NZ King Salmon sinks to $24.5m loss as warmer weather kills fish, reduces biomass

NZ King Salmon is pinning its hopes on its new Blue Endeavour project planned for Cook Strait. Photo / Supplied

Fish deaths caused by warmer water drove NZ King Salmon to a $24.5 million loss in the first half to July 31, the company says.

NZ King Salmon reaffirmed its full year earnings guidance - given in April 2022 - of an $8m to $12m pro forma ebitda loss.

The company said revenues were consistent with the prior comparable period at $80m, as a combination of price increases and customer mix offset reduced sales volumes throughout the half.

Sales volumes fell 21 per cent to 2,886 tonnes, reflecting a reduced harvest.

NZ King Salmon said it had been a challenging start to the year, with sea farm mortalities, lower harvest and a decline in biomass at sea.

The company, noting an expected warm summer, said a change in its aquaculture model was designed to provide strong mitigation against the effects of higher temperatures.

NZ King Salmon has applied for environmental consent to establish a fish farm in Cook Strait.

The hearing for its Blue Endeavour project, 7km north of Cape Lambert, closed early this month.

A decision is expected by the end of the year.

In its result, the company said warmer waters caused a "mortality event" in January and continued into the first half, more than doubling the mortality cost to $22.3m.

The pro-forma ebitda loss for the half was $13.7m, compared to profit of $3.3m in the previous comparable period.

Finished goods inventories were still being managed down after the build-up which occurred through Covid disruptions.

In May, NZ King Salmon successfully completed a $60.1 million pro rata rights offer, the proceeds of which were used to repay debt which left the company with net cash of $15.6m.

Chairman John Ryder said the company had introduced several cost-saving initiatives, and its financial performance had improved "although there is more work to do".

Chief executive Grant Rosewarne said it was a tough start to the financial year, but the outlook was improving with price increases implemented across all markets.

NZ King Salmon had already downsized the company, which was necessary to align with the reduced harvest.

"We have been fortunate that there are a number of staff shortages in other businesses, so only 23 positions were made redundant as our business reduced from 580 team members to 452, largely through attrition," Rosewarne said.

"We sensibly reduced capex and we are forecasting capex spend of $6.5m to $7.5m, compared to $13m last year."

Much of the capex related to pre-committed projects, such as a new barge and net cleaner and work on the Blue Endeavour ocean farm application.

NZ King Salmon is the world's largest aquaculture producer of the premium King salmon species.

It has four key brands - Ōra King, Regal, Southern Ocean, and Omega Plus.