except for the Scottish freshwater segment, which is starting now to ramp up, as Regin will explain more about later, and also the Scottish farming segment. The board of directors will propose to their annual general meeting that a dividend payment of DKK 8.44 per share will be paid in dividends. Moving on to markets and sales, I'm beginning with a price development in the global markets. The average price for 4 to 5 kilos of superior salmon was 80.74 NOK per kilo, a reduction of 3% compared to the same quarter last year, but an increase of 10% compared to the previous quarter, the third quarter. Prices were quite low in the beginning of the quarter, but towards the end of the quarter, in late December, prices increased rapidly.
We have seen a more than 50% reduction in the downgrade or production grade fish from Norway, which has affected market dynamics in this quarter. But despite that, there has been a shortage of large fish in the market, which has also added on to the price gap between small and large fish. According to the latest update from Kontali, global sales volumes increased 5.2% in this quarter. The biggest increase in absolute volume was sale to the European market, which increased around 15,000 tons, followed by sales to China, which increased 10,000 tons, corresponding to a 30% increase. Sale to the US market also increased by 2.2%, and there was strong demand from Japan, ASEAN countries, and also other markets like Israel, Thailand, and Taiwan. Global harvest in the quarter increased by 3.5%, including inventory movements, then that increase in sales or supply to the market was 5.2%.
The growth is delivered by Europe with a 7.6% volume growth. Norwegian harvest was up by 5.5%, partly driven by sea lice-related harvesting, but also better growth with higher seawater temperatures. Average weights in Norway dropped to 3.99 kilos, and feed sales also dropped with 7%. Scotland delivered an impressive volume growth of 63% in the quarter, also increasing harvest weight by 15% to 4.5 kilos. Bakkafrost harvested at 4.8 kilos in this quarter, so we contributed to that increase. In the Faroes, harvest volumes dropped by 19%. Biological performance was good. Average weights were 7% up to 5.28 kilos. Feed sales were up by 16%, and the biomass increased with 14% in volume or 23% in number of fish. Iceland also had a good quarter with solid volume growth of 12%.
In the Americas, on the other hand, harvest dropped by 5.8%, Chile delivering a 4.7% reduction in harvest volume. There was quite significant release of smolt in Chile in the second half of last year, an increase of around 15%, and that will affect harvest volumes coming from Chile later this year and next winter. Moving on to financials, starting with the group P&L. As mentioned, revenues came in at DKK 1,470 million, a reduction from last year's Q4, and operational EBIT reduced from DKK 356 million to DKK 280 million. We had positive value adjustments of DKK 361 million, and revenue tax was DKK 18 million compared to DKK 27 million the same quarter last year.
Profit after tax was DKK 477 million. Looking at the operational EBIT for the full year was DKK 1,550 million, slightly more than last year, and adjusted earnings per share for the full year were DKK 16.87 and DKK 4.37 for this quarter. On the balance sheet, since year-end 2023, our property, plant and equipment have increased by DKK 513 million to around DKK 6.7 billion. Fair value of the biological assets at the end of the quarter amounted to DKK 3.1 billion. Inventories have reduced by DKK 478 million throughout the year to DKK 671 million. A significant portion of that is with reduction in inventories at Havsbrún throughout the year. Receivables reduced by DKK 202 million and amounted to DKK 649 million, and cash equivalents increased DKK 69 million to DKK 481 million.
Equity ratio also increased to 63% by the end of the quarter. Moving on to cash flow. From operations, we're positive with DKK 68 million, which was an improvement of DKK 180 million compared to the same quarter last year. Investments of minus DKK 291 million and financing minus DKK 136 million. Our net debt during the quarter has increased by DKK 290 million. 209 of those are related to the tax payments in the Faroes, corporate tax, which are always due in the fourth quarter. And at the end of the quarter, we had a net interest-bearing debt of DKK 3 billion and undrawn credit facilities of DKK 2.4 billion.
And speaking of tax, as we have announced to the markets previously, on 1st of January, the new changes on taxation for the Faroese salmon industry kicked in. It is based on a broad political agreement stretching across the government and the opposition parties. It's a long-term agreement stretching to 2032. And the main change is that all revenue tax, which previously could go as high as 20%, is reduced to 7.5%.
And instead, an extra corporate tax, so a bottom-line tax, is added to the standard tax rate of 18%, which is applicable for all companies in the Faroe Islands, but an extra 12% is added to the salmon farming activities in the marine environment only. So not across the value chain, only the activities in marine farming. There is also a change in the way the revenue tax is calculated, and the effect is illustrated in the top right corner of this slide. So at low salmon prices, there is an increased revenue tax compared to what was in effect before 1st of January.
