Thank you for standing by, and welcome to the New Zealand King Salmon half-year results announcement. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Carl Carrington, Chief Executive Officer. Please go ahead.
Good morning, and thank you for joining us. Today, we are presenting New Zealand King Salmon's first half 2026 financial results and the progress we are making on performance recovery and growth. The key message for investors is that the first half shows a meaningful improvement in biological performance, financial outcomes, and confidence in the near-term outlook. We will cover three themes as we go. First, the turnaround in fish performance and profitability. Second, how that is flowing through into sales and cash generation. Third, how our growth infrastructure is now becoming tangible, including the wellboat and Blue Endeavor pilot. If we can move to our next slide. Yes, okay. I won't spend time on this slide other than to note that today's presentation should be read alongside our half year market release and other NZX materials.
It includes both NZ IFRS and non-GAAP measures such as pro forma EBITDA and pro forma EBIT. Where we refer to guidance and forward-looking comments, those remain subject to normal risks and uncertainties. Joining me today, Katie Bennett, CFO, Grant Lovell, GM Aquaculture, and Andrew Harrison, GM Strategy and Performance. I'll frame the overall result and strategic direction, and my colleagues will add detail on the financials, farming performance, and growth plan where appropriate. Getting to the executive summary. At the top line, the six months to 31st March 2026 delivered a GAAP net profit after tax of NZD 13.8 million, compared with a net loss of NZD 20.8 million in the comparable first half 2025 period. Our preferred measure, pro forma EBITDA, improved to NZD 17.2 million from NZD 5.7 million.
That improvement is fundamentally a fish performance story with better biology supported stronger sales, lower mortality expense, improved cost of fish, and stronger processing efficiencies from better harvest quality. This was not just a short-term earnings uplift. We also progressed the growth agenda. Blue Endeavor pilot infrastructure has been installed. The Ronja King wellboat arrived in late April. RAS design work continues. We received government funding support for the future farming program. Our balance sheet remains strong, with net cash on hand at about NZD 43.2 million at 31 March. That gives us flexibility to keep investing in growth while maintaining financial discipline. Pro forma EBITDA guidance range for the year-end 30 September has been revised upwards to NZD 23 million-NZD 29 million from the prior guidance of NZD 19 million-NZD 27 million. Similarly, the pro forma EBIT is revised to NZD 13 million-NZD 19 million.
This next section is about demonstrating that the operating recovery is visible in the numbers and is supported by underlying improvements in the business. Turning to the operational highlights. Revenue for the half was NZD 100 million, and harvest volume was 2,838 tons. Importantly, profitability improved sharply across all the headline measures shown here. GAAP NPAT was NZD 13.8 million, pro forma operating EBITDA was NZD 17.2 million, and pro forma operating EBIT was NZD 12.3 million. Geographically, revenue remains well-diversified. China represented 4% of revenue, North America at 37%, with Australia 15% and New Zealand 38%. Don't read too much into the market share changes between this half and the prior year.
For example, North America being down from the low 40%s. New Zealand and Australia significantly up, as this was driven largely by seasonality difference, with the change in year-end dates has meant higher Southern Hemisphere Christmas peaks are included in the numbers. It also reflects market preferences for size and quality grading as we rebuilt biomass. There is no visible impact to us of tariffs in North America slowing sales. We expect by year-end, both North America and China share numbers will have lifted. The message I would emphasize is that stronger biology has restored both operational leverage and commercial momentum. We are seeing better fish, better harvest outcomes, and better processing outcomes, all reinforcing one another. Turning to the specific sales performance. Sales have entered what we describe as a market rebuilding phase following constrained supply through FY 2025.
Our core markets of New Zealand, Australia, North America, and China have responded well as fish size have increased and as we progress through the year. In North America, demand remains steady, although as mentioned earlier, the mix has been influenced by smaller fish size and availability at the start of the year. In New Zealand, growth has been driven by fresh salmon sales, while ready-to-eat has been consistent with the prior year. Australia has performed strongly with channels that suit mixed fish sizes. As fish size normalizes, demand there is strengthening because that market clearly prefers larger fish. The rest of the world results reflect our product allocation strategy. Turning to brands. While biology and execution are the immediate drivers of the result, our brands also continue to strengthen and underpin long-term value.
