Good morning and welcome to the presentation of Bakkafrost's results for the first quarter 2026. My name is Høgni Dahl Jakobsen, CFO of Bakkafrost. I will point your attention to our disclaimer on forward-looking statements. I will leave it for self-study. It's included in the published presentation. This morning, we will follow the usual agenda with beginning with a summary of the quarter before we move on to markets and sales, finances, operations, and finally, outlook. The first quarter was a solid start to the new year for Bakkafrost. Compared to first quarter last year, our revenue increased by 11% to around DKK 2.1 billion, and operational EBIT increased by 8% to DKK 544 million. This was achieved in a market with significantly higher global supply and lower year-on-year prices.
The main operational driver was the Faroe Islands, where harvest volumes increased by 33%, to around 25,100 ton gutted weight. Scotland was broadly stable in volumes at around 6,200 ton. Feed sales also increased by 13% in the quarter, reflecting a strong biological growth in the farming operation. At the same time, fish meal sales and marine sourcing were lower. Around 51,000 ton of marine raw material were sourced in the quarter. Cash flow from operations declined to DKK 453 million, down from DKK 590 million the year before. At the AGM in end of April, the dividend payment of DKK 3.45 was approved for payment around 21st of May.
The group delivered an all-inclusive margin, or operational EBIT per kilo of DKK 17.35 per kilo compared to DKK 20.07 in the first quarter last year. Faroe Islands generated DKK 22.76, slightly weaker than last year. Scotland recorded minus DKK 4.58 compared to a positive margin of DKK 11.22 in the same quarter last year. With that regional margin picture established, we can move on to market and sales, starting with the supply side, how much salmon came onto the market and which regions drove the supply. Global harvest volumes increased by 12% year on year, while total sold quantities increased nearly 15%. This was a substantial supply increase, it came from both Europe and the Americas.
Europe grew by 10%, with Norway also up around 10%. Norway had good biology. Harvest weights were up 11%. Reduced mortality and generally strong growth with feed sales increasing 5% in the quarter. In the Faroe Islands, we grew almost 20% in harvest. The fish were large. We had 13% in increased feed sales. Sorry, 19% in increased feed sales, which was driven by strong growth with large moult. Iceland also showed a particularly strong percentage increase, from a lower or smaller base. In the Americas, the supply increased 19% led by Chile, which grew more than 20%. Chile had a flat biomass development through the quarter, though, it's the growth that has been harvested.
Feed sales were slightly down in Chile, -4%, and a slight increase in harvest weights. Overall, a strong extra supply coming to the market. If we then move on to the sales and see in which regions, which part of the markets that extra volume was absorbed. Demand was broadly stable across. Total sold volumes increased by 14.6%. As the largest market, Europe and the U.K. grew by 12%. This was slightly above the European supply increase of 10%. The strongest growth was in Asia and Latin America. Greater China increased by impressively 55%, ASEAN by 25%, and Latin America by 30%.
A large share of the extra supply that came from the Americas went into Asia and Latin America. The U.S. market was more moderate in growth, a 4% increase, partly affected also by a weaker dollar, lower purchasing power for consumers. If you look at the Norwegians' sale to the U.S., there was a drop of around 30%. This demand and supply, of course, had impact on salmon prices. Average spot prices in the quarter for superior 4 to 5 kilo fish was NOK 87.95 per kilo, which was 5.2% lower than the same quarter last year, but 7% improved compared to the previous quarter. Higher overall supply affected the prices, in addition, there was more supply of large fish coming to the market.
The price gap between small and large fish, or the large fish premium, which is it's also referred to as, shrinked quite significantly in the quarter. If we then move into finance, starting with the Profit and Loss. Revenues in the quarter increased from around DKK 1.9 billion to DKK 2.14 billion, an increase of DKK 214 million. Operational EBIT increased from DKK 505 million to DKK 544 million. Fair value adjustments were positive with DKK 13 million compared to negative DKK 376 million in the same quarter last year. Profit after tax was DKK 307 million compared to negative DKK 6 in the same quarter last year.
Adjusted EBIT adjusted earnings per share was DKK 5.16 per share. In that respect, this quarter was the strongest since the first quarter of 2024 for Bakkafrost. On the balance sheet, it remains strong at the end of the quarter. Total assets increased slightly to DKK 19.2 billion, with equity increasing by DKK 305 million to DKK 11.3 billion. Equity ratio improved from 58% to 59%. Property plant and equipment had a modest increase of DKK 35 million. Biological assets were broadly stable at around DKK 3.4 billion, while inventory increased slightly. Receivables increased by DKK 224 million to around DKK 1 billion.