And at higher salmon prices, there is a lower revenue tax. And now I will leave it over to Regin Jacobsen.
Good morning. First, we will go through the numbers from the feed segment and the operation in Havsbrún. In the fourth quarter 2024, we have sold less fishmeal and fish oil. However, during 2024, the FOF segment achieved record-high feed sales. This is the second-best year after 2023 for the feed division. Despite good full-year financial result, fourth quarter was hurt by lower external fish oil and fishmeal sales due to reduced raw material sourcing, especially earlier in the year. The marine raw materials sourced in this quarter was 42,000 tons versus 54,000 last year, a reduction of 22%.
The feed sales were unchanged at 39,000. External sales of fishmeal was reduced 87%, so only 1,600 tons versus 12,000 the year before. External sales of fish oil were reduced from 5,400 down to close to zero. The operational EBIT decreased 72% to 66 million DKK versus 239 million DKK the previous year. The market price for fish oil and fishmeal also dropped significantly. Fishmeal prices have also trended down, and that has, of course, a positive effect on the cost of farming salmon. The outlook with lower cost on marine ingredients in feed recipes will have a positive impact for Bakkafrost going forward. The freshwater segment in Faroe Islands continued to ramp up operations since the capacity expansion in 2023, where Norðtoftir and Glyvradal started the new sites.
New production records were delivered for the second consecutive quarter in a row with large, high-quality smolt. This improved efficiency is helping to reduce costs. In the fourth quarter, total transfer to marine sites increased to 6.1 million versus 5.2 the year before, and the size of fish was 413 grams versus 375 the year before. The operational EBIT more than doubled to DKK 110 million from DKK 52 the year before.
Some fish originally planned to be stocked in the fourth quarter were postponed to January due to optimization of the operation. This will impact harvest positively in the first half of 2026. In Scotland, the transition to produce large, high-quality smolt Atlantic salmon has begun. As we scale up the production this year and gradually replace legacy fish from our marine farms with high-quality fish, we expect a fundamental transformation of our farming operations from next year onwards. The freshwater segment in Scotland transferred one million in the fourth quarter versus 1.7 the year before.
The average weight was 152 grams from 109 the year before. The operational EBIT was minus DKK 28 million versus minus DKK 9 million the year before. The capacity utilization has not yet been optimal as we are building a lot of capacity, and there is a time lag in the utilization. Therefore, we will see capacity cost to be better utilized when the transfers increase during the second half of 2025. During 2025, we expect to stock 10 million smolt with average size above 200 grams. The chart to the right bottom shows this transformation in the marine farms. The farming in the Faroe Islands harvested 16,600 from 16,000 the year before. Average weight increased 11% to 5.3 versus 4.7 the year before.
The operational EBIT was DKK 100 million versus DKK 64 million. The operational EBIT increased to NOK 9.43 from NOK 6.27 the year before. Biological performance in the Faroes remains robust with solid growth, effective sea lice management, and large fish across all farms in the quarter. The breakdown of the Faroes harvested volume was 55% from the west region, average 5.4, and 45% from the north, average 5.2. Seawater temperatures in the Faroes' shores were marginally warmer in the fourth quarter versus last year, only around 0.1 to 0.2 degrees in difference, and as mentioned, we see good growth and strong biology across all farms in the Faroes. That was also the reason why we postponed some harvest from December to January, which has led to an increase in harvest in January this year to 6,700 tons compared with 3,300 last year.
This is an overview of what the robust, healthy smolt, what are the differences between high-quality and reduced-quality smolt. We have just finalized the harvest from Kunoyarnes during December and January. When we stocked Kunoyarnes in the fourth quarter 2023, there were 25% of the fish with reduced quality. 75% of the fish were a fish group with robust, high quality. The sizes of these two batches were quite similar.
In fact, the reduced-quality smolt were slightly larger, 285 grams versus 268. The background for the reduced quality was because this batch had gone through some stressful events on the hatchery. The stress related to reduced water quality and some mechanical issues. When we compare these two batches, we see that during around 13 months' growth time, both batches had the same growth time. In fact, the reduced-quality batch had 396 days compared with 380 days for the higher-quality batch. The harvest size of the higher-quality batch was 5.2 kilograms gutted, and the reduced-quality batch, 4.4 kilograms.