Ōra King continues to generate strong global visibility, particularly in the U.S. and Australia, and marked a 10-year ambassador partnership milestone. Event-led digital reach and engagement also more than doubled around key industry moments. Regal delivered strong seasonal visibility in New Zealand, supported by chef-led storytelling and innovation, while also building momentum in China through chef advocacy and high-profile trade and cultural moments. In New Zealand retail, Regal continues to lead the salmon category in awareness and preference conversion. Omega Plus is building targeted messaging in niche pet food segments, reinforcing its premium positioning. The investor message here is that we are not just recovering supply, we are also continuing to invest in demand, brand equity, and market premiumization. I'll hand now to Grant for fish performance.
Thank you very much, Carl. It's very pleasing to be able to provide a positive update in the fish performance world here. All metrics have improved in the first half of FY 2026 for both low mortality and positive stable feed outs, which obviously have resulted in good growth and a uplift in harvest, particularly from the original budget. When you're looking at some of the specific measures, you can see significant improvements coming through in average weight, a reduction in FCR, which obviously is the flow on from last year's feed-related issues being resolved, and a really nice improvement in closing livestock biomass up significantly from the previous. The only other point to really call out is the cost of feed.
This is obviously being influenced by the global instability at the moment, but that has also been influenced by our change to summer diets and the work that had been done on that previously. Although that diet is more expensive, we have been seeing the outcome with better fish performance, and we are contributing the better fish performance to a range of initiatives. It's not just one, but it is the summer diet, increased grading of the stock, improved feed protection, and a real focus on the operational execution on the farms. I'll pass over to Katie.
Thanks, Grant. As a primary sector organization, we recognize that the health of our environment and communities is directly linked to the sustainability of our business. During the first half of FY 2026, our environmental footprint reduced with an 8% reduction in absolute emissions compared to the previous period. Although we no longer are considered a climate reporting entity, we believe it is important to continue to report on our Scope 1, 2, and 3 carbon emissions. The commencement of the Waikawa warehouse feed storage operations with Port Marlborough brings with it the ability for us to lower our feed transport emissions. This change reduces feed-related road transport between Nelson and Picton by over 90%. We also continue our focus on maximizing value from raw materials and reducing waste, including further investment into our own silage capability.
From a certification perspective, we have maintained our BAP four-star certification and have continued to participate in the AQNZ A+ program. Pleasingly, the New Zealand salmon farming industry also continues to maintain the Monterey Bay Seafood Watch Best Choice rating. Alongside environmental stewardship, supporting our local communities remains a strong focus for NZ King Salmon. We continue to invest in regional partnerships, education initiatives, and community engagement programs aligned with our values as a Te Tauihu-based company. Examples during the period include supporting the Te Hoiere Bat Recovery Project , partnering with local schools and the NMIT scholarship program, and continuing our involvement with the Moananui Blue Economy Cluster. Moving on to the financial results for the first half of FY 2026. As noted earlier by Carl, the first half of FY 2026 has been positive, and this is reflected in the financial performance of the business.
Before I get into the numbers, I will quickly clarify the periods being covered, as due to our balance date change, the prior period is not directly comparable. With our new balance date of 30 September, this half-year reporting covers the six-month period from 1 October 2025 to 31 March 2026. The comparable period we describe as 1H 2025 September is for the six months period from 1 February 2025 to 31 July 2025. Now on to the results. Revenue has increased 6% to just over NZD 100 million for the first half. This was driven primarily by the increased sales volume, with volume up 7% to 2,799 metric tons. Some of this increase can be attributed to the change in balance date, with the domestic seasonal Christmas peak now occurring in the first half of the financial year.
While revenue growth was positive, the product mix sold did impact the revenue line with a higher proportion of whole fish sales occurring during this period. As noted previously, whole fish generally carries a lower average selling price when compared with value-added products. It remains margin accretive due to the lower processing costs. Gross profit has improved substantially to NZD 35.7 million on a GAAP basis. This reflects stronger biological performance, which has led to an overall fair value gain on biological assets of NZD 7.1 million. Other drivers for this gross profit improvement includes lower mortality costs, improved fish quality, and better processing efficiencies. On a pro forma basis, EBITDA was at NZD 17.2 million, up from NZD 5.7 in the previous period. I'll cover this more on the next slide.
