Salmon group Tassal in a sweet spot, says CEO
Tassal generates about 70 per cent of its sales from the domestic market, and 30 per cent from exports to countries including China, Japan and Indonesia.
Mr Ryan said restrictions put in place by the Tasmanian government where it has put a moratorium on granting any new leases in Tasmanian waters for salmon farming, and is committed to no net increase in acreage under a new 10-year industry plan to be in force from January 1, were a good thing for the industry.
“I think it’s a really healthy thing to do,” Mr Ryan said. “It’s right for the times, and it’s right at this juncture”.
Tassal has tiger prawn operations in Queensland and is also the largest seaweed farmer in Australia as part of its expansion and diversification strategy.
“We don’t feel we need any more hectares in Tasmanian waters,” he said. Environmental groups have been critical of commercial Atlantic salmon farming in ocean pens, saying it causes damage to marine ecosystems.
Tassal is in a sweet spot with its existing levels of salmon production of 40,000 tonnes a year. This enables better investment returns, because to lift production further would mean extra capital spending on land-based ponds and other associated infrastructure. The current situation is just right, as demand for salmon rises from customers, he said.
“It’s really a neat position,” he said. “We don’t have that capital build”.
“We see a future where we’re self-funding our business,” he said.
Tassal on Tuesday rejected the third buyout proposal from Cooke in a month, with the first two proposals spurned behind closed doors, and not made public.
Tassal shares were sitting above $5 in July 2019, but have been in the doldrums since March 2020. The stock was languishing at $3.38 just three months ago.
Mr Ryan has been the chief executive of Tassal for almost 20 years, and prior to his role was a partner with restructuring group KordaMentha.
Brazil’s JBS made a foray into seafood for the first time with its acquisition of Huon last year to tap into the rising popularity of salmon, amid a greater focus on health and wellbeing from consumers and as food security becomes a bigger issue.