So despite the lower-quality batch had longer growth time and they were larger when they were transferred, there was 800 grams in difference at harvest. Also, looking at mortality, there was 3.2% mortality with the higher-quality batch versus 7% on the lower-quality batch. This is measured in biomass. The harvest yield per input smolt was five kilograms for the high-quality batch versus 3.3 kilograms for the lower-quality batch, a big difference. Feed conversion ratio was 1.07 for the high-quality batch and 1.13 for the lower-quality batch. So the idea is to give an indication of what good quality means compared with lower quality despite they were similar in size.
The importance of a good environment in the hatcheries is really, really important. This is crucial for the operations in the marine environment to produce high-quality fish with good fish welfare and a competitive cost. So looking at the farming operation in Scotland, the total harvest in this quarter, fourth quarter, was tripled to 3,840 tons versus 1,062 tons the year before. The average weight was 68% up to 4.8 kilograms from 2.8 the year before.
The operational EBIT was more or less flat at minus 55 compared with minus 48, which was around minus 23 NOK per kilogram. There was slightly elevated mortality in the fourth quarter in Scotland in two of the three months. This related to matured large fish. Overall, we are pleased with the de-risking of our Scottish operations in 2024. Mortality has decreased significantly, and fish harvest in the quarter was large and contributed to the highest full-year EBITDA since the acquisition. As we await the full replacement of legacy fish, we will continue a similar de-risking strategy in 2025 before starting the journey to ramp up production in 2025. In 2026, sorry. The temperature in the Scottish fjords was around 0.2 degrees warmer in the quarter compared with the average the last 20 years.
Just to mention on the farming segment in Scotland that we continue in January harvest of large fish above 5 kg from our Scottish farms. The service segment reduced. The service segment increased the EBIT from 13 million DKK to 25 million DKK. The main objective with the service segment is to treat the fish, to transport fish for harvest, and smolt. And then we also have the biogas operation in this segment. We have really good operations in Faroes because of our high-quality operation in the service segment. So that is probably the biggest contribution from the service segment.
Sales and other is our sales and marketing operation. In this quarter, we had less volume for VAP, for ready-to-eat products, due to our change strategy last year. We transferred 42% less volume to the VAP segment, 3,299 tons versus 5,735 last year. That meant, however, that more fish was sold as HOG, whole gutted, head-on gutted, 55% increase up to 17,180 from 11,000 the previous year. The volume was 20% up to 20,478 from 17,000 before. The operational EBIT increased 19% to DKK 120 million versus DKK 101 million the year before. The largest market share is Western Europe with 54% of the sales from Faroes and 66% of the sales from Scotland.
However, both regions reduced the market share to Europe compared with the previous year. The second most important market is North America with 28% market share from Faroes and 14% from Scotland. Both regions increased their share this quarter compared with the year before. Asia also had a similar development, increasing to 14% from Faroe Islands and 19% from Scotland, which was a huge change from zero last year. As we produce larger fish in Scotland, more of this fish is benefiting from overseas markets. In this quarter, when we look at the performance per region, we see that Faroe Islands reduced the operational EBIT to DKK 310 million from DKK 460 million the year before.
This was mainly, as mentioned before, driven by the development in the fishmeal and oil. Scotland significantly improved year on year. EBITDA for Scotland in 2024 is record high, DKK 249 million, 89% up from 2020, indicating that despite low volumes operation, de-risking has been successful in 2024 in Scotland. The table on the right shows the differences, and we can see that in the Faroe Islands, especially the negative change is in the FOF segment. Looking at the outlook for the company and for the industry as a whole, we see now an expected 5% overall growth on the supply in 2025.
Norway reported higher biomass than anticipated by the end of the year. Higher share of smolt, above 250 grams, has been transferred. Good growth in December, which seems to continue in January 2025 in Norway. Scotland also increased the harvest estimates with better biology. In Faroe Islands, harvest expectations are driven by a higher number of transferred smolt and good and robust biology, large fish, and lower harvest in December to keep some fish to 2025. Iceland is also increasing their harvest. Stronger supply in many regions in Europe contributes to some downgrade or downward price pressure. We saw in January that the average price in January was close to NOK 4 in average down compared with the year before. Also in the fourth quarter, as a whole, we saw lower or weaker prices than anticipated or expected.
In Chile, there are lower growth expected for the first half of 2025, and this has also been slightly lifted compared with our previous expectations, and this is driven by a 15% increase stocking in smolt transfer in H2 2024, where farmers have moved from Coho trout to Atlantic. Stocking in the second half 2024 has been reported to 98 million fish compared with 85 million fish the year before, so an increase in number of stocked fish in Chile, which will increase supply in H2 2025, probably around 50,000 tons extra fish coming from Chile during next winter.
