New Zealand King Salmon Reports $20.8m Loss as Reduced Harvest Disrupts Supply

New Zealand King Salmon Investments (ASX: NZK) has reported a net loss of $20.8 million for the six months to end July following a $22.5m post-tax write-down of its biological assets (salmon at sea).

Reduced feed outs and elevated fish mortality during summer resulted in below-forecast biomass at sea, which prompted the company to reduce harvest volumes in the hope of boosting biomass and average fish size.

Revenues for the period decreased 7% to $94.5m and pro-forma EBITDA fell from $13.5m to $5.7m, with the harvest decrease the predominate impact, while supply constraints saw sales volumes drop 17% to 2,624 tonnes from the previous period, when the company recorded a post-tax net profit of $2.6m.

Significant Farming Challenges

New Zealand King Salmon chair Mark Dewdney said farming challenges played a significant role during the reporting period.

“Our half-year results were impacted by a less than ideal biological performance, with subdued feed outs and slightly elevated mortality impacting the amount of salmon available for harvest and sale,” he said.

“As a direct result of these impacts, the board made the difficult decision in May to reduce the harvest for the September period to allow our biomass to recover—pleasingly, our feed out and growth rates are now back on track and biomass is rebuilding well.”

The disruption was most prevalent in the foodservice (fresh sales) sector, with the utilisation of finished goods on hand partially offsetting the impact on retail channels.

‘New Initiatives in Motion’

“The good news is that we have new initiatives in motion to help strengthen our core business and mitigate the future impact of our fish health and performance challenges,” chief executive officer Carl Carrington said.

“Importantly, we are implementing a summer feed diet to improve health and reduce mortality, and we are breeding for resilience, continuing our selective breeding for thermotolerance and summer survival.”

Mr Carrington said the company had commenced construction of a pilot recirculated aquaculture system at the Tentburn Hatchery on New Zealand’s South Island to improve smoltification outcomes and reduce early runting.

“Despite the recent supply disrutpions, our confidence remains around the long-term growth opportunities for New Zealand King Salmon,” he said.

“Our direction of travel has not changed—rather, the emphasis on certain initiatives has increased, our sequencing is shifting in response to new circumstances, and certain investments are accelerating.”