New Zealand King Salmon is investing in improving fish health outcomes and reducing mortality rates.
Photo: New Zealand King Salmon.
New Zealand King Salmon (NZKS) presented its 1HY25 results. If it closed the previous year "slightly weaker" than expected, now, despite recording a 5% increase in sales and an 11% increase in revenues, the aquaculture producer registered a profit loss for the six months ended July 31, 2024.
According to the NZKS 1HY25 report, it was the increase in overhead expenses due to investments in capacity to carry out growth projects and adjust operations following the mortality event in FY22/23 that negatively impacted margins.
In total, the net profit recorded by New Zealand King Salmon in the first half of its fiscal year 2025 was NZD 6 million (EUR 3.3 million / USD 3.7 million) compared to NZD 10.6 million (EUR 5.9 million / USD 6.6 million) in H1Y24. Pro forma EBITDA, meanwhile, was NZD 13.5 million (EUR 7.6 million / USD 8.4 million), compared to an EBITDA of NZD 10.7 million (EUR 6 million / USD 6.7 million) in the same period of the previous fiscal year.
As mentioned, sales volumes increased by 5%, from 3,023MT in 1HY24 to 3,178MT in 1HY25, while revenues rose by 11%, increasing from NZD 91.6 million (EUR 51.7 million / USD 57.5 million) in 1HY24 to NZD 101.7 million (EUR 57.4 million / USD 63.9 million) in the current fiscal year.
The salmon producer also reported that, in its second summer using the adapted farming strategy, the mortality cost increased from NZD 7.8 million (EUR 4.4 million / USD 4.9 million) in 1HY24 to NZD 8.5 million (EUR 4.8 million / USD 5.3 million) in 1HY25. Following these changes in the farming model, mortality remains within management's expectations and the company continues to invest in R&D to improve fish health outcomes.
Commenting on the results of the 1HY25 report, New Zealand King Salmon chairman Mark Dewdney was pleased. "The half year result for the period ended July 2024 is underpinned by the continued steady performance of our new fish farming approach," he said.
"This gives us further confidence that we will be able to deliver strong aquaculture outcomes again this summer. Sales have held up well across all markets and channels, despite global cost-of-living pressures. We are happy with our solid first half result," he added.
For his part, Carl Carrington, CEO of NZKS, announced an update on the FY25 exercise guidance forecast resulting from a biological issue. "Looking forward, we are revising our full year harvest downwards to 6,800MT due to elevated levels of early runting (fish failing to adapt to seawater)," he said.
"Our aquaculture team is working closely with experts to address this challenge," New Zealand King Salmon's CEO continued. "Initial trials of mitigants are looking promising, and we are assessing options for pilot trials of freshwater Recirculated Aquaculture Systems (RAS) which we believe may also improve fish outcomes when adapting to seawater."
As a consequence of that downgrade in the harvest forecast, the pro forma EBITDA profit forecast range has also been revised to NZD 26-30 million (EUR 14.6-16.9 million / USD 16.3-18.8 million) versus the original forecast range of NZD 26-32 million (EUR 14.6-18 million / USD 16.3-20.1 million) provided to the market in March 2024.
Carl Carrington also discussed the company's sales strategy in his comments on the results. "We are making steady progress in developing our presence in China," he explained. "We are focused on establishing a premium position for our Regal brand in this market through partnering with premium customers across multi-channels."
"Market support is positive, and King salmon is recognised by customers for its premium taste, texture and presentation. Quality distribution is growing on a trajectory consistent with building the value proposition ahead of volume. Patience and consistency are required to lay the right foundations for the longer term," NZKS' CEO added.
Among these future projects for New Zealand King Salmon is the growth of its offshore farm project, Blue Endeavour. After gaining final Government approval earlier this year, according to NZKS' 1HY25 report, the pilot project is progressing well, and work has already started on the service vessel and the construction of the mooring grid and pens infrastructure.
Moreover, the company said the first fish for the pilot are currently growing at its Tentburn facility and anticipated that they will be moved to NZKS' breeding farm at Pelorus Sounds around April 2025, and then to Blue Endeavour around October 2025.
When the full project is underway, it will allow for the breed of up to 500MT at the Blue Endeavour site. "This is a milestone achievement for New Zealand King Salmon and New Zealand more generally, and we are cautiously optimistic the site will prove up a transformational growth pathway," Carrington stated.