Global supply looks a bit higher now than three months ago, and that will slightly lift up the global supply from expected maybe 3% to maybe 5%. When you look at the global number, it looks quite flat from H2 2024 to H1 2025 and H2 2025, around 5% global supply increase. So for Bakkafrost, this means that we expect a total harvest of 97,000 ton in 2025 versus 91 in 2024 or 90.6. As mentioned before, we moved some harvest in Scotland to the fourth quarter because of this elevated mortality, but the fish was large, 4.8 kilograms. So that means that we moved 3,000 ton from 2024 to 2025 to 2024.
So that's the rationale behind the change from 100 to 97 in 2025. In Faroes, if you look at Faroe Islands, the supply growth from 2024 to 2025 is 22%. So 22% more fish in Faroes. But in Scotland, we reduced the harvest from 28 to 20. So that's the combination of the numbers. In Scotland, the de-risking strategy continues, which means that around or a bit more than 60% of the harvest in Scotland is expected in H1 first half of the year, and in Faroe Islands, we expect to increase the stocking to 18.5 and in Scotland to 10 million fish, so combined, 28.5 versus 23.1 last year, so an increased stocking of 23%. Contracts, we stick to around 15% contracts here, and in FOF, we expect a similar development in fishmeal and oil.
There should be no strike this year, so that should be positive. Prices are expected to be lower on fishmeal and oil. Feed sales are going to continue to increase year on year for many years. We are expanding the feed factory in Havsbrún, which will be in operation around one year from now, doubling the capacity. We are continuing our growth track according to the plan communicated on our CAF market day in 2023 to reach 165,000 ton in 2028. To grow sustainably with high focus on utilizing our competitive advantage and value chain. There are three major projects under construction, and they are progressing well.
It's the Applecross hatchery, which are about to finalize and will be finished this year. Skálavík started a year ago and is progressing well. We hope to start operation in the first half next year. The whole site will be finished two years from now, and then the Havsbrún feed factory, so these are three major projects. There are other smaller projects ongoing as well, but these projects are crucial for our goal for 2028 to achieve the growth. There are also more capacity in some of these projects, especially feed, to deliver more growth also beyond 2028 with robust large smolt, the best feed, and good fish welfare.
As you are aware of, the Capital Markets Day will be in June this year, next Capital Markets Day, the 17th and 18th. That was all for now. Thank you very much, and we are open for some questions.
Herman Dahl, Nordea. Can you say something on the reasons behind the maturation issues in Scotland in Q4? And secondly, could you say something on the cost development during the beginning of 2025? Thanks.
Yeah. The reason for the higher maturation in our farming operation relates very much to the smolt quality. Our hatcheries in Scotland have not had full control on temperatures.
So where temperatures are fluctuating a lot up to maybe 18 degrees in the summer and cold in the winter, so there have been batches produced where water quality has not been controlled as we do in modern hatcheries today. This will obviously be changed now so that smolt will be of high quality and we should have better control on maturation. So now, as we have produced large fish, some of this fish, if the fish had been harvested before, we had avoided that. But producing large fish is also where we get extra value, but it's really important when we produce large fish that we have good and robust smolt so that we can take them through that cycle up to large size. And when that's not the case, then we have an elevated share of maturation.
The mature fish has a lower value, and they are very weak when they are exposed for stress, especially during these periods in the late fall, during the winter, and it's difficult to, yeah, we can see that there is some maturation already in August, September, on the appearance of the fish. If you check the fish in June, you could have seen inside the fish, but the level of maturation was a bit higher than we had expected, so that was the maturation, and the second question was on the cost development. Costs are coming down because of the feed, and in Scotland, the costs have come significantly down because of the de-risking strategy, around DKK 60 per kilo. In Faroes, prices are also coming slightly down.
The cost price will continue to go down during 2025 because the feed the fish that we harvest right now has had some more expensive feed earlier. As we go forward, there will be less of that expensive feed. So there will be a further decrease in the cost development during 2025.
Thanks. Alexander Aukner, DNB. Just to follow up on that because it's maybe for Høgni. You've added a chart on harvesting cost development where feed cost in the Faroes seems to be ticking up in Q4. So does that mean that the drop in cost you just mentioned is temporary and we're going to start seeing an increase in cost? And the second question is on the changing industry dynamics. As you mentioned, there will be more superior fish. So how do you plan to sustain the price premium in this segment? Yes, Stefan Schleif.
So this chart is to demonstrate that there is a time lag. So you have a feed cost development, and then there's a time lag. So if you see the longer trend, you see that there is a downward trend in the feed cost. There might be some ups and downs. It depends a bit on the types of feed that have been used, etc. But the raw materials are trending down, so that will take the cost down on feed. And that will then, as the time lag is a couple of months, then cost on farmed salmon will come down. And that is both for Scotland and for the Faroe Islands. Any further updates? Any further questions on feed?
