Tassal Group Ltd (ASX: TGR) today released its first half-year results for FY19 to the market with another record result and its shares up as high as 8.6% in early trading.
Tassal is a Tasmanian-based salmon farming company founded in 1986 and listed on the ASX in 2003. Its operations include hatching, farming, processing, sales and marketing of Atlantic salmon. It operates under four different brands of Tassal, Superior Gold, Tasmanian Smokehouse and De Cost Seafoods.
Key Results
Tassal’s results release focused on its operating earnings which excludes the fair value changes to its salmon at sea and prawns in ponds under AASB 141 ‘Agriculture’. It handed down impressive results on an operational basis, including:
- Revenue up 25% to $326 million
- EBITDA up 21% to $64 million
- EBIT up 23% to $50 million
- NPAT up 22% to $32 million.
More impressively, its operating cash flow was up 96% to $79.65 million.
Growth From Harvest and Price Offsets Costs of Goods Sold
Tassal reported an increase in harvest tonnage, up 16.4% to 21,710 hog tonnes despite its hog size down 7.8% to 4.7kgs. This was offset through increased sales with hog tonnage up 21.7% to 20, 578 tonnes. Further boosting their results was an increase in the average salmon price up 9.1% to $13.87, which helped to offset increased costs of goods sold.
Favourable Conditions
Tassal attributed favourable market conditions both domestically and internationally to increased sales and prices. Increased consumption per capita helped domestically, while international demand continued to outpace supply.
Strong Growth, But Still A Commodity
While Tassal was a beneficiary of increasing prices this half, they could easily have been subject to decreasing prices due to the nature of commodities. Since they are a price taker subject to market supply and demand, it is not a stock I am looking to add to my portfolio.
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