Aussie company turns away from China
A major Tasmanian salmon producer says the recent trade tensions with China has prompted the company to shift its exports to other economies.
In an update to the Australian Stock Exchange on Tuesday, Huon Aquaculture said it was minimising its sales to the Chinese market amid the souring relationship between the two countries.
Chinese authorities have slapped Australian producers with crippling import tariffs across several industries, including wine, agriculture and mining.
The feud has predominantly been caused by Australia's leading role in calling for a global investigation into the origins of the coronavirus pandemic.
Huon Aquaculture said it would diversify into other markets such as the US; however, less demand for salmon during COVID-19 is expected to drive down the average price by 15 per cent.
"The recent escalation in trade tensions between China and Australia confirmed a decision early in 2020 to start reducing Huon's exposure to this market," the company said in a statement.
"Increased diversification into new markets, including the US, has resulted in spot exports to China declining to around a third of total export tonnage with further reductions expected."
The company also revealed two major salmon escapes in November and December last year resulted in the loss of $1.8m worth of fish.
On November 24, a fire on one of the company's fish pens in the D'Entrecasteaux Channel caused a tear and allowed 50,000 salmon to flee.
A week later on December 3, a major tear in one of its ocean pens in Storm Bay south of Hobart caused 130,000 salmon to escape into the ocean.
Huon Aquaculture said it was also hit by a suspected co-ordinated criminal attack by its employees at its Ingleburn processing plant, with the damages expected to cost $2.1m.
According to the fish producer, international salmon prices at October were 40 per cent lower than the first six months of 2020, signalling stressed pricing has prompted a downgrade in expected earnings for the current financial year.
The outlook prompted a major slump in the company's share price in the early hours of Tuesday's trading day, with its stock falling more than 8 per cent to $2.79 each at around 11.30am.
"Huon's recent business performance and outlook, combined with the company's market capitalisation trading below book value, has resulted in an impairment assessment of the carrying values of assets on the balance sheet to be undertaken," the company said.
Huon Aquaculture will detail the financial impacts on the company in its interim results, which will be released on February 25.
Originally published as Aussie company turns away from China