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1. Company Snapshot

1.a. Company Description

P/F Bakkafrost, together with its subsidiaries, produces and sells salmon products under the Bakkafrost and Havsbrún brands in North America, Western Europe, Eastern Europe, Asia, and internationally.It operates through four segments: Farming FO; Farming SCT; Value Added Products; and Fishmeal, Oil and Fish Feed.The company is involved in the breeding and on-growing of salmon; harvesting, sale, and distribution of salmon; salmon farming, harvest, filleting, sales, and administration; and production of skinless and boneless portions of salmon.


It also produces and sells fishmeal, fish oil, and fish feed.The company was founded in 1968 and is headquartered in Glyvrar, Denmark.

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1.b. Last Insights on BAKKA

Bakkafrost's recent stock performance has been negatively driven by a lack of significant insider ownership, which is unusual for a company demonstrating robust growth. In contrast to peers like Quanta Services, with a high insider ownership ratio, Bakkafrost's ownership structure may signal a disconnect between management and shareholders. This could be a concern for investors looking for stability amidst broader economic uncertainties. Additionally, the company's growth has been driven by its aquaculture segment, but recent market conditions have been affected by global economic factors and inflation concerns.

1.c. Company Highlights

2. Bakkafrost's Q2 2025 Earnings: A Mixed Bag

Bakkafrost's Q2 2025 revenue came in at DKK1.575 billion, with an operational EBIT of DKK65 million. The company's profit after tax was negative, at DKK138 million, resulting in adjusted earnings per share of minus DKK0.1. Notably, the actual EPS was significantly higher than the estimated EPS of DKK0.05294 in the previous year, but still, the company reported a loss. The revenue decrease was largely due to lower salmon prices, which were down 33% compared to the previous year.

Publication Date: Aug -29

📋 Highlights
  • Revenue & EBIT Declined: Q2 2025 revenue fell to DKK 1.6 billion, operational EBIT of DKK 65 million, down from prior periods despite higher volumes.
  • Harvest Volume Shifts: Faroe Islands harvested 16,000 tonnes (+5,800 tonnes YoY), while Scotland dropped to 7,000 tonnes (-4,300 tonnes YoY) due to a major incident.
  • Feed Sales Growth: Feed sales surged 14% to 37,500 tonnes, but fishmeal sales declined, impacting the FOF segment’s external revenue.
  • Cash Flow & Dividends: Negative operational cash flow of DKK 204 million, yet dividends of DKK 501 million were paid, reflecting capital allocation challenges.
  • Price & Margin Pressure: Salmon prices fell 33% YoY, reducing EBIT per kilo in the Faroe Islands and causing a DKK 146 million loss in Scotland due to mortality and low volumes.

Segmental Performance

The Faroese farming segment delivered strong growth, with a 57% increase in harvest volume and a 12% decrease in farming costs. In contrast, Scotland's farming segment was impacted by lower salmon prices and lower volume, resulting in a negative operational EBIT. The company's one company approach and strong branding managed to increase value and capture better premiums, lifting results significantly in the quarter, as evident from the improved operational EBIT of DKK97 million, up from minus DKK57 million last year.

Operational Highlights

Bakkafrost has transferred 5,000 tonnes of smolt with a survivability rate of over 97%, leading to strong fish welfare and early feeding after sea transfer. The company's operating EBIT improved, driven by good premium realization. Sales volumes increased, and revenues were positively impacted by the improved premium.

Valuation and Outlook

With a P/E Ratio of 65.65, P/B Ratio of 1.47, and P/S Ratio of 2.29, the market is pricing in a certain level of growth. The company's guidance for this year has been raised to 104,000 tonnes, driven by strong development in the Faroe Islands and Scotland. Analysts estimate next year's revenue growth at 20.1%. The global supply growth is expected to slow down in the second half of 2025, and harvest is expected to come down to maybe 2% to 3% in the second half and close to 0 in 2026.

Dividend and Cash Flow

The company paid out dividends of DKK501 million in the quarter, resulting in a negative cash flow from operations of DKK204 million. The dividend yield stands at 3.07%, which is a relatively attractive metric. The free cash flow yield is 7.17%, indicating a decent cash generation capability.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.65%)

6. Segments

Sales and Other

Expected Growth: 14%

Bakkafrost's 14% growth in Sales and Other is driven by increasing demand for sustainable and premium seafood products, coupled with strategic acquisitions and expansion into new markets. Additionally, the company's focus on operational efficiency, cost savings, and investments in value-added products have contributed to the growth.

