Revenues fell 20 percent at Dover, Tasmania, Australia-based Huon Aquaculture Group from June through December 2018, and the company’s harvest tonnage fell 29 percent, the company reported on Friday, 22 February.
Sales reached AUD 136.3 million (USD 97.1 million, EUR 85.7 million) in the second half of 2018, down from AUD 170.5 million (USD 121.5 million, EUR 107.2 million) year-over-year. Its net profit for the last six months of 2018 was AUD 26.4 million (USD 18.8 million, EUR 16.6 million), down from AUD 27.6 million (USD 19.7 million, EUR 17.3 million) year-over-year, but up from a loss of AUD 1.2 million (USD , EUR ) in the previous six months.
Huon’s harvested volume fell to 9,012 metric tons (MT), down from 12,693 in the second half of 2017. The company said it “has been affected by the deterioration in operating conditions in the second half of FY2018 which saw a significant reduction in the biomass.”
The company’s lower sales were somewhat offset by the 13 percent higher salmon prices it recorded, achieving an average price of AUD 15.11 (USD 10.77, EUR 9.50) per kilogram. Nearly all of the company’s salmon sales (94 percent) ended up in the domestic market, which Huon said is “laboring under supply shortages and struggling to meet the continued growth in demand.”
Huon Aquaculture CEO and Managing Director Peter Bender said the decline in both sales and profitability reflected the impact of the “extremely challenging operating conditions” in the 2017-2018 summer, which resulted higher expenses for operations, reduced the tonnages available, and lowered the average weight of its harvested fish.
“Huon Aquaculture’s disappointing financial performance in the current half highlights the challenges we face every day when working with nature,” Bender said in a press release. “Our job is all about preparing for those events that are beyond our control and managing risk. All the decisions we have taken in recent years are about building both capacity and resilience within the company. This ensures we are able to manage through the difficult periods, recover momentum and quickly return the business to where it would have been on our planned growth path.”
On the capacity-building front, Huon said it continued its expansion in Storm Bay and completed construction on its Whale Point Salmon Nursery. Due to these projects and other costs, Huon spent AUD 41 million (USD 29.2 million , EUR 25.8 million) of its AUD 75 million (USD 53.4 million, EUR 47.2 million) capital expenditure budget for the 2019 fiscal year, most of which came from recently renegotiated debt facilities, resulting in net debt almost doubling to AUD 129.4 million (USD 92.2 million, EUR 81.4 million).
Further harming the company was a moon jellyfish bloom in the Huon River and D’Entrecasteaux Channel in December 2018, which has resulted in fish mortalities and lost growth. Some fish affected by the bloom are now suffering from gill necrosis, a secondary impact from the jellyfish encounter, according to Huon. The company estimated the jellyfish bloom will cost the company between AUD 8 million and 10 million (USD 5.7 million to 7.1 million, EUR 5 million and 6.3 million)
“While Huon is now past the worst of the damaging effects from the 2017/18 summer and Huon’s improved performance in the second half will reflect that recovery, production costs remain under pressure due to the secondary impacts on fish health arising from a jellyfish bloom in November/December 2018. We have however completed implementation of the majority of our efficiency program which will deliver a sustainable reduction in costs over coming years.” Bender said.
Due to anticipated lower harvest volumes, the company predicted revenue for FY 2019 will be “slightly below the result of FY2018 and its operating earnings before interest, tax, depreciation and amortization (EBITDA) will be down 5 to 10 percent.
Huon’s long-term outlook predicts production volumes for FY2019 at 20,000 MT.
“As the biomass is rebuilt over 2019, we expect to see a return to production volumes in FY2020 of at least 25,000 [MT] and Huon currently have fish in production that will support a 30,000-[MT] production in FY2021,” the company said.
Earlier this month, Huon announced it tabled its plans to farm kingfish in Australia’s Port Stephens marine park. It also announced it is planning to receive delivery of the Ronja Storm, the world’s largest wellboat, later this year.
