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Friday 20 May 2022

King Salmon posts $5.6m H1 loss, upbeat on H2 improvements

30th September 2021 By Bridget O'Connell | | @foodtickernz

New Zealand King Salmon matched last year’s interim loss of $5.6m for the six months to July 2021 but said it is on the road to recovery from Covid disruption and small fish sizes.

In line with a June update to the market, the salmon company said today that small fish sizes and the resulting harvest restrictions negatively impacted its results in the first half of its 2022 fiscal year

“Unfortunately, it’s been a challenging six months,” chairman John Ryder said.

“But we have now initiated our Prescient Aquaculture Model, built on decades of farming king salmon and the experience of our own in-house team. Since the beginning of our new financial year, we have returned to demand exceeding supply”.

Grant Rosewarne

NZKS’s first half revenue was up from $67m last year to $80.1m, which the company said reflected the clearance of excess inventory and a recovery in sales as global demand started to exceed supply with earnings lifting by the middle of the year.

“During the first four months we made losses, more than fully offset by closing out excess foreign exchange contracts,” chief executive Grant Rosewarne said.

“In June we were back to break even, followed by incremental gains in July of $1.3m (proforma EBITDA), continuing into 2H, with August at $1.6m.”

NZKS’s key brands comprised Ōra King, Regal, Southern Ocean, which it exported to more than 15 countries for sale through foodservice and retail channels.

The company also owned pet food brand Omega Plus, which was sold in supermarkets and launched into New Zealand Animates stores in July, with annualised revenue currently running at about $4m per annum.

NZKS forecast harvest volumes in the second half of 2022 of over 4,000 tonnes delivering “the usual premium prices,” Rosewarne said.

“We have consistently maintained prices for the core branded portfolio, even through the Covid pandemic. Excess unbranded stock, mainly whole frozen fish, continues to be sold to international customers outside of established branded channels.”

Rosewarne added that when Covid-19 hit last year, NZKS refocused on New Zealand retail with heavy price promotions, as well as additional fresh speciality and e-commerce business in the US.

“Now, in FY22, we have seen the return of the US foodservice sector whilst retaining the incremental fresh business to deliver improving returns.”

While the effects of Covid-19 disruptions had been largely overcome, NZKS noted that freight availability and cost remained the exception. Freight costs to get to overseas markets came in at $11m in H1 compared with $7.4m at the same time last year.

The company has not paid a dividend since the Covid pandemic started and said this would remain under review.

A hearing had been set for the week beginning 18 October in Blenheim for its Blue Endeavour application to farm in the Cook Strait, 7km north of Cape Lambert.  

Rosewarne said the project presented multiple benefits, including an improved environmental outcome, increased scale, reduction in operating costs, improvements in fish health, and a lift in unit values.

If successful, NZKS expected a harvest from the new venture in 2024.



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