King Salmon earnings at bottom of guidance range as more fish die
By Paul McBeth
May 1 (BusinessDesk) - New Zealand King Salmon expects annual earnings will come in at the bottom end of its previous forecast range as persistently warmer water increases the mortality rates at its fish farms.
The company expects to harvest 7,900 tonnes of fish in the year ending June 30, down from a previous forecast of 8,000 tonnes, but up from the 7,779 tonnes it reported a year earlier. Because of the smaller harvest, King Salmon expects earnings before interest, tax, depreciation and amortisation will be at the lower end of its $25-$28.5 million forecast.
That also means the 2020 harvest will be closer to 7,900 tonnes rather than the previous projection of 8,700 tonnes.
King Salmon flagged that warmer water temperature had dented its first-half earnings and has signalled it wants to be at the forefront of the government's efforts to address climate change.
The company today said its efforts to mitigate its climate change risk will require capital spending and lead to a lower harvest in coming years.
It's also working more closely with the government and local community to secure approval to relocate low-flow sites to higher-flow areas, which are cooler. King Salmon also sees ocean farming as a viable long-term strategy.
"We note that the coalition government is committed to addressing and mitigating the effects of climate change and strengthening biosecurity," chief executive Grant Rosewarne said in a statement.
"New Zealand’s green-rated salmon industry is an ideal candidate to demonstrate that commitment, given the solutions are relatively simple, such as shifting existing salmon farms to cooler, deeper waters and enabling open ocean farming, together with best practice biosecurity protocols," he said.
King Salmon shares last traded at $2.97 and have gained 30 percent so far this year.