New Zealand King Salmon has lifted its earnings forecast for the third time this financial year, telling the market on 17 September that fewer of its fish are dying than it expected and that the ones surviving are growing better than planned.
In a market update filed with the NZX, the Nelson based company, which farms in the Marlborough Sounds, said it now expects pro-forma earnings before interest, tax, depreciation and amortisation of $36 million to $39 million for the 2026 financial year, up from the $30 million to $34 million range it gave in August. Pro-forma earnings before interest and tax are now put at $27 million to $30 million, against $21 million to $25 million previously.
Chief executive Carl Carrington said it was “pleasing to be able to provide a further guidance upgrade for FY26” and that the company’s “ongoing focus on fish performance continues to have a positive flow on impact to our earnings with mortality levels continuing to come in below expectations”.
The harvest itself has not changed. King Salmon still expects to take between 5,950 and 6,050 tonnes of whole gilled and gutted salmon out of the water this year, the same range it has been signalling for months. What has changed is how many fish make it to that point and how heavy they are when they get there. Salmon that survive the summer and put on weight cost roughly the same to raise as salmon that do not, so every percentage point off the mortality rate drops almost straight to the bottom line.
The scale of the turnaround is easier to see when the upgrades are lined up. King Salmon began the financial year guiding to pro-forma EBITDA of $19 million to $27 million. In May it raised that to $23 million to $29 million. In August it went to $30 million to $34 million, saying fish were performing strongly and that the disruption to global oil supply chains had cost less than feared. Now it sits at $36 million to $39 million. The midpoint of the forecast has roughly doubled in a year without a single extra tonne of fish being added to the harvest plan.
That matters because of where the company was standing not long ago. In the summer of 2021 and 2022 a marine heatwave killed King Salmon’s fish in numbers it had never seen. RNZ reported in May 2022 that the company had disposed of 1,269 tonnes of dead fish between December and February, including 632 tonnes in February alone, against 90 tonnes in the same month a year earlier. King Salmon closed three of its four farms in Pelorus Sound, keeping one for trials, cut about 120 roles and posted a net loss of $55.7 million for the 2022 financial year.
Then chief executive Grant Rosewarne told RNZ the company was “a bit like the canary in the coal mine, when it comes to global warming”, and described chinook as “a cold water species that’s very susceptible to half a degree change or one degree change”. King Salmon farms chinook, the species sold overseas as king salmon, and it is less tolerant of warm water than the Atlantic salmon farmed in Norway, Scotland and Chile.
The recovery since has come from two directions. The first is husbandry. King Salmon has changed what it feeds fish over summer, graded stock more aggressively so that weaker fish are pulled out earlier, and concentrated on getting the basics of farm operation right. Announcing the half year result in May, Carrington put the improvement down to “the implementation of the new summer diet, increased grading of stock and a focus on operational execution”.
The second is moving the fish somewhere cooler. King Salmon’s Blue Endeavour project in Cook Strait is the country’s first open ocean salmon farm, sited in deeper, faster moving water than the sheltered arms of the Marlborough Sounds where the company has farmed for decades. Fish Farming Expert reported in May that the Ronja King wellboat had arrived and the Blue Endeavour pilot pens had been installed, with the volume growth from that investment expected to start showing from 2027. Chairman Mark Dewdney said the company had “a clear path to scale”, pointing to a 2028 harvest guidance of about 8,500 to 9,100 tonnes, lifted from 8,200 to 8,800 tonnes.
The half year result underneath all of this was the company’s first clean profit in some time. For the six months to 31 March, King Salmon reported a net profit of $13.8 million against a $20.8 million loss in the comparable period, on revenue of $100.3 million, up from $94.5 million. Sales volume rose to 2,799 tonnes from 2,624 tonnes. No interim dividend was declared.
Investors have not exactly rushed the stock. King Salmon shares trade around 24.5 cents, giving the company a market value of roughly $132 million, well under the $0.40 a share of net tangible assets the NZX lists for the business. The company has paid no dividend, and the shares remain a long way below the $1.12 they were issued at when King Salmon listed in October 2016. The market appears to be waiting to see whether a good run of fish survival is a permanent change or a good couple of summers.
King Salmon has itself been careful to flag what comes next. The company said supply chain cost pressures, including rising feed prices and the cost of running the wellboat, are expected to land in the 2027 financial year. It will give formal 2027 guidance in November when it reports the full year result. Its financial year ends in September, so this upgrade arrives with only weeks of the year left to run and the harvest largely known.
The longer question is the water itself. Sea surface temperatures around the New Zealand coast have trended warmer over the past four decades, a pattern we have looked at in detail in our story on 41 springs of sea temperature and what they mean for snapper. A better summer diet and tighter grading buy a farmer time. Deeper, colder water in Cook Strait buys more. Neither changes the direction the Sounds are heading, which is why the company that once called itself the canary in the coal mine has spent the past four years trying to get its fish out of the cage.
Do you think open ocean farming is the answer for New Zealand aquaculture, or should salmon farming shrink as the water warms? Leave a comment below and tell us what you think.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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