Q4 2025 Trading Update

Bakkafrost preliminary Q4 2025 trading update reports Q4 harvest volumes of 25.4 thousand tonnes HOG in the Faroe Islands (average weight 5.2 kg) and 4.6 thousand tonnes HOG in Scotland (avg 4.1 kg); YTD Faroe harvest is 83.6 thousand tonnes HOG. Incident-based mortality costs in Farming were 0 mDKK in the Faroe Islands and 58 mDKK in Scotland (about half attributable to a Pasteurella incident at Portree in Q3); Freshwater incident costs were 0 mDKK (Faroe) and 2 mDKK (Scotland). Smolt releases in Q4 were 5.3 million (Faroe) and 2.2 million (Scotland). FOF segment Q4 volumes: 39.8 kt marine raw material sourcing, 44.7 kt feed sales and 2.4 kt fish meal sales; fish oil sales were nil. The full Q4 report is scheduled for 9 February 2026.

Analysis

Market structure: Bakkafrost’s Q4 shows concentration of harvest in the Faroe Islands (25.4k t HOG) versus a small, higher-cost Scotland operation (4.6k t HOG) and incident costs of 58 mDKK in Scotland. Winners: integrated Faroe producers (BAKKA.OL) with stable volumes and low incident costs; Losers: regional Scottish sites and smaller operators with disease exposure. Supply/demand: Q4 smolt releases (Faroe 5.3M, Scotland 2.2M; YTD 18.7M/7.3M) imply modest harvest growth 18–24 months out, pressuring mid‑term prices if peers also ramp up.

Risk assessment: Tail risks include renewed Pasteurella/sea‑lice outbreaks or regulatory tightening in Scotland that could add >100 mDKK extra costs and push harvest delays beyond 3–6 months. Immediate (days) risk centers on investor reaction to Feb 9 full report; short‑term (weeks/months) risk is operational (hatchery cull follow‑ups); long‑term (quarters) risk is macro-driven salmon price collapse if global supply overshoots by >5–8%. Hidden dependencies: feed/FOF sourcing (349k t YTD) links margins to fishmeal/fish‑oil prices and shipping bottlenecks.

Trade implications: Favor selective long in BAKKA.OL into Feb 9 with defined stops and call spreads to limit downside; pair trade long BAKKA.OL vs short MOWI.OL or GSF.OL to express operational outperformance of Faroe assets. Use calendar spreads (3–9 month) to play expected volatility around the report and potential disease announcements; overweight aquaculture equities vs commodity protein producers for 3–12 months if disease remains contained.

Contrarian angles: Consensus will likely penalize all Scottish‑exposed names; this is too broad—Bakkafrost’s Faroe operations are de‑risked and may re‑rate as mortality costs normalize. Historical parallels: past localized disease shocks produced 10–30% idiosyncratic drawdowns but full recovery within 6–12 months once contained. Unintended consequence: underinvestment in biosecurity at smaller peers may create consolidation opportunities for Faroe specialists over 12–24 months.

Key Decisions for Investors

• Establish a 2–3% long position in BAKKA.OL ahead of the Feb 9 Q4 release, target +25% in 6–9 months, stop-loss at -12%; hedge tail risk with a BAKKA.OL Mar–Sep 2026 call spread (buy near‑the‑money, sell 25–40% OTM).
• Enter a relative value pair: long 1% BAKKA.OL vs short 0.5% MOWI.OL (or GSF.OL if available) to express Faroe operational premium; rebalance if spread narrows >15% or if Scotland incident costs rise >50 mDKK.
• Buy a 3–6 month put spread on Scottish‑exposed small caps (e.g., GSF.OL) sized at 0.5% portfolio notional to hedge regional disease/regulatory tail risk if incident‑based mortality in Scotland increases beyond 75 mDKK within 60 days.
• Reduce cyclic protein/commodities exposure by 1–2% and reallocate to aquaculture names with high Faroe exposure (BAKKA.OL, LSG.OL) over the next 3–12 months, conditional on no new large‑scale disease events within 90 days.
• Monitor specific triggers before adding size: Feb 9 full report (liquidity/cashflow details), any regulatory inquiry in Scotland within 30–60 days, and smolt release cadence published next two quarters—only increase net long if combined metrics (operational cashflow + zero new incidents + smolt-to-harvest visibility) meet or exceed current guidance.