Profit and cashflow thumped by coronavirus, Huon Aquaculture will tap investors for up to $68 million.
The Tasmanian-based salmon grower’s statutory net profit after tax for 2019-20 came in at $4.9 million, well down from $9.5 million in the previous financial year.
“Despite a 21 per cent increase in revenue to $339.9 million on the strength of a 36 per cent increase in harvest tonnage, earnings were significantly impacted by COVID-19,” the company said.
“This included disruption to the wholesale market from closure of the food service sector during the final quarter and restricted access to the international salmon market as the availability of international airfreight services declined.
“Cashflow from operations of $8.4 million deteriorated from the previous corresponding period ($14.5 million) due to reduced revenue in the second half as a result of COVID-19 and increased working capital requirements as fish were kept in the water longer with some channels to market closed or restricted in the final quarter.”
Huon borrowed to deal with the lower operating cashflow and extra costs
“As the impact of COVID-19 on markets and pricing during financial year 2021 continues to remain highly uncertain and in recognition of the higher than planned gearing levels in place at this time, an equity raising of up to $68 million is being announced,” Huon said.
It said the money would be used to reduce net debt and strengthen the balance sheet and liquidity.
The equity raising would include a fully underwritten institutional placement to raise $64 million and a non-underwritten share purchase plan for eligible shareholders to raise up to $4 million.
Huon said founders and major shareholders Peter and Frances Bender would not take part in the equity raising.
“However, the founders are fully supportive of the equity raising and reiterate their long-term commitment to the company,” Huon said.
It said it expected there would be continued challenges in the current financial year as economies emerged from coronavirus constraints.
“We are, however, optimistic about our ability to deliver continued productivity improvements in the way we farm, which will realise our long-term goal of lowering operating costs,” it said.
It expected slowing the harvest in the last quarter of 2019-20 would lead to the 2020-21 harvest volume increasing by about 40 per cent.