Losses caused by fish failing to adapt to seawater hits profits for New Zealand producer.
New Zealand King Salmon Investments has reported a significant decline in net profit for the half-year ended July 31, 2024, with profits falling to NZD 6.01 million (USD 3.79 million), down from NZD 10.63 million (USD 6.70 million) in the same period last year.
This decline is attributed primarily to elevated fish mortality rates, which continue to challenge the company’s operations.
Revenue for the period increased by 11%, reaching NZD 101.72 million (USD 64.08 million), up from NZD 91.56 million (USD 57.68 million) last year, but the rising costs associated with fish deaths had a significant impact on the company’s financial performance. Mortality costs surged to NZD 8.5 million (USD 5.36 million), compared to NZD 7.8 million (USD 4.91 million) a year earlier.
Chief Executive Officer Carl Carrington highlighted the company’s ongoing struggle with early runting, where salmon fail to adapt to seawater. “We are revising our full-year harvest downwards to 6,800MT due to elevated levels of early runting. This has had a material impact on our ability to meet production targets and maintain profitability,” Carrington said.
Carrington also acknowledged the broader challenge of variable fish sizes, which has hurt consumer confidence and sales. “Variable fish sizes impacted our market performance, but we are making progress in improving size consistency,” he added.
The company is also exploring mitigation strategies, including pilot trials of freshwater Recirculated Aquaculture Systems (RAS), which it believes could improve fish outcomes.
“Initial trials of mitigants are looking promising, and we are assessing options for pilot trials of RAS, which we believe may improve fish outcomes when adapting to seawater,” Carrington noted.
New Zealand King Salmon’s Chairman Mark Dewdney emphasized the impact of external pressures on the business. “While sales have held up well across all markets and channels despite global cost-of-living pressures, the mortality issues have overshadowed what could have been a much stronger performance,” he said.
The Board has revised its pro-forma EBITDA guidance to a range of NZD 26 million to NZD 30 million (USD 16.38 million to USD 18.9 million), reflecting the challenges the company continues to face.
