Tassal salmon production up, profits down
Shares in the Australian salmon farming company Tasssal Group Limited dropped almost 20 per cent on news that profits for the second half of 2007 were down by some 35 per cent. Shares were traded in the AUD 2.80 (USD 2.61) range since the financial report came out last week, down from a high of AUD ~4.40 (USD 4.10) last fall.
While revenues rose from AUD 126.7 million during the last half of 2006 to AUD 143.6 during the same period in 2007, after tax profits dropped from AUD 13.0 million in 2006 to AUD 8.45 million for the last six months of 2007. Part of the reason for this decline was the adaptation by the company of new accounting rules. Without this, net profits after income tax would have been AUD 8.51 million in the last half of 2006, and AUD 8.24 during the corresponding period in 2007. The company maintains that it is still on track to deliver a net profit of AUD 21 million for the full fiscal year of 2008.
Tassal represents approximately 70 per cent of the farmed salmon production in Tasmania, growing almost exclusively Atlantic salmon. Most of the fish is sold on the domestic market, where it is in increasing demand and popularity. Salmon farming is generally well accepted in Tasmania, and even tourist maps show the location of some of the salmon farms.
Tassal is currently rebuilding its fish harvesting and processing facilities, aiming at reducing costs and improving the quality and shelf life of its products. During the six month reporting period ending December 31, 2007, the company spent an additional AUD 1.6 million on marketing over the expenditures during the same period in 2006. In February this year, Tassal bought the Superior Gold Brand for AUD 26.5 million