On the cash flow side, from operations, we had a cash flow of DKK 453 million compared to DKK 590 million in the first quarter of 2025. This was a decline of DKK 137 million, but still represents strong operating cash contributions. Cash flow from investments improved from minus DKK 304 million to minus DKK 216 million. Financing cash flow also improved significantly from DKK 516 million to minus DKK 167 million. From minus DKK 516 to minus DKK 167.
Together, these movements resulted in a positive net change in cash of DKK 17 million, which left us with DKK 370 million in cash at the end of the period. This leads us to the development in our net interest-bearing debt, which decreased during the quarter from around DKK 3.9 billion to DKK 3.8 billion, a reduction of DKK 135 million. Liquidity remains strong. Undrawn credit facilities were around DKK 1.6 billion at the end of the quarter, and we have an accordion option of EUR 150 million in addition to that. I will hand over to Regin to go through the operations and outlook.
Good morning. Bakkafrost has a value chain second to none in the international salmon farming environment. Full control from feed production, including fish meal and oil, genetics to sale. The value chain gives Bakkafrost control, flexibility, efficiency, differentiation, best traceability and resilience. When we move to the FOF segment in the first quarter, the most important is that our FOF operation supports the biological growth in our farming operations with healthy salmon. Low marine sourcing in this quarter due to seasonal patterns affected the results. The feed sold increased 13% up to 35,421 tons. 100% of the feed was sold internally. This is of course due to higher biomass and better growth. Marine raw material sourced was 51,199 tons, down 53% from last year.
External fish meal sold was only 1,200 tons, 67% down from last year. Operational EBIT for the FOF segment was DKK 84 million, up 29% versus last year. The margin was 15% versus 13% last year. Feed sales are growing, which is directly linked to record biomass at sea and strong growth. Margin improvement up to 15%. Good cost control, of course related to high efficiency and capacity utilization. Less external fish meal sales, which means more are used in-house. Raw material sourcing is of course the big issue in feed in general. Costs are going up going forward. Raw material prices have come significantly down from 2023 when it peaked, the trends are upwards going forward.
Volumes are increasing, which are improving our efficiency, and we lift our target this year by 10,000 tons up to 175,000 tons for the full year. We will continue our focus on the best feed quality and the best feed composition for FCR and fish health. We see better sourcing in April and May. Year to date, until today, we have sourced 130,000 tons. A bit better in April and May, but we are still behind last year. The FOF segment remains a key competitive advantage for Bakkafrost being self-supplied with increased flexibility in feed operation, especially with the new factory coming into operation from June.
The yearly International Blue Whiting Spawning Stock Survey was conducted in April, a few weeks ago in international waters and in Faroese waters by scientific research. This 26th survey showed 32% biomass increase in stocks, whereof 83% of the whole stock is younger stocks, which supports continued growth in the stock. Could be an early indicator of a healthy biomass, at least going forward. We will see what that leads to for next year. Moving to freshwater Scotland, the key priority is steady controlled ramp up of Applecross. We are prioritizing biological stability and smolt quality. In this quarter, we see 1 million smolt being transferred, 67% up from last year. Average weight, all smolt 280 gram, 29% up.
Average weight from Applecross was 269 gram. The operational EBIT was minus DKK 28 million. This reflects both an issue in operation in the quarter with electricity causing some technical issues in the quarter related to the new operation. Also increased depreciation because of the size of the investment and only 30% utilization of the new site yet. We are happy that the volumes from Applecross are increasing quarter by quarter, and we see now a clear upward trend. The Applecross biomass is now the highest ever, right now 9 million pieces in the biomass. At peak, we should see 18 million pieces, also at higher average weight than we see right now.
Focus is steady ramp up, not volume at the moment, but high quality. Bakkafrost is set to produce 200-400 grams smolt in 2026, which gives flexibility in the production planning. The negative EBIT is expected to turn positive within the ramp up phase. We expect improving biological outcome step by step, and we expect an average weight from Bakkafrost about 200 grams during this year. We see that the share of large smolt is now increasing steadily in Scotland. This is our cornerstone of the de-risking strategy in the Scottish farming operation. Large smolt, shorter sea phase cycles, less exposure to the risk. Once at full capacity, this will fundamentally change our risk picture in Scotland.