We can go into more depth afterwards.
Yeah. So on the premium, the premium in the fourth quarter and also in 2024 was weaker for Bakkafrost than in previous years, especially in 2023 where we had a very good premium. 2024 had a lot of disruptions for ourselves. We had the strike, and then we had the ISA, and then we had, because of these interruptions, our planning was interrupted so that during the year, we had not the optimal breakdown of sizes as we normally would have. And with interruptions in the markets, it takes a bit of time to stabilize this operation again. So that's at least an impact.
There might be other drivers behind this. One of the drivers could also be that because we have reduced our VAP operations, we have much more volume of HOG. So that could also be one of the drivers. But at least you can see the result that is that we have a lower margin compared with before. I would also say that we have had a larger share of large fish because of this development, and that could also have a negative impact on the margin. But when we compare the margin, we compare margin on the actual size. So it will always be valuable for us to produce larger fish because more fish will be moved from the lower price category to a higher price category.
Despite that, the extra margin will maybe not be the same as before. We still have the benefit of moving fish from a lower category price to a larger category price.
Okay. Thank you.
Christian, on Arctic Securities. You initially guided around 17 million smolt stocking in the Faroes, and last quarter, you took it up by 6.7 million smolt and 600,000 smolt, and then now you ended up at 17.1. What happened there?
Yeah. So yes, so the rationale from that was that during the end of the fourth quarter, we saw that because of the weather situation and because of the temperature, etc., it was better for this fish to be stocked in January rather than December. So that's why we took this down to 17.1 again. The fish will still be in stock a few weeks later.
And so you're now stocking more fish than planned in 2025?
Yes. We have kept the initial number still on our guidance, but that gives us a better confidence, at least in the numbers.
In terms of your FOF EBIT, what should we expect going into Q1 given that it fell so much now in Q4 already, Q1Q?
Yeah. In the fourth quarter, it is mainly the sales of fish oil and fishmeal, which are reduced significantly because the inventories were really low because of the low intake during the summer and during the strike. Now we are in the season again, so that means that in the first quarter, we normally should have a good sourcing of fishmeal and oil. But of course, as we have low inventories, there probably will be low external sales in the first quarter. But we are producing now again, and at some point, we might sell some external. Of course, this helps us to produce at least our feed with own raw materials.
But broadly speaking, we should think of an EBIT then in line with this quarter in the Q1.
Yeah. EBIT is difficult for me to guide on, but we say that we expect similar raw material levels this year as last year. So 2023 was exceptional good, 460,000 or something like that, while 2024 was much lower. So we expect that 2023 was exceptional good. 2024 was still the second best year for the full year, and we expect similar numbers in volume for Havsbrún.
Thank you.
Wilhelm, Danske Bank. Just to follow up on Scotland, when it comes to the early maturation, how much do you see this as a risk going forward? How much should it impact? And the second question is on the US market. You increased the market share into the US. Just broadly, how do you see the market going forward and just the development?
There is a risk with maturation in Scotland when we produce large fish. If we harvest all the fish at 3 kilo, it wouldn't be a risk for maturation. But when we take the sizes up to large fish, the maturation takes place during August, September. That's the critical point. So ideally, we could grade all the fish in August, but that's quite difficult, but that could have been possible. So there is a risk that there will be a share of higher maturation, especially in the fourth quarter every year. But when you have a good quality smolt operation with stable, when we are able to control all the environmental factors such as light, temperature, etc., then that risk will be significantly taken down, and there should not be a high maturation. So that's also solved with the new hatchery at Applecross.
This year, we might see an elevated maturation in fourth quarter if we again produce large fish. When it comes to the U.S. market, as you see in the numbers, we have increased our market share in the U.S. market. More fish is sold to the U.S. This is also, as mentioned, driven by larger fish. The U.S. market and the Asian market primarily takes large fish. Scotland did not use to sell so much to those markets because the fish was very small. We see good development in these markets. We see strong demand, and that's also an indication that we are increasing our sales to those markets. There is an underlying high demand in the U.S. market, an untapped potential. The U.S. market has been underdeveloped for a long time.
In recent years, it has been more developed, but it takes a long time to develop a huge market like the U.S. So we think that this is a big potential for us. The political things, I cannot comment. I don't know. We are working as everything is normal, and we hope that that will be the case.
Thank you.
Okay. No further question. Thank you very much for the questions, and thank you very much for coming. Thank you.