New Zealand King Salmon Investments Limited Analysis

Overview

New Zealand King Salmon is the world's largest aquaculture producer of King salmon, supplying salmon under three key brands: Ora King, Regal and Southern Ocean. We own and operate eight seafarms in the Marlborough Sounds, harvesting and processing more than 7,000 MT of King salmon a year.

Three new sea farms consented in 2014 are expected to enable the company to approximately double annual production over time. NZ King Salmon controls all elements of the value chain from breeding and growing to harvesting and processing, and we have been selling salmon to consumers and chefs for more than 30 years.

The New Zealand salmon farming industry has been recognised as a global leader in sustainable seafood following New Zealand's 'Best Choice' accreditation in 2015 in the Monterey Bay Aquarium's globally respected consumer guide Seafood Watch.

NZ King Salmon listed on the New Zealand and Australian Stock Exchanges in October 2016.

Performance

The following information was extracted from New Zealand King Salmon Investments Limited's full year results, released on 27 March 2024:

New Zealand King Salmon Investments Ltd (NZX & ASX: NZK) reports its financial performance for the 12 month period ended 31 January 2024 (FY24). Key points include:

• FY24 net profit for the year of $28.5 million, compared to a net profit for the year of $1.9 million in FY23.
• FY24 pro-forma EBITDA was a profit of $24.5 million, compared to an EBITDA loss of $2.7 million in FY23.
• Mortality expense reduced from $25.9m in FY23 to $12.6m in FY24.
• Revenues increased from $167 million in FY23 to $187 million in FY24 (an increase of 12%).

New Zealand King Salmon Chair Mark Dewdney said: “The second half of the year has seen a continuation of our turnaround which started in FY23. Our new farming strategies have again assisted in reducing summer mortality, and we are continually looking at other ways to optimise our existing business. We are about to commence work on the Blue Endeavor pilot which is an exciting milestone. Although the full-year result is pleasing, and we have been able to deliver on the commitments the Company made during the FY22 rights issue, there is more work to be done.”

New Zealand King Salmon Chief Executive Officer, Carl Carrington, said: “It's pleasing to deliver guidance, albeit the year ended slightly weaker than our aspirations. As a result of the changes to our production plans in FY22, we were aware we would have a period of smaller fish in the last quarter of FY24. Unfortunately, the size of the fish did create some challenges with export markets. The good news is we are now through this period and are back to our normal size curve both now and in our future production plans.”

Acknowledging the above, Carl noted, “We acknowledge we have had some challenges over the last couple of years and now we are coming out the other side I really want to thank our loyal customers and wider stakeholders who support what we do, and as Mark mentioned, also acknowledge we have more work to do.”

In late February the Company also received our resource consent for the Blue Endeavour open Ocean farm (7km north of Cape Lambert, in Cook Strait). This process has taken over 9 years, and millions of dollars that could have been utilised elsewhere. Carl noted “It’s great to finally have the consent, and we can now focus on the next steps for the Blue Endeavour project. The focus for FY25 is to complete the monitoring (as required by the consent) and to order the equipment for a pilot farm.”