Fall in harvest volumes, higher operating costs and jelly fish dampen Huon’s earnings

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One tough year for the Tasmanian salmon farmer.

In a financial statement posted on Wednesday, Huon Aquaculture posted revenue of AUD 282 million (EUR 171.5 million) representing an 11% decline due to an 18% reduction in harvest tonnage.

Huon said it faced a combination of operational challenges during the 2019 financial year which contributed to a greater reduction in production volumes than originally anticipated.

FY2019 commenced with lower biomass following difficult operating conditions in the prior year which resulted in part of the FY2018 harvest being brought forward. Then, late in the first half of FY2019, some of the pens in the Huon River and D’Entrecasteaux Channel came into contact with a moon jellyfish bloom. This resulted in increased fish mortalities both directly and indirectly over the following months due to a related outbreak of gill necrosis. For those fish that survived, growth rates were compromised until such time as water temperatures fell below 16 degrees Celsius which did not occur until April 2019.

Average harvest weights fell to 4.40kg compared to 4.78kg in FY2018 as fish growth was seriously impacted by gill necrosis, a disease caused by contact with jellyfish, and exacerbated by warm water temperatures which persisted until April 2019.

The 34% decline in Operating EBITDA to AUD 47.3 million (EUR 28.7 million) combined with increased working capital requirements associated with rebuilding the biomass, lower production volumes and higher per kg costs, resulted in a 75% reduction in cash flow from operations to AUD 14.5 million (AUD 8.8 million) – which was AUD 57.9 million (EUR 35.2 million) in FY2018.

“The various challenges that we have been dealing with during the past year are significant in terms of their impact on the financial performance for FY2019 but they need to be placed in context. These events come with the territory when working with nature so we have to manage through them and move on. We are already well on the way to a strong recovery in FY2020 demonstrating that our capital investment program over the past five years has strengthened Huon’s capacity and its resilience, ensuring the impact of these difficult periods is short-lived,” wrote Huon Founder MD and CEO Peter Bender.

Huon’s forecast of production volumes for FY2020 is at least 25,000 tonnes. It said that it will also be the first year since 2014 in which the company “is not investing aggressively in the business”.