Salmon (and prawn) farmer expects earnings to grow for the full-year. Reduction in sales was mostly due to the lower value export market.
Tassal, the largest producer of Tasmanian grown Atlantic salmon, posted its half-year results half year (1H20) ended 31 December 2019 on the Australian Stock Exchange.
Revenue was down 15.8 per cent. While operating EBIT decreased by 3.6 per cent. It said that reduction in sales in 1H20 was “predominantly targeted the lower value export market, with sales mix shift and cost efficiencies driving the increase in EBITDA $/kg”.
CEO Mark Ryan said that its operating cash flow was lower than the same period before because it wanted to harvest and sell less salmon. The company left salmon in the water longer to grow, and “therefore fed more so that we could target cost efficiencies – i.e. the bigger the size of a fish, the better the cost of growing that fish”.
“Operating cash flow was AUD 41 million (EUR 25.2 million) reflecting management decisions that were made in line with Tassal’s 1H20 operational strategy to harvest and sell less salmon in 1H20 to underpin growth in earnings over FY20 and FY21,” said Ryan.
“These decisions consider longer periods of time than simply six months – particularly given the salmon working capital cycle [i.e. growing time] is circa 3 years,” he added.
“We continue to transition supply towards the domestic market with a focus also on more profitable product lines,” wrote Tassal.
“The export market will continue to be strategically used to support growing and production efficiencies, with surplus stock exported,” it added.