NZ King Salmon Faces Biomass Setbacks but Pushes Growth with Blue Endeavour

A Challenging Half-Year for NZ King Salmon

New Zealand King Salmon Investments Limited (NZKS) has revealed a significant turnaround in its financial performance for the six months ending 31 July 2025. The company reported a net loss after tax of NZD 20.8 million, a stark contrast to the NZD 6.0 million net profit recorded in the prior comparable period. This downturn was primarily driven by subdued feed outs that led to lower than forecast biomass at sea, forcing a strategic reduction in harvest volumes to allow stock rebuilding.

The company’s GAAP results were further impacted by a non-cash pre-tax fair value loss of NZD 31.2 million on biological assets and inventory, reflecting the diminished fish biomass. On a Pro-Forma basis, which excludes such fair value adjustments and is the preferred performance measure, EBITDA fell to NZD 5.7 million from NZD 13.5 million previously. This decline underscores the high operational leverage inherent in salmon farming, where fixed and semi-variable costs remain substantial despite lower production volumes.

Progress Amidst Operational Headwinds

Despite these challenges, NZKS is optimistic about the future. Feed outs have returned to forecast levels, and the rollout of a new summer feed diet, trialled successfully at the Ruakākā facility, is expected to improve fish growth and health, albeit at a higher feed cost. Mortality rates increased slightly but remain a focus for ongoing improvement through selective breeding and vaccine development programs.

On the growth front, the Blue Endeavour pilot farm project is advancing steadily. Pilot pens are moored at Waihinau, with fish performing as expected and scheduled for relocation to the Blue Endeavour site in November 2025. The service vessel “Whekenui” is due for delivery in October, and design work for a pilot Recirculating Aquaculture System (RAS) at the Tentburn hatchery is underway. These investments, supported by approximately NZD 5.8 million in capex during the half, signal NZKS’s commitment to scaling sustainable aquaculture operations.

Financial Position and Market Outlook

NZKS’s balance sheet remains robust, with net cash on hand increasing to NZD 58.4 million, bolstered by government funding from the Sustainable Food and Fibre Futures partnership. Capital expenditure for the half was NZD 8.5 million, with a forecast of NZD 14 million for the full FY25 period ending September 2025. This includes investments in both the Blue Endeavour pilot and essential maintenance across existing farms.

Revenue declined 7% to NZD 94.5 million, reflecting the reduced harvest volume of 2,691 metric tonnes, down 20% from the prior period. However, revenue per kilogram improved due to a shift toward higher-value products and price increases. Geographic sales remained diversified, with strong demand in North America, Australia, and China, although supply constraints impacted foodservice channels globally.

Guidance and Strategic Focus

Looking ahead, NZKS has maintained its FY25 Pro-Forma EBITDA guidance range of NZD 1 million to 7 million, with the Board targeting the upper half. Harvest volumes are expected to remain subdued in FY25 as biomass rebuilds, with forecasts of 3,150 to 3,450 metric tonnes. Recovery is anticipated over the longer term, with harvest projections rising to 5,200–5,800 metric tonnes in FY26 and 6,800–7,400 metric tonnes in FY27, consistent with salmon’s 30–36 month growth cycle.

The company is also accelerating investments in processing capabilities, brand development, particularly the Regal brand in China, and sustainability initiatives. NZKS recently acquired a commercial site in Blenheim for future processing expansion and continues to improve its environmental footprint, reporting a 9.5% reduction in carbon intensity and advancing compliance with modern slavery legislation.

Dividends remain on hold as NZKS prioritizes capital allocation toward growth projects, including the Blue Endeavour pilot and a potential well-boat lease to enhance operational flexibility and capacity.