NZ King Salmon back in black after big loss

NZX-listed salmon farmer NZ King Salmon has published its annual result. Photo / Supplied

A sharp turnaround in the second half allowed NZ King Salmon Investments (NZKS) to eke out an annual $1.9 million net profit after reporting an almost crippling $73.2m loss in 2022.

The South Island salmon farmer’s earnings before interest, tax, depreciation and amortisation (ebitda) came in at a loss of $4.4m for the year to January 31, compared to an ebitda profit of $6.7m in 2022.

The operating loss was better than the company’s original market guidance of an $8m – $12m ebitda loss.

Looking ahead, NZKS said its ebitda guidance for the current year was $21m to $25m.

Sales fell by 24 per cent to 5,837 tonnes and revenue dropped by 4 per cent to $167.1m.

The harvest this year is expected to improve to around 6,600 tonnes.

NZKS farms king salmon in Pelorus and Queen Charlotte Sounds in the Marlborough Sounds, as well as Tory Channel.

In recent years, the two sounds have seen water temperatures consistently above the optimum range for salmon farming.

In comparison, Tory Channel is exposed to southerly swells, has strong tidal currents, consistently colder water and has always been a haven for farming salmon during warmer months.

According to the National Institute of Water and Atmospheric Research (NIWA), 2022 was the hottest year on record in New Zealand, driven by another La Niña event.

This resulted in extremely high fish mortalities throughout January, February, and March.

“A key lesson when facing adversity is how you react to it,” the company said in today’s result.

The company last year raised $60.1m from the market to restructure its balance sheet – repaying all bank debt on a net basis.

NZKS said its latest result was impacted by a “mortality event” in the first quarter which resulted in a higher mortality expense, lower available harvest and a decline in salmon biomass at sea.

The half year loss came to $24.5m.

“Performance improved in the second half of the year with a significant reduction in mortality and a fair value uplift in our salmon biomass at sea,” the company said.

The company has high hopes for its planned Blue Endeavour farm which it wants to build in the cooler and fast-moving waters of Cook Strait.

Environmental permission was granted in November.

Two appeals were subsequently lodged, and mediation began in March with the parties involved.

“Blue Endeavour has the potential to add up to 10,000 tonnes of harvest volume in conjunction with our nursery sites when fully developed,” it said.

Full capacity of existing sites plus Blue Endeavour would be 17,000 tonnes, the company said.

NZ King Salmon said its sales model continued to improve throughout the financial year. There was a strong focus on managing the supply to meet the demand in the 2023 year following a reduced harvest associated with the summer mortality.

Supply chain disruptions and inflationary pressures resulted in cost increases being passed on to the market.

NZ King Salmon said fish death expenses to date - at $2 million - were significantly lower than the prior comparable period a year earlier.

It added that inflationary pressure was continuing to occur across its cost base, specifically the cost of feed on a kg basis rose substantially in 2023.

Freight costs remained significantly above pre-Covid levels, the company said.