Loss-making Huon is potential takeover target
Australia’s second largest salmon farmer, Huon Aquaculture, confirmed it has received “unsolicited approaches” after announcing half year losses. The company attributed the losses to the coronavirus pandemic.
The Tasmania-based business suffered a statutory loss of AUS $95.3m (£52.9m), including a non-cash impairment charge of $79.9m (£44.3m) after tax for the six months to 31 December 2020.
Salmon prices fell by 15 per cent to $11.41 (£6.33) per kg.
This meant the underlying loss was $15.4m (£8.5m). On an operating basis, the loss was $18.4m (£10.2m) compared to a profit of $3.7m (£2.1m) for the same period last year.
Huon said the two key reasons for this turnaround were the fall in salmon prices and an increase in international freight costs which effectively cost the business $38m (£21.1m) in revenue and $17m (£9.4) in additional shipment costs.
The directors pointed out that had it not been for the Covid pandemic, Huon would be enjoying a bumper year with output 45% higher and sales up by 24%.
The statement added: “The reduction in cash flow and increased costs during the half, combined with the uncertain outlook, prompted a $66m (£36.6m) equity raise in August to reduce net debt and ensure the company remained well capitalized during Covid.
“The continued deterioration in the salmon price over the remainder of the year, however, saw the company’s market capitalization trading below book value.
“We have, as a result, written down the carrying value of assets on the balance sheet by $114m (£63.2m) and revised the terms of our banking facilities with existing bank covenants waived and new leverage covenants in place until March 2022.”
Huon said it had recently fielded “unsolicited approaches”, leading it to start a strategic review which will “assess the potential for corporate level transactions for the benefit of shareholders”.
Founded in 1986, Huon Aquaculture has grown to become a major force in Australian salmon farming, employing more than 700 people.
In early December then company lost more than 50,000 salmon following a fire at a farm in southern Tasmania.