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Huon Aquaculture's revenue grew, but the salmon grower still took a hit due to COVID-19

von Laura Beavis - Sep 1st 1,859 Views
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Tasmanian salmon grower Huon Aquaculture has sold $64 million worth of new shares to help it guard against the risk of high debt levels, as COVID-19 restrictions crimp its most valuable markets.

Key points:

  • Huon Aquaculture Group's profit dropped by 32 per cent last financial year
  • COVID-19 restrictions disrupted the wholesale and export markets the company heavily relies on
  • Locals in the Huon Valley say their fortunes are tied to the health of aquaculture companies, including Huon Aquaculture

Despite harvesting almost a third more salmon and growing revenue by 21 per cent last financial year, the company's net profit after tax dropped by 32 per cent to $4.9 million.

In its announcement to shareholders, Huon Aquaculture Group said government restrictions designed to stop the spread of COVID-19 had significantly disrupted two of its main channels to market.

Sam Baker from Shadforth Financial Group said Huon Aquaculture sold a higher proportion of its salmon overseas and to restaurants than its rival Tassal.

"Huon's got a high dependency on both the wholesale and export salmon markets, and with the COVID restrictions in recent months those parts of their sale cycle have been impacted," he said.

"Their retail business only makes up about 30 per cent of their total sales and that has probably been more robust through the supermarket network over this COVID period."

Large salmon processing ship next to fish farming pens.Large salmon processing ship next to fish farming pens. Huon Aquaculture isn't immune from the impacts caused by the coronavirus pandemic.( Supplied: Havyard )

Late last month, Huon Aquaculture issued 21.3 million new shares priced at $3 to raise approximately $64 million.

Mr Baker said the aquaculture company had fairly high levels of debt, which increased by 21 per cent last financial year.

"It appears as if what Huon has done is try to raise this money to defend their balance sheet and reduce debt in case the COVID impacts continue for the company, so it certainly is a defensive move by the company," he said.

"There's no doubt there is uncertainty around Huon's earnings in this current COVID environment, particularly around their product and sales channels, so a continuation of COVID would cause some issues for Huon."

Huon, Tassal 'backbone' of the region

Geeveston butcher Matthew Nicholas sells Huon Aquaculture salmon in his shops and counts many of the company's employees as customers.

He said both Huon Aquaculture and Tassal were very important for the area's economy.

"I imagine there's probably 1,200 employees between the two companies. They do need to be fed at different times and their boats are great supporters of our business as well," Mr Nicholas said.

"They've gone through a massive expansion in the last two years ... and they are the backbone of the Huon Valley, Huon Aquaculture and Tassal.

"If they were both gone it would be a very sad economic place."

Butcher Matthew Nicholas prepares to cut a large fillet of smoked Huon salmon.Butcher Matthew Nicholas prepares to cut a large fillet of smoked Huon salmon. Geeveston butcher Matthew Nicholas heavily relies on Huon's products.( ABC News: Alexandra Humphries )