NZ King Salmon FY18 profitability forecast on target, guidance given for FY19

Published on
June 7, 2018

The directors of New Zealand King Salmon Investments Ltd. believe that the company’s pro-forma operating earnings before interest, taxes, depreciation, and amortization (EBITDA) for the 12 months to 30 June 2018 is likely to be at the upper end or slightly above the previously advised guidance range of NZD 24.5 million (USD 17.2 million, EUR 14.7 million) to NZD 26 million (USD 18.3 million, EUR 15.6 million).  

Despite a challenging summer fish performance, brought by very high sea temperatures across the whole of Australasia, the company is expecting to achieve a sales volume of around 7,750 metric tons (MT), with a harvest of approximately 8,000 MT. It also confirmed that sales prices have continued to climb off the back of high demand and limited supply.

“This is a very pleasing outcome especially taking into account the many on-farm challenges, offset by highly successful export sales and marketing efforts and the continuing development of our premium Ōra King and Regal brands,” said Grant Rosewarne, managing director of New Zealand King Salmon.

“We are also continuing our positive discussions with the government regarding MPI (Ministry for Primary Industries) plans for potential relocation of some of our farms to cooler, deeper waters. These plans are important because they would help mitigate the effects of seasonal temperature fluctuations. They would improve environmental, social and economic outcomes, and allow testing of new technologies as we plan for the next 30 years of salmon farming in New Zealand.” 

Looking ahead to the 2019 financial year, the directors have provided EBITDA guidance for the full-year result, of between NZD 25 million (USD 17.6 million, EUR 15 million) and NZD 28.5 million (USD 20.1 million, EUR 17.1 million). 

This forecast is based on a number of assumptions, including a harvest volume in line with 2018 at around 8,000 MT and mortality rates significantly below those of the current financial year. Furthermore, due to limited fish availability, sales will be slightly weighted to the second six-month period.

Meanwhile, it has been reported in New Zealand that the company has, for the first time, started sourcing stock from overseas in an attempt to keep up with rising demand and static production. It is currently experiencing shortfalls of between 20 and 30 MT per week.

The imported salmon – from Norway and Canada – will be sold under the Southern Ocean brand which will be modified to incorporate the change in origin.

Contributing Editor reporting from London, UK

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