28 Sep 2022

Fish deaths a factor as NZ King Salmon posts $24.5m first-half loss

11:32 am on 28 September 2022

NZ King Salmon's farm in Pangu Bay in the Marlborough Sounds. Photo: Supplied/ NZ King Salmon

New Zealand King Salmon has deepened its interim loss as it faced increased fish deaths, a lower harvest and a fall in biomass at sea.

Key numbers for the six months ended July compared to a year ago:

  • Net loss $24.5m vs $5.6m
  • Revenue $80m vs $80.1m
  • Operating loss $18m vs $1.1m
  • No dividend

Company chair John Ryder said the high fish mortality as a result of warmer sea temperatures cost the company $22 million in the first half.

"We then had to begin rebuilding our biomass and accordingly we restricted our harvest and sales. We introduced a number of cost-saving initiatives, and our financial performance has improved although there is more work to do," he said.

Chief executive Grant Rosewarne acknowledged it was a tough start to the financial year, but said the outlook was improving with price increases implemented across all markets.

"We introduced our new aquaculture strategy as outlined at full year with three farms in the Pelorus already fallowed. We also made the decision to mothball our Waiau freshwater facility which is surplus to current requirements.

"We successfully completed a $60.1 million pro rata rights offer and proceeds were used to repay debt which has left us with net cash of $15.6 million. We now have to rebuild biomass from 3700 metric tonnes back up to around 5000 metric tonnes," Rosewarne said.

The company made 23 positions redundant as the business was downsized, which was fewer than anticipated due to staff shortages.

NZ King Salmon now employs 452 people down from 580, largely through attrition.

The company has also reduced capital expenditure to be between $6.5m and $7.5m, compared to $13m last year.

On the likelihood of another potential marine heatwave this summer, the company said the change in its aquaculture strategy was designed to mitigate the effects of warmer temperatures.

Looking ahead, the hearing for its proposed Blue Endeavour ocean farm was formally closed at the beginning of September and the company expected a decision by the end of the year.

"This project is expected to have multiple benefits including an increase in scale of operations, a reduction in operating costs and improvements in fish health," Rosewarne said.

NZ King Salmon said it was on track to deliver a full year operating loss of between $8m and $12m.

It said mortalities continued to improve in the post-summer months but tracked above expectations for the first half of the 2023 financial year.

The company was also facing inflationary pressure, including for the cost of feed.

In its production model for 2023, it has 400 tonnes of seasonal fish coming from Ruakaka. The company said it was not planning to take the fish through the summer, therefore it would be harvested smaller than its average size.

It said there was uncertainty over pricing due to the risk around the size of the fish.

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