Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


King Salmon invests as climate change heats fish farms

By Pattrick Smellie

Aug. 29 (BusinessDesk) - Rising summer sea temperatures are forcing New Zealand King Salmon to invest in new techniques to reduce farmed fish deaths that are holding back profitability even as demand for its products surges.

The aquaculture operator reported the average price per kilogram for its salmon across domestic and export markets was up 9.6 percent in the year to June 30, driving an 8 percent increase in total revenue to $172.6 million.

That was in spite of a 1 percent fall in the total harvest for the year to 7,931 metric tonnes. High mortality rates and a higher accounting value on the firm's fish biomass harvested saw net profit after tax fall by 30 percent on the previous year to $11.4 million.

Operating earnings before interest, tax, depreciation and amortisation were down 4 percent at $25.2 million.

“A challenging year has tested our resilience, and yet we have still achieved a robust result and revenue growth," chairman John Ryder said in a statement to the NZX. "We achieved our second-most profitable year, despite sustained high-water temperatures during summer impacting fish survival."

The firm will also adopt a new rotational approach at its sites in the Marlborough Sounds. Managing director Grant Rosewarne told BusinessDesk that is likely to produce a "sawtooth" profile for annual harvest volumes if warmer summers continue to cause higher than historic mortality at its Pelorus Sound farm sites, in particular.

Those sites have low tidal flows and so heat up more in summer. Rosewarne gave no hope the company would receive ministerial approval to move those farms to higher flow sites anytime soon.

Despite new sites being identified prior to the last election, Rosewarne said he did not expect a ministerial decision until after the 2020 election and was more hopeful the company would receive consents to build a farm in the open ocean, in the western approaches to Cook Strait, more quickly. Hearings on the application were now expected in January next year, Rosewarne said in an interview.

Changing to a 'single year class' approach will also see the same group of fish remain in the same fish-pen until harvest, improving bio-security and reducing fish handling. That, along with a new regime for net-cleaning at the end of each season, should improve fish health.

The company will also invest around $4.8 million in extra pens and equipment to create "upwelling" of cooler, deeper water at warmer sites. That will take capital expenditure in the year ahead to an estimated $20 million, compared with $16.9 million this year.

"Implementation of the new production model limits volume growth in the short term," the company said in slides accompanying its announcement. It forecasts a flat 8,000 tonnes for the current and following financial years, depending on summer survival rates.

Operating earnings of $25-28.5 million are expected in the current financial year and the company's final dividend of 3 cents per share takes total payout to 5 cents per share for the year, unchanged from the previous year. The dividend will be paid on Sept. 20.

Export and domestic demand continued to exceed supply in the last financial year. Ongoing "optimisation of sales mix into branded premium markets" drove a 9 percent increase in sales to the company's largest export market, the US, which has experienced a compound average growth rate of 30 percent over the past five years and accounts for 33 percent of total revenue.

New Zealand is the largest market at 46 percent of the total.

King Salmon shares opened this morning 2.5 percent higher than yesterday's close, and were recently up 5.5 percent at $2.10. The shares have fallen 25 percent in value in the past 12 months.


© Scoop Media

Business Headlines | Sci-Tech Headlines


National: National Backs Businesses With $10k JobStart

National will provide a $10,000 cash payment to businesses that hire additional staff as part of our commitment to keeping New Zealanders in jobs, National Party Leader Todd Muller and Finance spokesperson Paul Goldsmith have announced. Our JobStart ... More>>


DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>


Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>


ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>


Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>


RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>


Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>


Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>


Auckland Airport: Thousands Of Kiwis Travelling For Queen’s Birthday Weekend

Confidence in domestic travel is beginning to steadily ramp up, with thousands of Kiwis travelling within New Zealand for Queen’s Birthday.
Nearly 400 flights will be operating to and from Auckland Airport over the long weekend... More>>


Science Media Centre: Understanding 5G Concerns – Expert Q&A

Recent attacks on cell phone towers have brought concerns over the rollout of 5G technology into sharp relief.
While scientific research has consistently shown that the technology does not adversely affect human health, public concerns about its impact have spread around the world, fueled in part by growing misinformation online. The SMC asked experts to comment... More>>


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>


RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>


Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>


Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>