We see now the first batches of smolt coming out within 12 months, which means lower mortality, better average weights, and better feed conversion rates. The farming, sea farming operation in Scotland is improving biologically. Good growth, stable condition, low mortality. In this quarter, the issues are mainly low prices and low volume, no scale. That's the big issue. The harvest in this quarter was 6,198 ton, flat from last year. The average weight is pretty high, 6.4 kilos. However, minus DKK 63 million in EBIT. This is due to low prices and low scale. Half and half on both, I would say. Mortality improved year on year, tracking well below recent years.
We are happy about the development in biology. It was a good quarter across most sites. Strong harvest weights, sea temperatures are normal. The big issue was the lower prices and low volumes. We have 2 sites right now where they were both stocked in July last year. One of them is now 3.5 kilos on average, will be harvested out in July this year. This was a 250 gram smolt from Applecross. We have another stock which were stocked at the same time at 90 gram external smolt, now 1.6 kilos. The Applecross stock is 4% losses. The other one is 11.6% losses right now. Both will be harvested at the or are planned to be harvested at 6 kilo.
As said, Bakkafrost stock will be harvested in July this year, means that there should be a low risk for those fish. The other one will be harvested from December to February next year, but they were both stocked in July. That illustrates a bit the difference with larger smolt. We see that with 250 gram, we see that we should be able to harvest the fish within 12 to 14 months. At least in this case, it's 12 months. We are still positive on the case, but still need to improve that we can deliver. Fresh water in Faroes, better, larger and cheaper in this quarter. This is the engine behind our strong biological performance at sea. In this quarter, we transferred 3.9 million smolt, 22% up.
Average weight 527 gram, 25% up. Operational EBIT from the segment was DKK 90 million, 61% up. The smolt cost, despite larger, 10% down. We are particularly happy that we are hitting on all three dimensions, larger smolt, higher volumes and lower cost. The 90-day post-transfer survivability improved. Clear evidence on better smolt quality and robustness. 26 survivability tracking above 21-24 range. All hatcheries are performing well. We are working on reaching our goal for this year on 20 million of internal transferred smolt to our farms in Faroes. We are increasing capacity utilization across all the hatcheries in Faroes. This is also the key of low cost. Continuous focusing on smolt quality, not just about size, but robustness and post-transfer performance.
The new Skálavík hatchery is progressing well, planning to start the eggs now in June. Then first the transfer by the end of next year in 2027. That will bring our total capacity up to 24.4 million at 500 gram. The trend has been clear. We have gone from 300 gram average in 2023 up to 527 gram in this quarter. We see clearly that larger smolt gives much shorter time in sea, less exposure to risk and better cost profile in the sea. This is a structural competitive advantage that will continue to improve. This is the foundation for us to reach 107,000 ton in the Faroe Islands, you know, in the company this year. Also Faroe Islands and Scotland combined. Coming to farming Faroe Islands.
Farming delivered an excellent quarter, significantly reduced costs and a strong biological performance. The investments in freshwater smolt quality are clearly paying off at sea. Harvest volumes 25,139 tons, 33% up from last year. Average weight 5.8 kilos, 14% up. Operational EBIT DKK 386 million, up 2%. The margin, 28%. Ring-side cost 13% down. At this quarter, we harvested around half of the fish was from Fuglafjørður, where many of you have been. Half of the fish, 13,500 out of 25. Then around 10% was from A-71, that's Funningsfjørður, and same from Haraldssund and Hvannasund Norð and Kunoyarnes, then 5% from Undir Eyju. Six sites harvested in this quarter, all performing well.
I am very happy to see that costs came down 13% in this quarter, driven by larger smolt, better growth, operational efficiency. ring-side cost now down at DKK 26.95, down from DKK 31.15 one year ago. Volume growth 33% harvested from record high biomass built through 2025. Very strong growth at sea. The combination of low cost and high volume is of course a good combination. This capacity utilization, that's also really important. This is also key for our biological discipline and cost discipline, not compromising on fish health for volume. We will continue to optimize stocking patterns and harvest planning. Further cost improvement expected as smolt size continues to increase.
