August 30, 2021

    

Huon Aquaculture suffers $128 million full-year loss

 

  

A fish pen fire, the mysterious disappearance of tonnes of salmon from a New South Wales, Australia processing plant and soaring freight costs are being blamed for a multi-million-dollar full-year loss for Australia's second-largest salmon producer, Huon Aquaculture.

 

Huon told the Australian Securities Exchange it had been a "turbulent year" for the company, resulting in a full-year statutory loss of $128 million.

 

"While there was some respite in the last few months of the year from the challenges faced by Huon during much of FY2021, the overall pressures placed on the business from the market-related impacts from COVID-19 were significant," the company statement said.

 

"The two main contributors were the 12% fall in the average international salmon price … compared to the previous year and the significant increase in freight charges due to limited access to international flights."

 

Huon said COVID-19 unfortunately coincided with a significant ramp-up in salmon production aimed mainly at overseas buyers.

 

International freight costs soared $34 million over the 2021 financial year — a rise of 49% per kilo of fish — and the global salmon price dropped 12% over the year.

 

But the problems were not all related to the pandemic.

 

In November 2020, a fire in a fish pen in the D'Entrecasteaux Channel resulted in the loss of 50,000 full-grown fish.

 

A month later, a fish pen net was slashed during cleaning, allowing another 130,000 fish to swim away.

 

Around the same time, five people were charged over the alleged theft of 250 tonnes of salmon over six months from a Huon processing plant at Ingleburn, in Sydney's south-west.

 

The combined cost of the fish pen accidents and theft has been put at $4 million in the company's annual accounts.

 

In February 2021, the strain on company founders Frances and Peter Bender was showing and Huon began a strategic review to canvas interest from potential buyers. That resulted in the announcement of a scheme implementation deed, with Brazilian abattoir owner and meat processor JBS offering shareholders $3.85 a share.

 

The deal was backed by the Benders and Huon's board, and constituted a 40% premium over the value of the company's shares at the time.

 

Huon said it was expecting conditions to improve in 2022.

 

"The outlook for revenue is more positive compared to this time last year," it told the exchange. "Retail demand in the domestic market has returned to its long-term average growth rate of 10% and Huon will deliver its first full twelve months of sales under two new three-year contracts with Coles and Woolworths."

 

JBS's takeover bid will play out over the next few months.

 

A scheme booklet will be sent out to shareholders outlining the details and benefits of the deal in September. After which, they will vote at a shareholder meeting a month later.

  

- ABC News