Huon Aquaculture Group says challenging market conditions, declining international salmon prices and stock losses will mean its projected earrings for FY2021 will be substantially lower than FY2020. Its official outlook for the year will be released on 25 February, with its 1H2021 results.
The company said its sales volumes for 1H2021 were consisted with targets, but international salmon prices declined by around 40 per cent on the prior corresponding period. There were no signs of a recovery in the next several months, it said.
The company’s impairment assessment of the carrying value of assets on the balance sheet expects to recognise material charges for impairment and write-down of assets for 1H2021 will be non-cash, non-recurring and will not impact EBITDA.
The escalation of trade tensions with China confirmed the company’s decision at the start of 2020 to reduce Huon’s exposure in that market, it said. Increased diversification has resulted in spot exports to China declining to about a third of its total export tonnage. Sales volumes through other channels have grown 80 per cent.
In late November/early December, Huon had two unrelated events that damaged pens and resulted in fish loss. While the fish loss won’t impact overall harvest volumes, the losses were estimated at $1.8 million.
Then in January, the company reported fish loss at its Ingleburn processing plant as the result of suspected coordinated criminal conduct. The book value of inventory and gross margins have been estimated to be $2.1 million lower that it would otherwise be for the first half.
