Saturday, March 30, 2024

Domestic sales boost salmon recovery

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New Zealand King Salmon has struggled with covid-19 sales disruptions and higher freight costs to declare a sharply reduced net profit for seven months of trading until January 31.
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The company has moved its financial year and balance date to align with summer seasonality of fish production.

The latest results suffered in comparison with a healthier pre-covid corresponding period, throughout late 2019.

Revenue was $95.2 million, down 6% on the seven months to January 31, 2020.

Gross margin took a hit of 42% and earnings before interest, tax, depreciation and amortisation (Ebitda) were down 49% to $9.9m.

Pro-forma net profit was 77% to $2.35m and when GAAP adjusted it was a statutory loss of $7m compared with a profit of $18m in the full 12 months of FY20.

Chair John Ryder called it a creditable outcome considering the impact of the covid-19 pandemic.

“The full financial impact of excess inventory, caused by the pandemic, has been absorbed into these results with appropriate contingencies built in,” Ryder said.

“Going forward, our average price will return to pre-covid levels, however, margins will still be affected by higher freight and distribution costs.

“We are seeking to increase prices globally around the middle of the calendar year, with a view to recovering some of these ongoing costs.

“Pleasingly, we have come through summer in reasonable shape with sea temperatures around average.”

Chief executive Grant Rosewarne says the company continued to innovate and invest, develop new brands and launch new products.

Monthly sales volumes from March to August last year were well down on their 2019 comparison, but have now recovered with the assistance of retail promotions in the domestic market.

NZ sales are 43% of the total, Australian 7% and the United States and Canada 36%.

In North America new sales channels such as fishmongers, specialty retail and online ordering are replacing the loss of foodservice demand.

“Disruption to exports and foodservice have created the opportunity to renew domestic retail interest, grow the market and build brand awareness,” Rosewarne said.

He says the company was planning for annual production between 10,000 and 11,000 tonnes from existing in-shore farm sites, but future harvest volumes were impacted by consent and compliance challenges.

He says the proposed open ocean site development in Cook Strait should go to a consent hearing later this year.

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