New Zealand King Salmon Company Investments Limited (NZKS) has announced its best half-year results in five years on its preferred measure of performance (pro-forma EBITDA).
“We have just plotted another consecutive solid result, showing our company continues in the right direction,” says CEO Carl Carrington.
NZKS has announced the following increases across the six months ended 31 July 2024 (1HY25):
- Pro-forma EBITDA increase of 26%,
- Sales volume increase of 5%, and
- Revenue increase of 11%.
NZKS also has a strong balance sheet, with $32.5m in net cash on hand.
“And in the current challenging economic environment, moving in an upward positive direction with a solid balance sheet behind you is no mean feat,” says Carl.
“Predicting the future as a fish biomass company, in the context of economic volatility, can be incredibly fickle,” says Carl. “However, I am pleased with our company’s delivery within guidance.”
Carl says that fish performance remains a key focus area and a point of pride for NZKS.
“Aquaculture is the beating heart of our company, and this half year, our fish performance has been consistent with our estimates. Regarding our fish, the King salmon species is one of the most premium and sought-after on the planet. To say we are ‘niche’ is an understatement. However, if it were easy, everyone would be doing it,” says Carl.
Grant Lovell, General Manager of Aquaculture, says there are a few critical biological challenges facing the farming of the King salmon (Oncorhynchus tschawytscha) species, one of which is called ‘runting.’
Grant explains what runting is and why this BAU salmon sector challenge is one area NZKS focuses on for further improvements.
King salmon species, representing less than 1% of global farmed salmon.
“Runting is when our young fish, known at that stage of their lifecycle as ‘smolt’, fail to adapt properly to the change from freshwater, where they start their life, to salt water. At this point, some fish ‘runt’ and never feed and grow. As a result, runts usually die early in their lifecycle, so although the actual biomass lost and mortality is small, it has the potential to create a lost opportunity if it is above expected levels,” says Grant.
“This year, our runting was slightly higher than average, and as a result, we will be at the lower end of our predicted performance range (between 6,800MT – 7,200MT).”
Grant says that NZKS continues to invest significantly in its research and development programme, including trials to address runting, which are showing positive early results, and a focus on thermotolerance, which will help provide temperature-resilient fish fit for the future. NZKS is also assessing options for pilot trials of freshwater Recirculated Aquaculture Systems (RAS), which we know from scientific trials can significantly improve fish outcomes when adapting to seawater.
These solid financial results create further confidence for NZKS to invest in future growth plans, including piloting the Blue Endeavour open ocean farm.
Our freshwater facility at Tentburn where our salmon smolt for our Blue Endeavour
pilot farm are currently growing
“It’s getting real now, with our fish that will go out to our Blue Endeavour pilot farm already growing in our Tentburn hatchery. They are currently around 5 grams. They need to get to around 100 grams, and then they’ll be ready for the ocean. These will be the first King salmon fish farmed in an open ocean environment. And this will be happening in the second half of next year,” says Grant.
GAAP vs Pro-Forma EBITDA
Ben Rodgers, Chief Financial Officer, explains why pro-forma EBITDA is our preferred performance measure.
“Although all profit measures have their purpose, the company prefers pro-forma EBITDA as its guidance measure. This is because it removes the impact of non-cash fair value movements in both our biological assets (salmon at sea) and inventory (finished goods), as well as other non-cash foreign exchange accounting adjustments. By removing these adjustments, NZKS believes we get a better understanding of the underlying performance of the business and its directional trend”.
NZK 1HY25 Half Year Results – GAAP v Pro-Forma |
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| GAAP |
Pro-Forma |
|||||
| NZ$000s | 1HY25 | 1HY24 | % chg | 1HY25 | 1HY24 | % chg |
| Volume Sold (t) | 3,178 | 3,023 | 5% | 3,178 | 3,023 | 5% |
| Revenue | 101,718 | 91,561 | 11% | 101,718 | 91,561 | 11% |
| Gross Margin | 24,610 | 27,110 | -9% | 28,270 | 22,940 | 23% |
| Gross Margin % | 24% | 30% | 28% | 25% | ||
| EBITDA | 12,481 | 18,459 | -32% | 13,518 | 10,737 | 26% |
| EBITDA % | 12% | 20% | 13% | 12% | ||
| EBIT | 8,756 | 14,607 | -40% | 9,793 | 6,885 | 42% |
| NPAT | 6,006 | 10,630 | -44% | 7,043 | 4,076 | 73% |
Table 1 Comparing GAAP vs Pro-Forma results. Please see our NZK 1HY25 Half Year Results announcement for further details.
Jarden analyst Guy Hooper described the result as a ‘solid’ start to the year for New Zealand King Salmon as it embeds its new operating model.
“A small reduction to earnings guidance at the top end on similarly narrowed volume guidance, but remains fairly consistent with expectations heading into the result.”
The earnings guidance range for pro-forma EBITDA has been revised to $26 million—$30 million (the original guidance range of $26 million—$32 million was provided to the market in March 2024).
Further enquiries should be directed to:
Monique Hatfull, Head of Relationships and Communications, monique.hatfull@kingsalmon.co.nz