NZ King Salmon shares tumble as increased fish deaths lead the company to slash earnings guidance

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New Zealand King Salmon has slashed its earnings guidance after warmer sea temperatures increased fish deaths.

Shares in salmon producer New Zealand King Salmon plunged as much as 16.5 per cent to NZ$1.01 on Tuesday after the company slashed its earning guidance. The drop represents the steepest decline for the company since debuting in October 2016.

The salmon producer now expects its underlying profit for the current financial year to be between NZ$6.5 million (€3.8 million) and NZ$7.5m (€4.4 million), down from NZ$10.5 million (€6.1 million) and NZ$12.5 million (€7.3 million).

The company had just lifted its earnings forecast in December after reporting increased fish sizes but the recent bout of hot weather in the Pelorus Sound had contributed to higher levels of fish deaths in its sea farms.

In a statement to the stock exchange, the company said the increase in mortalities would “seriously impact” its financial performance for FY22 and FY23 because its harvest would be reduced.

“The situation continues to unfold, and we are deploying best practice measures to counter the heat of summer and other contributing stressors.

“This outcome is particularly disappointing for our dedicated teams who closely monitor and care for our fish because our improved farming model was showing good results.”

It said that climate change and warming sea temperatures had been identified as a key risk to the business and the company had respondend by putting measure in place to mitigate the risks.

“To minimise this impact, we are evaluating options to accelerate our existing harvest schedule starting this week.”

The company said it was not uncommon to see a higher death rate in summer particularly on its westerly Pelorus farms and this was one of the main reasons it had applied for an open farming resource consent in the cooler, deeper and faster current conditions of the Cook Strait.

The resource consent hearings were completed in December and a decision was expected in a few months, the company said.