Salmon farmer Tassal swims against stream with big profit
Rebecca Le May
Atlantic salmon producer and marketer Tassal Group Ltd has swam against the stream of downbeat earnings results, posting a large jump in annual profit due to increased demand for its products.
The Tasmania-based sea farmer lifted its net profit for 2008/09 by 46.99 per cent to $30.08 million, up from $20.46 million in the previous financial year.
Revenue rose 24.1 per cent to $357.78 million, up from $288.31 million previously.
Managing director Mark Ryan said on Tuesday in a statement that salmon sales were proving resilient to the effects of the global financial crisis.
This trend was expected to continue in 2009/10, Mr Ryan said.
"It is extremely pleasing to deliver another solid profit outcome in such a difficult economic climate," he said.
Mr Ryan told a teleconference on Tuesday that Tassal's supermarket sales were growing year on year as consumers reacted to tough economic times by buying more restaurant-quality consumables for the home in favour of dining out.
"Salmon fits very nicely into that," he said.
"It's very hard to stuff up cooking salmon and even harder to stuff up putting a piece of smoked salmon on a biscuit."
Consumers were also increasingly aware of the health benefits of fish oils, Mr Ryan said.
"There is definitely now a greater understanding of omega 3s and a focus on people living a healthier lifestyle," he said.
During the year, Tassal's overall salmon sales revenue grew by 22.1 per cent and was up 29.9 per cent for the Australian market.
Salmon sales volumes rose by 21.2 per cent overall.
Mr Ryan said Tassal dominated the national market with a share of 65 per cent, which it aims to increase by 10 per cent per annum.
Almost all of its product is sold domestically, with exports expected to continue to account for between five and ten per cent of the company's total sales.
He said the company only exported "excess supply".
"The domestic market will soak up all the volume growth," he said.
However, disease had severely hampered Chile's salmon export industry, which opened up opportunities for competitors to fill the global supply gap.
"We've really seen the export prices improve," Mr Ryan said.
"The (currency) exchange rate ... has been all over the place whereas the salmon prices have stayed quite high during that (2008/09) period.
"So we just need to make sure the exchange position and the price position are aligned.
"There can be better margins made out of export than domestically."
Mr Ryan said he expected global salmon prices would remain robust throughout the current financial year.
Tassal said its balance sheet remains strong and its gearing of 33.17 per cent would allow it to pursue organic and acquisitive growth opportunities.
Tassal declared a final dividend of four cents a share, taking the total dividend for the year to eight cents, up from 6.5 cents in 2007/08.
Shares in Tassal fell 14 cents, or 6.86 per cent, to $1.90 after reaching an intraday high of $2.05.
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