Small fish sizes hurt New Zealand King Salmon as company announces €3.3m in losses

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Net losses come to €3.3 million in the six months to July, driven by small fish sizes.

On Thursday, New Zealand King Salmon, the world’s largest producer of farmed king salmon, reported its financial performance for the six months period ending 31 July 2021.

The report indicates that while the effects of Covid-19 disruptions have been largely overcome with the exception of freight availability and cost, small fish size and compensating restrictions on harvest have negatively impacted results.

Net losses came to NZ$5.6 million (€3.3 million) in the six months to July.

Revenue came to NZ$80.1 million (€47 million), up from NZ$67 million (€39.7 million) in the first half of 2021, reflecting clearance of excess inventory and a recovery in sales.

The company’s operating EBITDA came to NZ$3.3m (€1.9 million), compared with NZ$7.1m (€4.2 million) in the previous corresponding period.

Chairman John Ryder said: “Unfortunately it’s been a challenging six months, but we have now initiated our Prescient Aquaculture Model, built on decades of farming King salmon and the experience of our own in-house team. Since the beginning of our new financial year, we have returned to demand exceeding supply”.

“Our premium brands continue to show great strength in building customer relationships and supporting margin growth, focusing on diversification across categories and markets to build resilience. ”Now, in FY22, we have seen the return of the US foodservice sector whilst retaining the incremental fresh business to deliver improving returns.

New Zealand King Salmon CEO Grant Rosewarne acknowledged it had been a tough period. “During the first four months we made losses, more than fully offset by closing out excess foreign exchange contracts. In June we were back to break even, followed by incremental gains in July.

“We are forecasting harvest volumes in the second half of 2022 of over 4,000 tonnes delivering the usual premium prices. We have consistently maintained prices for the core branded portfolio, even through the Covid pandemic. Excess unbranded stock, mainly whole frozen fish, continues to be sold to international customers outside of established branded channels.

“During Covid FY21 we refocused on NZ retail (with heavy price promotions) and developed additional fresh speciality and e-commerce business in the US, which helped get us through FY21.

“Now, in FY22, we have seen the return of the US foodservice sector whilst retaining the incremental fresh business to deliver improving returns.”

Shares in NZ King Salmon last traded at NZ$1.42, up 2c. The company has not paid a dividend since the Covid pandemic started and this will remain under review.