King Salmon affirms profit guidance and sees potential for ocean fish farm as ‘shovel ready’ Covid-19 project, while PushPay hits record high after reporting 25-fold jump in earnings on American church donation revenues
Good News 1: NZ King Salmon affirmed its previous full year earnings guidance for pre-tax, interest and depreciation earnings of between $25.0 million and $28.5 million. The company said it had been able to continue to operate during the lockdown because it had been deemed an essential service and noted sales were beginning to recover, although a 6-18-month period of lower sales to cafes and restaurants was expected.
Shovel ready? CEO Grant Rosewarne said he saw significant opportunities for sustainable growth and employment. “We are hopeful that our Blue Endeavour open ocean application will be facilitated as part of the Government’s search for ‘shovel ready’ projects to reboot the economy.”
Upbeat: King Salmon did not provide guidance for FY21 due to the significant disruption in the foodservice industry globally, but was confident of a positive medium to long term picture for aquaculture and NZ King Salmon. Its shares closed down 5c at $1.95.
Good News 2: It might be a case of ‘pray and pay’ for mobile commerce company Pushpay Holdings, which continued to grow its business, including providing online pledging software to American evangelical churches who encourage digital ‘tithing’. Its shares jumped to a record high – in itself something of an achievement in the current market – after the company said it expected its rapid pace of growth to continue as Covid-19 restrictions see more American churchgoers turn to its digital platform.
Oh Lordy: Pushpay’s EBITDA, including currency movements, rose to US$25.1 million in the 12 months ended March 31 from US$1.6 million a year earlier. Revenue was up 33 percent at US$127.5 million and its gross margin widened to 65 percent from 60 percent.
Keeping the faith: The company is expecting its pace of growth to accelerate and is targeting over 50 percent of the medium and large church segments, an opportunity representing over US$1 billion in annual revenue. Its shares closed up 21 percent at $5.50.
New cloud formation: Microsoft announced plans to launch a new datacentre region in the North Island without saying how much it might spend or how many jobs would be created. A local datacentre avoids sovereignty issues over sensitive data being hosted in global centres, giving Microsoft an advantage over its rivals in attracting customers who have concerns about jurisdictional issues.
Cheque is in the mail: Simpson Grierson repaid the $2.3 million it received from the government wage subsidy, saying its revenue forecasts were now better than it had anticipated at the time it applied for the subsidy. It said the 43 partners in the firm had agreed to reduce their drawings, a measure also being adopted by several leading accounting firms to manage cashflow during the Covid-19 crisis.
Better off now… Other major law firms returning their subsidies included Bell Gully ($1.8 million) and Minter Ellison Rudd Watts ($2 million), while Meredith Connell has indicated that it too is likely to repay its $1.6 million subsidy. Earlier in the week former Labour Finance Minister Roger Douglas, who co-authored a report on the Government’s economic response to Covid-19, called out major law firms who claimed the subsidy as an example of support measures that had been “wasteful.”
New record: Meat exports topped $1 billion in the month of March for the first time, up 12 percent from March last year. The Meat Industry Association said the new record came despite a nine percent drop in the value of exports to China, reflecting the Covid-19 slowdown there. The Association said overall dollar returns had been buoyed by increased value of red meat exports to other major markets, led by a 13 percent increase in the dollar value of sheep meat exports, on the back of a 4 percent increase in volumes. The lower NZ dollar helped.
Surging demand: A decline in exports of sheep meat to the U.S. was offset by a more than doubling of product into Malaysia, up 131 percent to 3,310 tonnes. The association said beef exports had also increased three percent by volume and 14 percent by value, with China the only market showing year-on-year declines.
Restructure: Furniture and appliance retailer Smiths City confirmed plans to restructure the company, starting talks with its employees and landlords. The company said that while it continued to trade online during the lockdown, sales had not been sufficient to make up the revenue shortfall from its closed stores. Smiths City said was continuing talks with potential strategic investors and the company continued to retain the support of its bankers.
Clock ticking: Smith City Chair Alastair Kerr said the restructure would see some stores closed and jobs lost, but the final result depended on the negotiations. “We expect this consultation process to be concluded in just over two weeks with the Board then making a decision on adopting a final restructuring plan,” Kerr said. Its shares closed flat at 12.9c.
Sinking? Norwegian Cruise Line warned investors its accounting firm had “substantial doubt” about Norwegian’s ability to continue as a going concern because of the Covid-19 pandemic.
So Norwegian, which has 28 ships with 60,000 berths, announced plans to raise nearly US$1.8 billion, but investors were unconvinced. Its shares fell 23 percent.
Will they come? As anticipation builds in the tourism sector about the creation of a Trans-Tasman bubble, new figures out from China reveal that domestic visitor numbers have fallen dramatically since the lockdown ended in late April. During the Labour Day holiday that ran from May 1 to May 5, domestic visitor spending slumped by almost 60 percent, according to China’s Ministry of Culture & Tourism.
But wait: However, in an interesting twist, online travel booking site Ctrip said car rental reservations rose 10 percent from last year.