Importantly, though, this first half has returned us to a profit-making position, delivering a great net profit after tax of NZD 13.8 million on a GAAP basis. These results demonstrate the ongoing focus on stabilizing the core business through strong operational performance and the benefits flowing through from improved fish performance, stronger biomass levels, and greater production efficiency. Moving to the bridge from the prior comparable period. We have seen a positive uptick in sales volume, this was slightly offset by our product mix impact, being the higher proportion of whole fish sold. Seen as a negative against revenue, this increase in whole fish supports some of the cost of goods sold upside due to the lower processing costs compared to value-added products.
The main driver, though, of this operational leverage increase is driven from the improved biological performance, increased biomass levels at sea, better fish quality, and scale benefits as production rebuilds. Mortality performance also improved materially, contributing a further NZD 5 million benefit compared with the prior period. Corporate costs were slightly higher as we have continued to invest in capability and strategic growth initiatives across the business. Overall, pro forma EBITDA increased to NZD 17.2 million, highlighting the operational progress achieved during the half and reinforcing the positive trajectory of the business. Our balance sheet strengthened during the period, supported by this improved biological performance and the continued rebuild in biomass. Closing live weight biomass increased to 4,858 metric tons, up from 4,243 metric tons in September. This reflects the benefit of changes implemented across feed, fish health management, and operational efficiency initiatives.
The increase in biomass and improved biological performance drove a positive fair value uplift on the carrying value of our biological assets. Working capital remained well managed as the business supports growth in biomass and sales activity. Receivables have increased in line with the higher sales volume, while finished goods and work-in-progress inventory have reduced slightly as we have continued to focus on stock optimization. Unsurprisingly, feed inventories have increased to support that additional biomass. Payables have increased primarily due to the higher input costs associated with this increased biomass, as well as the elevated freight costs, including feed pricing, foreign exchange impacts, and fuel surcharges seen from that Middle East conflict. Also, as we have now returned to a profit-making position, there is a tax payable liability required. Net cash on hand reduced modestly during the period, reflecting continued investment into biomass growth and strategic capital projects.
We have invested approximately NZD 12.7 million in CapEx during the half, including growth-related investment across Blue Endeavor, RAS, and Cloudy Bay, alongside other operational projects. I will now hand to Andrew to take us through our guidance update.
Thanks, Katie. Following on from strong half-year results, guidance for the full year is a range of NZD 23 million-NZD 29 million EBITDA, up from a range of NZD 19 million-NZD 27 million in April. EBIT guidance follows EBITDA. Harvest guidance remains unchanged. The increase in guidance reflects a reduced impact of risk relating to the ongoing conflict in the Middle East that were factored into the previous guidance range. The main risk to our business from this conflict is the potential for supply chain disruptions and an inability to get product to market. While oil prices remain high, suppliers are still managing to maintain existing supply routes. With this reduced downside and ongoing strong biological performance, we're increasingly confident that we will be in the upper range of this guidance range. Looking further ahead, FY 2027 harvest guidance remains unchanged.
However, FY 2028 guidance has increased by 300 tonnes to a range of 8,500-9,000 tonnes. As we capitalize on increased feed discharge and the benefits of having a wellboat. To support this growth, there are several key initiatives being undertaken across the business. Grant will talk further to the wellboat and Blue Endeavor, but we're already seeing some of the volume uplift in the harvest forecasts for FY 2027 and FY 2028. Katie has already touched on our new feed warehouse at Port Marlborough that supports the feed needed for this volume uplift, while also providing significant supply chain efficiencies. Work to develop our key growth markets is also ongoing and can be seen in the half-year numbers, with Australia up significantly. While China growth is less evident, the end run rate for this market is significantly up on the average for the half.
The design and build of our first RAS units continues down at our hatchery in Tentburn, and planning for our new processing facility is gaining momentum as volume growth gets ever closer. I'll now hand to Grant to talk through Blue Endeavor and the wellboat.
Thanks, Andrew. I was going to talk a little bit around our focus on fish performance. Our farming improvement program is a multi-layered program. It includes diet, fish health, breeding, and freshwater initiatives. I think one of the key points I'd like to make here is that we consider these fish performance initiatives BAU. These are ongoing work that will just carry on into the future and will never end. Just to touch base on a few of these specifically, and around the summer feed. The summer feed is an outcome of our trial facility at our Ruakaka farm, which is really now starting to pay for itself. We run trials here twice a year. It allows us to undertake trials in a commercially relevant environment and without putting significant numbers of fish at risk.
