27 Aug 2020

NZ King Salmon reports $18m profit for year

12:52 pm on 27 August 2020

New Zealand King Salmon has reported an improved full year profit, despite sales volumes plummeting by hundreds of tonnes due to the Covid-19 disruption.

New Zealand King Salmon farm

Photo: Supplied / New Zealand King Salmon

It reported an $18 million profit for the 12 months to June, up 58 percent on last year, due to increased fair value gains for its livestock.

Pricing also held up at 7 percent more a kilogram than 2019, at $24.54.

Chief executive Grant Rosewarne said the hit to sales during the lockdown period tested the company's resilience.

"Sales revenue [dropped] by 50 percent during level four lockdown, but I'm proud to say we have adapted to the crisis and, with the aid of the government's wage subsidy, been able to keep all 550 team members employed."

The company received $3.8m through the wage subsidy and operated as an essential business.

Rosewarne said the pandemic's impacted on second half sales was estimated at between 600 and 700 tonnes.

"Despite NZKS being listed as an essential service provider, disruptions to global supply chains meant that we were unable to fulfil all available orders. Where air freight was able to be secured for export customers it was significantly in excess of normal rates."

Sales are now at about 80 percent of pre-Covid levels, however the cost of air freight was impacting margins.

Rosewarne said despite the challenge, the outlook for the firm was good.

"The future of the industry and our company is bright with the government's aquaculture strategy recognising the opportunity for the industry to grow from its current $625 million to $3 billion in 2035.

"Our Blue Endeavour application to farm in the Cook Strait, 7kms north of Cape Lambert, is progressing well with a hearing expected by the end of the year. We expect the result of the application to be confirmed by mid 2021, and assuming a positive outcome, first harvest expected [near the end of 2023].

If granted about 300 jobs would be created.