Due to challenges related to COVID-19, New Zealand King Salmon posted an almost 50 percent year-on-year decrease in earnings for the seven months ending on 31 January, 2021.
According to last week’s financial report for FY2021, the operating earnings before interest, taxes, debt, and amortization (EBITDA) was down to NZD 10 million (USD 7 million, EUR 6 million) compared to NZD 19.6 million (USD 13.82 million, EUR 11.73 million) for FY20 (covering seven months).
The company also reported revenues of NZD 95.2 million (USD 67 million, EUR 57 million), a 6 percent decrease compared to the prior 7-month period.
The decrease in operating EBITDA and revenue was juxtaposed by a slight increase in sales volume. The company sold 4,117 MT, which represents a 1 percent increase compared to the prior 7-month period – showcasing how low salmon prices and COVID-19 related difficulty pushed the company’s earnings down.
“It is a creditable outcome considering we are recovering from the challenges of the COVID-19 pandemic,” New Zealand King Salmon Chairman John Ryder said in a statement. “The full financial impact of excess inventory, caused by the pandemic, has been absorbed into these results with appropriate contingencies built-in.”
Low prices, Ryder said, will likely shift back to normal levels as COVID-19 begins to be handled by nations across the globe, but production costs may stay high.
“Going forward, our average price will return to pre-COVID levels, however, margins will still be affected by higher freight and distribution costs,” he said. “We are seeking to increase prices globally around the middle of the calendar year with a view to recovering some of these ongoing costs.”
The company is optimistic about its future, stating that it is looking forward to moving into open ocean farming. The company has applied for its first open-ocean farming operations, comprising two farm sites in the Marlborough region.
The site has been named “Blue Endeavour,” which the company sees as “a step towards the long-term sustainability of the industry.”
“Our Blue Endeavour application to farm in the Cook Strait, 7 kilometers north of Cape Lambert is likely to go to a hearing in August once submitters have been fully consulted,” New Zealand King Salmon Managing Director and CEO Grant Rosewarne said. “If successful this will drive significant economic benefits to the region, eventually delivering hundreds of green jobs to the top of the south. It will provide better waterspace and conditions to grow our fish. The earliest possible harvest is mid CY24.”
The farms will be the first open-ocean aquaculture operations in New Zealand, and Rosewarne said the farms will be a “critical cornerstone” in the country’s plan to increase the aquaculture industry from NZD 625 million (USD 441 million, EUR 374 million) to NZD 3 billion (USD 2.1 billion, EUR 1.79 billion).
The company added that it is also planning for the future effects of climate change, and through its Prescient Aquaculture Model it hopes to focus on having the right sized fish in optimal locations. The model aims to introduce smaller fish into cooler sites and move them as they grow, to ensure they are in the best sites for each stage of growth, and have access to upwellings of colder water when at harvest size.
Photo courtesy of New Zealand King Salmon
