NZ King Salmon expects earnings 'at upper end or slightly above' guidance
By Jonathan Underhill
June 6 (BusinessDesk) - New Zealand King Salmon says full-year earnings are likely to be "at the upper end or slightly above" guidance, although a hot summer has curbed expectations for volumes available for sale in both 2018 and 2019.
The company, which farms King salmon in the Marlborough Sounds, has previously forecast pro-forma operating earnings before interest, tax, depreciation and amortisation of $24.5 million to $26 million. It gave an ebitda forecast for the 2019 year of $25 million to $28.5 million, assuming a harvest of about 8,000 tonnes, a lower mortality rate than in 2018, and continuation of the current rate of capital spending for the next three years.
The 2018 year has seen sales volumes of about 7,750 tones from a harvest of about 8,000 tonnes, while prices have risen, but the past summer "has significantly impacted survival rates."
King Salmon expects to post its 2018 results in late August.
The company reiterated that it is in talks with the government about plans to relocate farms to cooler, deeper waters within the Sounds.
"These plans are important because they would help mitigate the effects of seasonal temperature fluctuations," managing director Grant Rosewarne said in the statement. "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.”
King Salmon is working through the process of relocating its farms to areas of the Marlborough Sounds with higher tidal flow rates and further from where people live. The shift is necessary because rule changes mean some of the farms would be marginal on existing sites.
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.
King Salmon shares last traded at $2.23 and have surged 64 percent in the past 12 months.