Delayed Blue Endeavour and Lower Biomass Challenge NZ King Salmon’s Recovery

Financial Performance and Operational Challenges

New Zealand King Salmon Investments Limited (NZKS) has reported a net loss after tax of NZD 6.3 million for the eight months ending 30 September 2025, a marked reversal from the NZD 13.4 million profit recorded over the prior 12-month period ending January 2025. This result reflects the impact of a shortened reporting period and subdued biological performance, notably lower feed outs that led to reduced biomass at sea and consequently diminished harvest volumes.

The company’s preferred profit measure, Pro-Forma EBITDA, also declined sharply to NZD 7.1 million from NZD 29.7 million in the previous full year. This drop underscores the high operational leverage inherent in salmon farming, where fixed and semi-variable costs remain substantial despite lower production volumes. Management highlighted that a new summer feed diet, rolled out from November, is expected to improve fish growth and performance in the coming season.

Blue Endeavour Pilot Project Progress

NZKS continues to advance its Blue Endeavour (BE) pilot project, designed to test open ocean farming technology with the goal of scaling harvest volumes by up to 10,000 metric tonnes. The pilot pens have been constructed and moored at the Waihinau site, and the BE service vessel, Whekenui, arrived in New Zealand in October 2025. However, installation of the mooring grid has faced delays due to vessel suitability and weather constraints, with completion now expected in March 2026.

These delays mean the originally planned transfer of pilot fish to the BE site will not occur, with fish instead being grown out at Waihinau. The company anticipates transferring fish from Te Pangu to the BE site in April 2026, aiming for harvest in the first quarter of FY27. The successful lease of a wellboat, currently under commercial negotiation, is seen as a critical enabler for operational improvements and unlocking additional feed discharge capacity.

Outlook and Strategic Focus

Looking ahead to FY26, NZKS has provided guidance for Pro-Forma EBITDA between NZD 9 million and 15 million and Pro-Forma EBIT ranging from a NZD 3 million loss to a NZD 3 million gain. Harvest volumes are forecast between 5,500 and 5,900 gilled and gutted metric tonnes, reflecting ongoing biomass rebuilding efforts. Capital expenditure is expected to be significant, between NZD 28 million and 36 million, including investments in the Blue Endeavour pilot, a new processing site acquisition in Cloudy Bay, and essential maintenance capex.

The company remains committed to sustainability, having released its second Climate-Related Disclosures report with improved carbon intensity metrics and assured greenhouse gas emissions data. New high flow consents have been secured, simplifying environmental compliance and enabling earlier access to feed discharge allowances. NZKS is also investing in brand development, particularly in China and North America, and expanding operational capabilities to support future growth.

Balance Sheet and Capital Management

Despite the challenging operational environment, NZKS maintains a strong balance sheet with net cash on hand of approximately NZD 46.6 million. Inventory levels have decreased in line with reduced harvest volumes, and working capital management remains disciplined. The company has invested NZD 12.5 million in capex during the eight-month period, split between Blue Endeavour pilot costs and stay-in-business expenditures.

Dividends will remain on hold as the company focuses on developing the Blue Endeavour project and other growth initiatives. The strategic emphasis is on doubling down on core operations, improving fish health and welfare, and unlocking operational efficiencies through new technologies and infrastructure.