NZ King Salmon sees weaker second half on hot summer; 1st-half profit soars 81%
By Jonathan Underhill
March 1 (BusinessDesk) - New Zealand King Salmon says the "extraordinarily hot summer" has cut survival rates at its fish farms in the Marlborough Sounds and it expects weaker second-half earnings after profit in the first half soared 81 percent.
Profit rose to $15.7 million in the six months ended Dec. 31 from $8.7 million a year earlier, the company said in a statement. Sales climbed to $87.7 million from $63.6 million.
Chair John Ryder said King Salmon remains "positive about the longer-term prospects for our company" having experienced strong demand for its fish in the first half. It would give an update on the impact of the hot summer once it had done a full assessment.
"Favourable growing conditions during the FY2017 year allowed us to deliver additional volume to satisfy the demand," he said. "However, the situation has now become more challenging. The extraordinarily hot summer has impacted the survival rates of our King Salmon, and this will be a principal factor behind an anticipated reduction in profits for the second half."
Growth in sales volumes would be impacted during the second half "and into FY2019," the company said.
King Salmon is also working through the process of relocating its farms to areas of the Marlborough Sounds with higher flow rates and further from where people lived. The shift is necessary because rule changes mean some of the farms would be marginal on existing sites.
Fisheries Minister Stuart Nash said last month he was "some months" away from making a decision after a report by an independent panel for the previous National government recommended three out of six farms be moved.
The report recommended relocating the farm in Otanerau Bay in Queen Charlotte Sound to Tio Point in Tory Channel; the farm in Waihinau Bay to Richmond Bay South, both in Pelorus Sound; and the farm in Ruakaka Bay to Horseshoe Bay in Pelorus Sound. The panel also considered three other salmon farms - one in Forsyth Bay and two in Crail Bay - but didn't recommend they be moved. There are currently 12 sites in the Marlborough Sounds which have resource consent for finfish farming, with all but one operated by King Salmon.
The panel warned that the minister should be aware of the depth of public opposition and that the salmon farming industry is going to find its future difficult through the Resource Management Act and resource planning processes.
"We look forward to working with government, council and our community to progress our vision for best-practice salmon farming," said chief executive Grant Rosewarne.
King Salmon will pay a fully imputed dividend of 2 cents a share, payable on March 23.
It sold 4,392 tonnes of gilled and gutted salmon in the first half, up 17 percent on the year earlier, and average selling prices rose, led by its premium Ora King brand.
King Salmon shares last traded at $1.99 and have gained 47 percent in the past 12 months.