However, we see a strong foundation for the coming quarters with 57,000 tons biomass at sea. Feeding volumes up 30%, which indicates continued strong growth ahead. Structural cost advantage from integrated value chain and large smolt is now delivering. We are well on track in 2026 to target our delivery on volume, and that's why we increase our target from 92,000-97,000 tons for Faroe Islands. Services. Services is a lot of different things, transports, farming supports, harvest, packaging, biogas, et cetera. We have a solid underlying performance in this segment. But in this quarter we have a one-off cost which is taken out of the EBIT. The EBIT was DKK 41 million, 80% up.
One-off was 17 million, which is write off of delousing equipment which was made obsolete by dual freshwater treatment. This works well and therefore we have written this old equipment off. We are happy about the strong development in the quarter. The dual freshwater treatment works really well and therefore we need the other equipment. The high activity across all services, transports, treatments, harvest, packaging, biogas. Actually, biogas delivered 61% more green energy in this quarter, 3.3 gigawatt hours of electricity and the district heating to the people in Tórshavn versus 2.1 gigawatt hours last year. We are working on scaling the service capacity in line with the growing harvest volumes. Continued efficiency in the dual freshwater treatment, reducing need for chemical mechanical delousing.
Waste to biogas product production, circular value from the processing byproducts, focusing on the service fleet and infrastructure to keep the pace up to our goal of 17,000 ton in 2030. We see a stable good operation enable strong survivability in our farms and competitive assets to protect and sustainable growth strategy. Coming to sales and other segment. This includes our VAP operation. Market conditions improved through the quarter. High volumes have been sold. We are actively diversifying our operations into U.S. and Asia. In this quarter, we sold totally 31,337 ton gutted weight, 24% up from last year. Had been gutted 25,432. VAP 5,905, 34% up.
Operational EBIT was DKK 47 million, which is 12% up. 2.37 NOK per kilo EBIT margin. I would say pressured from high supply. We are happy to have been able to sell this volume, especially of very large fish, which was a bit complicated. We had a lot of impacts of bad weather in the quarter. That impacted our ability to reach our premium markets and our premium prices because we had to replan in many, many weeks in the quarter. That was an issue. Our VAP share is stable around the 23%. Maintaining premium positioning. We see strong developments in all markets, challenged by the global supply growth. Increased global supply put pressure on premium prices, especially in some markets.
We are working on increase our share to high value markets, product development, new products, focusing on new markets also, balance the flow across markets to reduce exposure on any single region. The market seems tight looking forward, and that will support stronger prices. Coming to the outlook, the supply picture seem more tight, more limited growth expected now when we look forward. The biomass is tight, as Høgni mentioned, around the globe. After a period with elevated supply, the market is tightening up. Low supply expected the remaining part of the year. We have around 14% supply growth behind us in a market where we expect around 2% for the full year. As we see on this graph, the last half of the H226 is flat or zero growth.
In Americas, actually negative. There will be tighter supply in front of us. In the first quarter, we saw 680,000 tons supply coming up from 592 last year. That was a big volume increase in the first quarter in a year where it should be relatively flat. It will be very low going forward. For Bakkafrost, we see our clear growth trajectory, 117,000 tons harvest target for this year versus 107 last year. Well on track after a strong Q1 delivery. Faroe Islands lifted up to 97 from 92, Scotland remains on 20, where we have delivered 31 in the first quarter. The quarterly profile relatively even in the Faroes between 23 and 25 per quarter.
Scotland lower in the second quarter, but then in the third quarter, and then ramping up in the fourth quarter. Freshwater plan in 2026 remains at DKK 30 million, Faroes DKK 20 and Scotland DKK 10, which is 15% up from last year when it was 26. That supports also a continued growth and biomass built up. It's not only the numbers, it's also the average weight of the smolt because they will be larger, meaning that the cycle will be shorter. On contracts, we intend to contract between 15 and 25% of expected harvest volume. In general, the contracts are shorter than they used to be. Fishmeal, Oil, and Feed, we expect lower production volumes of Fishmeal, Oil, and Feed in 2026.
We expect feed production up to 175,000 ton, up from 165, which was our previous target. We lift our target 10,000 ton. This is all based on internal consumption. The long-term targets from our CMD in June last year remains intact. CapEx around DKK 5 billion for the period 2026 to 2030. Harvest target in 2030 on 162,000 ton. This year, 117, and investment of around DKK 5 billion in this period to reach our target in 2030. We will focus on our disciplined execution, growing at pace, biology and market support. We will, of course, focus very much on cost discipline, especially now when we see the feed cost going up on our ability to balance our feed operation.
