Plenty of fish in the sea: Ridley to sell Tasmanian aquaculture facility

Australia’s largest commercial provider of animal nutrition solutions, Ridley Corporation (ASX: RIC) has today announced the sale of their Tasmania extrusion and feed production facility. The sale of the facility to Skretting Australia will put $54.85 million into Ridley’s pocket and is expected to be finalised in the first half of FY22.

The Company cites the reason for this divestment as underutilisation where they will instead refocus on their facility in Narangba, Queensland which is currently undergoing upgrade and expansion expected to be completed in July 2021.

Company Managing Director and CEO, Quinton Hildebrand said that the move will “consolidate our aquaculture feeding production into one facility, providing a more competitive and lower cost supply chain to service the Australian and New Zealand aquaculture industry, including our Tasmanian customers.”

The facility was originally opened in 2019 with the support of the Tasmanian Government in recognition of the contribution it will make to the salmon farming industry and the local economy.

Ridley does not expect to see its earnings impacted by the sale of the facility and there is expected to be a pre-tax profit in excess of $7 million upon completion.

Across their 20 production sites in Australia, Ridley produces an estimated 20 million tonnes yearly of finished feeds to support the health, wellbeing and performance of Australia’s dairy, poultry, beef, horse, sheep, pet food and aquaculture industries.

Last year the Company pooled a consolidated EBITDA of $16.3 million after factoring in some significant impacting events such as their internal restructure, settlement of a $1.9 million legal claim and the closure of an unprofitable feed mill, all totalling $43.2 million in costs. That being said, the Company believes that removing some layers will leave them with a leaner, more efficient organisation with a “simplified, flatter reporting structure with clear lines of accountability”.