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Big fish help Tassal to record HY profit

TassalTassal expects a record annual profit after bigger and heavier salmon helped the fish farmer lift first-half profit to a record $28.4 million.

Revenue for the six months to December 31 climbed 23.7 per cent to $271.3 million, and operating earnings grew 24.3 per cent to $53.2 million.

Driving the result was an increase in salmon volumes, which rose 43.8 per cent in the six months, as well as the benefit of bigger fish and the premium prices they attract, Tassal said.

The company last year said it planned to grow salmon weighing five kilograms or more in 2017/18 – an increase from an average of 4.8 kilograms in 2016/17 – in order to optimise both sales mix and returns and achieve scale and operational efficiencies. Chief executive Mark Ryan said the benefits of growing larger fish were beginning to flow through to operational efficiencies which had, in turn, generated domestic market returns.

“Due to the high capital and fixed overhead component of salmon farming, the more biomass and more optimal fish size, the better the cost of growing across a salmon harvest for a financial year,” Ryan said on Friday.

Ryan said the company was well positioned to continue to deliver sustainable growth.

“We have successfully grown per capita consumption of salmon in Australia, and see this continuing given the health and farming benefits of salmon over other proteins,” he said. “Tassal’s Board expects to deliver another record result in FY18.”

Despite the positive result, however, Ryan said summer water temperatures remain a concern following the unseasonably high temperatures in November and given the increasing farming costs associated with summer – with more operational tasks required in the warmer weather.

He said the company actively manages its farming through high water temperature periods, with most of the harvest undertaken before the start of the summer season, and harvest fish for summer being stocked in the company’s cooler sites.

“Tassal has not been immune to warming water temperatures and increasing costs, nor do we accept we cannot proactively do something about this,” Ryan said. “Through ensuring we focus on growing domestic per capita consumption and optimising sales mix, together with scale and fish size efficiencies – we believe we can continue to grow operational earnings in a responsible, sustainable manner.”

Tassal’s shares gained 31 cents, or 8.5 per cent, to $3.95 on Friday.

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