Tasmania-based salmon giant Huon Aquaculture has received "unsolicited approaches" after a horror year due to the COVID-19 pandemic, prompting the board to initiate a strategic review that will have takeover suitors licking their lips.
In an announcement to the Australian Stock Exchange on Friday, the company - which employs more than 750 people - revealed a net operating loss of $18.4 million after tax, incurred in the first half of financial year 2021. Due to a $114 million write-down of its assets, Huon recorded a statutory loss of $95.3 million.
At $11.41 per kilogram, salmon prices were 15 per cent lower compared to the same period last financial year - the six months to December 31, 2019 - resulting in foregone revenue of $38 million.
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Because of record production, Huon sold significantly more of their fish into the much lower priced international export market, from which it generated 51 per cent of its revenue.
Were it not for the pandemic, the company would be having a bumper year, with production tonnage up 45 per cent, the average fish size at a record high of 5.77 kilos (up 14 per cent) and total sales revenue up 24 per cent to $220.1 million for the six months to December 31, 2020. Huon was also hit by additional export freight costs of $25.6 million.
Against this backdrop, the company said that it had recently fielded "unsolicited approaches", leading it to start a strategic review it says will "assess the potential for corporate level transactions for the benefit of shareholders".
Corporate advisory group Grant Samuel has been appointed to undertake the review.
Huon chairman Neil Kearney said the board was disappointed by the company's performance "during this COVID-impacted period", but that it wasn't all doom and gloom.
"The underlying fundamentals of the company remain sound and it is uniquely positioned as a leading global producer of environmentally sustainable proteins," Mr Kearney said. "These attributes have seen the company attract interest from potential strategic partners and investors over a sustained period including over recent weeks since announcement of our profit downgrade."
"The board considers it important to fully explore these options.
The company [has attracted] interest from potential strategic partners and investors.- Neil Kearney, Huon Aquaculture chairman
"At this stage, that work is preliminary and there should be no assumption that a transaction will eventuate."
In November, Huon lost salmon worth about $2 million in two separate incidents whereby a fire broke out at one of its leases near Hobart and a net was torn in a pen at a lease near Storm Bay. Meanwhile, the alleged organised theft of salmon at a processing facility in Sydney was uncovered through an internal audit in December, leading to criminal charges being laid.
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