Takeover target Huon cops $128m loss

AAPAAP
International salmon prices dropped in FY2021 with demand impacted by COVID-19.
Camera IconInternational salmon prices dropped in FY2021 with demand impacted by COVID-19. Credit: AAP

Huon Aquaculture has sunk to a full year loss of $128 million despite scooping up 39 per cent more tonnage of salmon.

Revenue for the 12 months to June 30 increased 24 per cent to $426.4 million.

The Tasmania-based company attributed the loss to a drop in international salmon prices and soaring freight costs, which had prompted it to book impairments worth $113.9 million in February.

"While there was some respite in the last few months of the year from the challenges faced by Huon during much of FY2021, the overall pressures placed on the business from the market related impacts from COVID-19 were significant," it said in a statement.

It said the two main contributors were a 12 per cent fall in the average international salmon price in the 2021 financial year, and the significant increase in freight charges due to limited access to international flights. International freight costs soared $34 million over the year.

The impact was amplified by Huon's ramp up in production as part of a five-year strategy to expand capacity.

The salmon farmer has been caught in a takeover battle after Brazilian meat processing firm JBS earlier this month agreed to buy Huon for $3.85 per share. The deal has been backed by Huon's board.

That prompted Fortescue Metals Group chairman Andrew Forrest to raise his stake in the company from 8 per cent to 18.5 per cent. He has also called on the Foreign Investment Review Board to block the JBS bid due to the group's poor animal welfare practices.

Huon expects salmon prices and retail demand to lift in the current financial year, but said it will maintain output at 35,000 tonnes for the next two years because of ongoing constraints in the global market.

By 1545 AEST, Huon shares were down 0.3 per cent to $3.84 each.

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