Fishmeal, Oil and Feed

Expected Growth: 17%

Strong demand for salmon, increasing global aquaculture production, and Bakkafrost's efficient operations drive growth in Fishmeal, Oil and Feed segments. The company's vertically integrated business model, high-quality products, and strategic partnerships also contribute to the 17% growth rate.

Services

Expected Growth: 12%

Strong demand for sustainable and locally sourced salmon, increasing market share in key regions, and successful integration of acquired companies drive P/F Bakkafrost's services growth. Additionally, investments in aquaculture technology and efficient farming practices enhance productivity, while a focus on premium products and value-added services contribute to revenue expansion.

Freshwater Faroe Islands

Expected Growth: 15%

Freshwater Faroe Islands from P/F Bakkafrost's 15% growth driven by increasing demand for sustainable seafood, expansion into new markets, and investments in aquaculture technology. Additionally, the company's focus on reducing environmental impact and improving fish welfare contributes to its growth.

Farming Scotland

Expected Growth: 13%

Farming Scotland's 13% growth, driven by P/F Bakkafrost, is attributed to increasing demand for sustainable seafood, favorable climate conditions, and strategic investments in aquaculture technology. Additionally, the company's focus on disease management, efficient feeding practices, and certifications such as ASC and ISO 14001 contribute to its growth.

Farming Faroe Islands

Expected Growth: 16%

Farming in Faroe Islands by P/F Bakkafrost is driven by increasing demand for sustainable seafood, favorable climate conditions, and government support for aquaculture. The region's pristine waters and strong fish farming traditions also contribute to the growth. Additionally, Bakkafrost's commitment to innovation, quality, and environmental responsibility further fuels the 16% growth.

7. Detailed Products

Atlantic Salmon

Fresh and frozen Atlantic salmon, harvested from sustainable aquaculture practices, suitable for human consumption.

Value-Added Salmon Products

Processed salmon products, including fillets, portions, and other value-added items, tailored to customer specifications.

Fishmeal and Fish Oil

High-quality fishmeal and fish oil, derived from sustainable fish sources, suitable for use in animal feed and other industrial applications.

Roe and Caviar

High-quality salmon roe and caviar, harvested and processed to meet premium standards, suitable for gourmet and specialty food markets.

8. P/F Bakkafrost's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for P/F Bakkafrost is medium due to the availability of alternative protein sources such as chicken and pork. However, the demand for salmon is high and the company's products are differentiated, reducing the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the market and the lack of large-scale buyers. P/F Bakkafrost has a diverse customer base, which reduces its dependence on individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the limited number of suppliers of high-quality fish feed and the importance of these suppliers to P/F Bakkafrost's operations. However, the company's vertical integration and long-term contracts with suppliers reduce its dependence on individual suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the salmon farming industry, including the need for significant capital investment and the requirement for specialized knowledge and expertise.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the salmon farming industry and the presence of several large players. P/F Bakkafrost competes with other companies such as Mowi and Lerøy Seafood Group, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.55%
Debt Cost 5.03%
Equity Weight 71.45%
Equity Cost 7.66%
WACC 6.91%
Leverage 39.97%

11. Quality Control: P/F Bakkafrost passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Anglo-Eastern Plantations

A-Score: 6.8/10

Value: 7.9

Growth: 5.2

Quality: 7.5

Yield: 5.0

Momentum: 10.0

Volatility: 5.0

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Mowi

A-Score: 5.4/10

Value: 3.7

Growth: 4.7

Quality: 4.7

Yield: 4.4

Momentum: 6.0

Volatility: 9.0

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Lerøy Seafood

A-Score: 5.0/10

Value: 4.3

Growth: 4.7

Quality: 3.2

Yield: 6.9

Momentum: 4.0

Volatility: 7.0

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SalMar

A-Score: 4.8/10

Value: 3.0

Growth: 6.6

Quality: 3.3

Yield: 6.2

Momentum: 4.0

Volatility: 5.7

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Bunzl

A-Score: 4.5/10

Value: 4.9

Growth: 5.3

Quality: 4.8

Yield: 4.4

Momentum: 0.5

Volatility: 7.0

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Bakkafrost

A-Score: 3.7/10

Value: 4.0

Growth: 5.8

Quality: 3.4

Yield: 3.8

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

486.6$

Current Price

486.6$

Potential

-0.00%

Expected Cash-Flows