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New Zealand King Salmon has signed an exclusive distribution agreement with China Resources Food Supply Chain, expanding its distribution in mainland China.
The two companies have engaged in a trading relationship since May 2023, through which New Zealand King Salmon has sold around 60,000 kilograms of product, or 2.5 percent of its total sales.
In 2014, the company pulled out of China, saying it could not supply enough product to meet demand. It is not clear when it reentered the Chinese market, but its sales to Asian countries outside of Japan accounted for 7 percent of its total sales by value last year.
The formalized relationship requires CRFSC to buy a minimum of 4,000 kilograms of product from the Nelson, New Zealand-based aquaculture firm monthly. In exchange, CRFSC, which is owned by China Resources Enterprise Limited (CRE), a Shenzen-based specialty food importer, has been granted an exclusivity agreement for distribution in China.
CRE also owns nearly 10 percent of New Zealand King Salmon, and CRE Deputy General Manager Yuen Carol Chen sits on the company’s board of directors.
The agreement, announced 21 November by New Zealand King Salmon, said pricing for CRE’s purchases may vary, but could result in sales exceeding 10 percent of the average market capitalization of the company, which was NZD 113.7 million (USD 68.5 million, EUR 62.9 million) as of 22 November, with its stock price trading at NZD 0.21 (USD 0.13, EUR 0.12) per share.
“The board considers the exclusive distribution agreement is in the best interests of [the company],” the company said in a press release. “China represents an important export market for our premium species and has the ability to provide additional demand for both our current volumes and future growth aspirations.”
New Zealand King Salmon posted a NZD 10.6 million (USD 6.3 million, EUR 5.9 million) half-year profit as of 31 July, boosted by reduced mortalities and higher pricing. The positive results follow on the company posting a profit for its 2023 fiscal year after a challenging 2022, during which the firm’s CEO, Grant Rosewarne, abruptly resigned, and after it sold off additional stock in an effort to pay off debt.
In June 2022, the company’s board denied a report it had engaged an investment bank to gauge interest in a potential sale.
Photo courtesy of New Zealand King Salmon
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