Tassal’s 1H20 results show successful implementation of its growth strategy
Friday, February 14, 2020, 02:40 (GMT + 9)
Tassal Group Limited has posted its results for the half year ended 31 December 2019 (1H20), which it says saw the company deliver on its core salmon operational strategy, progress its prawn growth strategy, and strongly position itself for continued growth in earnings and returns in FY20 and beyond.
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Key 1H20 highlights:
1. Salmon: the strategic focus for 1H20 was to increase operating EBITDA AUD/kg through a period of investment in the growth of biomass and size. Reduction in sales in 1H20 was predominantly targeted at the lower value export market with sales mix shift and cost eficiencies driving the increase in EBITDA AUD/kg. Harvesting and selling less salmon in 1H20 supported greater biomass and size, and is expected to deliver increasing harvest and sales in 2H20 (vs 2H19) and FY21. Earnings and returns are expected to grow in FY20 and beyond.
2. Salmon: live biomass (up 15.5%) including size (up 2.1%) for 1H20 vs 1H19. Growth was achieved given management’s focus on sustainable farming and fish health practices... breeding, biosecurity, feed automation, feed diet formulation, stocking densities, optimising leases with fallowing, growth times and survival. Bigger salmon generate better margins .
3. Salmon: continually optimising salmon biomass growth (cost efficiencies) and sales mix (higher margin markets and products) underpinned growing salmon EBITDA AUD/kg of AUD 3.44kg (pre AASB 16 Leases impact), which compares favourably with 1H19 of AUD 2.98kg. Salmon EBITDA AUD/kg was AUD3.69kg (post AASB 16 Leases impact)
4. Prawns: on track for targeted circa 2,400 tonnes harvest and sales in 2H for FY20, with further growth expected in FY21 onwards through staged expansion of farming operations.
TASSAL Smart Farm for shrimp
5. Overall: well positioned to deliver earnings and returns growth in FY20 and beyond through capitalising on the strong growth in both salmon and prawn biomass via higher sales and cost efficiencies in 2H20 and FY21. Tassal’s delivery of its salmon growth strategy, combined with the Company’s strategic investment in prawns, will help underpin expected long-term growth in earnings and returns in FY20 and beyond.
Commenting on the Company’s 1H20 results, Tassal Managing Director & CEO Mark Ryan said: “Tassal’s growth strategy for FY20 is to increase operating EBITDA AUD/kg returns for both salmon and prawns through optimising biomass growth to generate cost efficiencies, and also optimising sales mix with a focus on higher margin markets and products, while keeping export as the channel for surplus volume. The company’s results demonstrate that this strategy was well implemented in the first half, generating strong increases across operational, financial, environmental and social parameters.
“Selling and harvesting less salmon in the first half was a deliberate operational strategy to underpin strong harvest volumes and sales in the second half and next financial year. Salmon live biomass grew significantly over the past six months given our focus on sustainable farming and fish health practices including breeding, biosecurity, feed automation, feed diet formulation, stocking densities, optimising leases with fallowing, growth times and survival.
“Tassal’s delivery of its salmon growth strategy, combined with the Company’s successful investment in prawns, will help underpin expected long-term growth in earnings and returns. We have a well-balanced program in place centred on species, geographic and earnings diversification, and are well positioned to drive growth in earnings and returns in FY20 and beyond.”