• Net Profit After Tax: $13.4 million, down from $28.5 million last year.
• Pro Forma EEA: $29.7 million, up from $24.5 million last year.
• Revenue: Record revenue of $211 million.
• Harvest Volume: Just under 6,800 tons for FY25.
• Net Cash on Hand: Approximately $50 million.
• FY26 CapEx Forecast: $21 million, with $9 million excluding Blue Endeavor pilot.
• Pro Forma EBITDA Guidance for Next Year: $15 to $24 million.
• Market Earnings Contribution: New Zealand 32%, North America 44%, Australia 11%, China 2%, Japan 3%.
• Sales Volume Growth: Retail volumes grew by 10%.
• Feed Cost: Slightly higher than FY24, but recent price reductions noted.
• Cash Increase: $26 million increase in net cash on hand.
• CapEx Spending FY25: $10.5 million.
• Tax Position: Utilized all remaining tax losses, now in a tax-paying position.
• Biological Assets: Holding around 500 tons less biomass at sea compared to last year.

• Warning! GuruFocus has detected 5 Warning Signs with ASX:NZK.

Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• New Zealand King Salmon Investments Ltd (ASX:NZK) reported a pro forma EBITDA of $29.7 million, an increase from $24.5 million the previous year.
• The company secured a significant funding partnership of up to $11.7 million with the New Zealand government under the Sustainable Food and Fiber Futures Fund.
• Record revenue of $211 million was achieved, with strong market presence in North America (44% of earnings) and New Zealand (32% of earnings).
• The balance sheet remains strong with net cash on hand at approximately $50 million.
• The adaptive farming strategy has shown improved fish performance outcomes compared to previous years, despite challenging conditions.

Negative Points

• Net profit after tax decreased to $13.4 million from $28.5 million the previous year, impacted by non-cash adjustments and Forex contract unwinds.
• Higher than expected sea farm mortality and lower growth rates are expected to reduce harvest volumes for the coming year.
• The company faces challenges with elevated mortality rates and lower than anticipated growth rates, impacting future harvests.
• Guidance for next year's pro forma EBITDA is wide, ranging from $15 to $24 million, reflecting uncertainty in harvest forecasts.
• Dividends remain on hold as the company focuses on developing the Blue Endeavor project.

Q & A Highlights

Q: Can you explain the assumptions behind the wide guidance range for FY26? A: Ben Rodgers, CFO, explained that the guidance range reflects the uncertainty in harvest volumes and fish growth rates. The difference between the lower and upper ends of the range is significant due to the impact of volume loss on profitability. The company is working to narrow this range as more information becomes available.

Q: Will the current mortality issues affect FY27 volumes? A: Grant Wayne Lovell, GM of Aquaculture, stated that the impact is expected to be contained within FY26, with a full rebound anticipated in FY27, targeting around 7,000 tons.

Q: How is the government funding for the Blue Endeavor project structured? A: Ben Rodgers, CFO, explained that the funding is split between CapEx and operational costs, with $5 million allocated to CapEx and $6.7 million to operational costs. The CapEx is further divided between the BE pilot site and the RAS infrastructure.

Q: Is it feasible to build a feed plant in New Zealand? A: Grant Wayne Lovell, GM of Aquaculture, noted that the industry is currently too small to support a feed mill plant, which requires over 60,000 tons of feed production to be viable. The current industry output is about 15,000 tons.

Q: How vulnerable is the business to tariffs from the US? A: Carl Carrington, CEO, mentioned that while tariffs are a concern, they would likely apply to all salmon, not just New Zealand's. The company plans to pass any tariffs onto consumers and redirect volumes to other markets if necessary.

Q: What is limiting the export of more salmon to China? A: Carl Carrington, CEO, cited supply constraints and the need to build brand and species recognition in China. The company is cautious about expanding too quickly without sufficient supply to meet demand.

Q: Are there plans to trial sockeye salmon farming in New Zealand? A: Carl Carrington, CEO, and Grant Wayne Lovell, GM of Aquaculture, indicated that the company is focused on king salmon due to its market potential and does not plan to diversify into sockeye salmon, which would require significant resources.

Q: Will there be a substantial harvest from the Blue Endeavor pilot in FY26/27? A: Grant Wayne Lovell, GM of Aquaculture, stated that the first harvest from the BE pilot is expected in FY27, with volumes ranging from 0 to 500 tons as the company learns and adapts to the new farming environment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.