This has really proven to be a significant investment and one that was well and truly worth making. The summer feed over the last summer has performed as expected. If we move on to some of the other fish health initiatives, we look at things such as vaccine development and vaccine trials. We're currently doing work with our friends at Cawthron on the next stage of our vaccine development, and we're also doing work with regards to having therapeutic availability and optimizing our smolt production and the wellboat, which I'll talk about more. The picture we see there is actually the RAS pilot design for our Tentburn hatchery. This is ongoing work, and we are expecting to break ground on that later this year, with fish being entered into that facility sometime in 2027. Lastly, around the breeding program work and thermotolerance, as well as genomics.
Thermotolerance is one key part of our breeding program. I'd classify that as both thermotolerance and resilience traits. We're looking at both the ability of fish to improve their resilience to temperature, but also all the other aspects that exist in the open ocean environment or the inner ocean environment. Lastly, with genomics, that's all around us focusing in on those gains to improve them in the long term. If I move over to the wellboat, which is without a doubt probably my favorite topic to talk about. This here arrived into the country in late April 2026, and it's really exciting to make the comment here that it will actually be doing its first fish transfers later this week, currently scheduled for the end of the week, so operational in May 2026.
We have talked a little bit around its primary benefit here and what pays the bills is it allows us to increase our inshore volume by approximately 2,000 metric tons. That's essential to pay for its bills. From an aquaculture perspective, this is transformational for our operation in terms of the additional benefits that it brings. It enables the grading, site filling, and single year class operation of our farms. It eliminates the manual towing risks that we have had for the years to date. It actually simplifies our farming operation for the majority of our farms by having dedicated grow-out farms and is a non-negotiable part of our open ocean expansion. For other parts of the business, the ability of all of our fish having a count halfway through the cycle means that we will stabilize our forecast and our planning.
This is before we even start to look at the future opportunities that it may bring with regards to smolt transfers. One of these vessels is the equivalent of 40 smolt tankers, and options in and around future harvest strategies such as a centralized harvest site. Lastly, if I bring on to Blue Endeavor. It's really exciting to point out that open ocean finfish aquaculture is now active in New Zealand. We have our two Blue Endeavor pilot pens out on site. The mooring grid is fully installed, and fish will be relocated to this site at the end of this week and the start of next week to start our very first phase out at Blue Endeavor. It's an incredibly exciting time for us to start this part, and it is a real crucial part of our longer-term growth.
I think that the key focus for us in this pilot phase is really taking those learnings and going through that to make sure that we develop this and scale this in the most appropriate and sensible fashion in the coming years. Some really exciting developments from the aquaculture phase here as we continue and start a period of growth. I'll now hand back to Carl.
Thank you, Grant. In closing, I'd reinforce three points. First, the first half result shows a real recovery in operating and financial performance. Second, that the recovery is being driven by tangible improvements in fish performance and operational execution. Third, the infrastructure for the next phase of growth is now arriving and being put to work. We are rebuilding confidence in the core business while putting the foundations in place for disciplined long-term growth. Now, we'll move to questions.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question on the phone today is from Guy Hooper with Jarden. Please go ahead.
Good morning, team. Well done on a strong result. Can I start by just asking around the costs implied into the second half and then perhaps how they step into FY 2027? If I have a look at the guidance you provided around EBITDA and sales, it looks like there should be a step up in revenue from the additional sales volume, but the second half weighting for EBITDA is quite a lot lower. Can you just talk me through what's actually the moving parts, I guess, within the cost and perhaps what the impact of the lease boat is expected to be in there?
I can take that, Guy. We have factored in the increase in cost related to the wellboat in the second half, but most of that is actually capitalized to the balance sheet, so we won't see the true impact of that come through till FY 2027. In terms of H2, we do usually see, like with the change in balance date, I guess we used to have a stronger H2, we will now have a stronger H1 just with the timing of sales. As I said in the presentation, we do think we will come in at the upper end of that guidance range. That sort of reflects that stronger belief given our H1 performance. I think looking ahead to 2027, we're still working through those numbers at the moment, and we'll provide an update on those hopefully at the completion of Q3.
Yes. Thanks. I guess even if I put it at the top end of the guidance range for EBITDA, you're still looking at, I mean, it depends what you get for price on the second half weighted volume, but you're still looking at quite a material step up in OpEx. What's the drivers behind having, other than, I suppose, volume, is there a reason why costs would be seasonally higher in the first half or why, sorry, why margin would be seasonally higher in the first half?