That balance will improve with our new feed plant coming into operation now in June. That was everything from this presentation, and we are open to take some questions if there are any.
Hi, Alexander Aukner from DNB Carnegie. Just on Scotland, you seem fairly content with the biological performance, and you say cost will be lower at scale. How much lower at scale, and what is your definition of scale?
At the moment, we have an operation in Scotland, which is We have made some improvements, but we have not scaled the whole operation down to 20,000 tons. When you compare the cost difference between Faroes and Scotland, you see maybe in this quarter it was really high, but over a longer picture, maybe DKK 20 difference. I believe that there will be some difference also in the future, but maybe three quarters of that should be eliminated when we are producing at scale. Half of half of that will be improved with lower cost, and half of it will be improved with better biology in Scotland.
There are many examples if you go through the breakdown of costs, but for example, a lot of fixed costs means today that per kilo they are four times higher than, for example, in Faroe or five times higher than Faroe Islands because we have a lot of assets that we need, but the volumes does not reflect them at the moment.
That's very clear. Thanks. One other question on the raw material price, which you say will mitigate some of the good cost positions. When will the higher raw materials hit your P&L?
On the feed?
No, you on the guidance.
Yeah.
You basically say that going forward, higher raw material prices will impact cost.
Yes. High raw material prices on the feed.
Yeah.
Yes. We have a cycle of around 12 months in the sea now. What we harvest in the first quarter this year is a result of the feed that we used over the last 12 months in the sea. That means that if the feed prices are going to increase in second half of 2026, that will especially impact 2027, early 2027. Late 2026, but especially 2027. We will of course, need to see what we can do to mitigate some of the increase, but there will be an increase of feed cost as it stands at the moment. Especially marine ingredients have increased significantly lately.
Thank you.
Henrik Knudsen, Pareto Securities. You mentioned 6 sites in the Faroes being harvested and doing well. Can you say something about the sites you plan to harvest from in Q2?
First quarter was very low in cost. These are average sites, I would say. Maybe if Fuglafjørður, which had 50% of the cost in this quarter was good. There were no bad sites. There are no bad sites. We will see, when we go forward, as Alexander Aukner asked about that, especially at the end of this year, we expect that cost will come up. We also expect that during this year, the cost will be higher than in the first quarter. I think the first quarter was lower than we will see going forward in 2026, in the next quarters. There will be a few DKK higher costs going forward. A few DKK.
Thank you. Also you mentioned freshwater Scotland breaking even when you ramp up. When do you see that inflection point?
We had some extra costs in this quarter. We should not see that in the future, or at least much lower. As we gradually during 2026 will come from 30% capacity utilization, maybe up to maybe 80% at the end of the year. I would say that we should expect later in 2026 to see positive margins from freshwater.
Okay.
You say you you're today at 9 million smolt in Bakkafrost, and you should peak around 18 million. When do you expect that to hit?
I believe that the full biomass at Bakkafrost will be around second quarter 2027.
Okay. Thank you.
Martin Kaland, ABG Sundal Collier. Could you mention how much feed prices have increased or based on the current raw material prices that you now see?
Well, in the second quarter, they increased slightly from the first quarter, but the marine ingredients have increased significantly now because of the low quotas in Peru. That's in front of us. We have not seen yet a very big increase in feed prices.
How could that also impact your feed operations, feed segments, for example? Do you have inventories of fish meal, fish oil at lower raw material costs that will be sold to the farming segment so that you expect increased margins in the feed operations, although lower in the farming segment?
Yes, of course, you know, in our FOF segment, the way we calculate is that we do a internal pricing at market from the fish meal and oil to the feed. There will be a margin on the internal meal and oil segment into the FOF, but that's within the FOF segment. In between there is a margin, but that goes out on the eliminations. We have a internal inventory which reflects much of the use that we have in '26, which means that there will be an internal margin in the FOF segment if prices go up. That goes on the eliminations. That means that the balance sheet is not affected by that most of the year.
At some later point, there will be an increase if raw materials are going more up.
Does that mean that the EBIT margin you now have in the FOF segment is what you expect also for the coming quarters?
That's a difficult one. I believe that there is a risk that the margins can come down, especially if the raw material situation is challenged, which looks to be the case this year. There is a risk that it could be a lower margin.
Thank you.
Very good. Thank you very much.