No, I don't think we're seeing any particular seasonality to margin. I think if we take the upper end of that guidance range being 29, we'd probably see a split of 17 and 12 to that full-year result. Again, I think we always have a good period around that December, January, February, and that's now captured in our H1 split rather than our H2. In terms of OpEx increases, as with everyone, we're seeing increased fuel and freight costs from the conflict in the Middle East, which is baked into that guidance range. I think given those two factors, it's reasonable to say we would expect to be in the top half of that guidance range. That's a fairly reasonable H2 for us.
Yeah. Okay. The step down in CapEx guidance versus the previous update, I think late last year, is that just the timing of projects? How should we think about it?
Yeah. That's predominantly timing. I think one of the big projects that has pushed up is our RAS project. That sort of pushed into H1 to H2 next year.
Okay. I guess no change. If you're thinking about it on a two-year basis, there's probably no change to total capital spend. It's just a timing thing.
Yeah. Correct.
Yeah. Cool. The FY 2028 uplift in volume guidance, I mean, what's giving you confidence to lift that? I know it's only a small uplift, what are you seeing? What's factored into that?
Yeah. I think the arrival of the wellboat, and we've started incorporating that into our overall operations, and I think that's providing that additional confidence looking further out.
Cool. Okay. Thanks. I'll pause there.
Your next question is a webcast question from Pam Ha with Suisse. "Is the Kai Hamana vessel still being used?
I can take that one. Yes, it is. That is our feed barge, which is currently operating at our Clay Point sea farm.
Thank you. Your next question is another webcast question from Hamish Hurley with BNZ. This one reads, "Congratulations on the good H1 results and rollout of Blue Endeavor pilot. Can you tell us how you're thinking about the likely change to El Niño weather systems?
The El Niño, La Niña weather question, was definitely expecting this one. Probably could've put that in my update, actually. Look, La Niña actually is probably the one that creates a little bit more issues for us than El Niño. El Niño is characterized by probably a lot of dry weather on the land, but a more easterly flow. You often get a bit of a cooler patch off the east coast. For us, what we'll be thinking is, from a planning perspective, if it's going to be El Niño, our Tākaka hatchery is probably going to be subject to a drought, whereas actually the east coast is going to be a little bit cooler in terms of water temperatures, but dry on land. From a weather perspective, we always pretty much have to plan on the worst and hope for the best.
We never get the ability to do it any other way.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone or type your question into the ask a question box. Your next question is a phone question from [Jerry Fells] with [AS Alpha] . Please go ahead.
Good morning, everybody. Can you please remind us of the NZD 12 million CapEx you had in the first half, which part was stay in business CapEx as opposed to growth CapEx? Can you please also remind us for, let's say, midpoint NZD 22 million you're forecasting for the whole year, what the split will be?
I can take the CapEx bit of it. I think the stay in business was around NZD 3 million of the NZD 12 million, and growth CapEx was NZD 9 million, mainly targeted towards Blue Endeavor and the supporting activities.
Okay. With regard to the full-year guidance, will it be also 25% versus 75% roughly or different?
Sorry. Yes, it'll roughly that split of stay in business to growth should continue into H2.
One more, please. You mentioned to Guy that this year, you're expecting a stronger half year, in the first half year will be stronger than the second half year. Is it only going to be this year or is there something structural that happens so that we should expect this kind of distribution also in 2027 and beyond?
Yeah, I think there is a structural thing around Christmas time. We do have a ramp-up in volumes toward Christmas time. Looking out into future years, though, that will be somewhat offset by our general ramp-up in volumes. As we ramp volumes, that ramps throughout the year, which will provide a bit more of an uplift to H2, which will help to offset some of that seasonality that we see around Christmas time.
Okay, that's it for now. Thank you very much.
There are no further questions at this time. I'll now hand back to Mr. Carrington for closing remarks.
Very good. Well, thank you very much for joining the presentation this morning. I hope you can see that we talked about last year that management was becoming increasingly confident about the initiatives that we've been putting in place to support fish health. They certainly played through this summer with a very strong fish performance that we've seen. Equally, we're very confident about market demand going forward. I would just reiterate that message that we are increasingly confident about the underlying stability of the core business as we continue to work on building fish resilience. We continue to invest in market development. Good first half of the year. Looking forward to a strong second half and even better outlook for FY 2027 and 2028. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.