Record NPAT up 24.7% but operating cash collapsed 72.4%

The economically more material movement is on the cash side: net cash from operating activities fell 72.4% to $13.7m from $49.6m, because inventories expanded $28.5m (+33.7%) to $113.1m. FCF before leases was just $7.0m versus $33.8m, despite capex being cut 57.5% to $6.7m (2.5% of revenue).

Net debt was reduced to $102.1m from $165.1m, with gross borrowings down $57m to $120m. Equity rose 9.8% to $780.2m. The interim dividend was held at 5.0cps.

Segment mix shifted: Wildcatch revenue grew to $153.7m (56.9% of group, up from 50.4%) and segment result rose to $31.7m; Salmon revenue fell to $56.6m but result jumped to $39.6m on a disclosed 70% gross margin; Mussels result more than halved to $7.7m on revenue down 27% to $49.5m.

FCF/NPAT collapsed to 16.5% from 99.4%. This matters because the headline earnings story is being delivered almost entirely through reported profit, not cash. Until the inventory build unwinds, the deleveraging momentum is partly funded by the capex cut rather than by trading cash.

Segment economics are diverging. Salmon's revenue fell but its segment result rose ~29% with a stated 70% gross margin — a margin profile that demands scrutiny. Wildcatch carried the volume and grew result ~32%. Mussels weakened materially in both revenue and result. The group earnings growth is therefore concentrated in two segments while one is going backwards, which means a less diversified earnings base than the headline suggests.

Deleveraging is real but partially capex-assisted. Net debt fell $63m year-on-year, but capex was halved versus the prior interim. This matters because if the H1 spend pace continues, FY capex would run materially below FY25 levels, and the question of whether that is timing or a structural reset affects medium-term capacity.

Historical shape shows revenue is roughly evenly split (HY25 took 49% of FY25 revenue) while NPAT has been H1-weighted (HY25 took 53.4% of FY25 NPAT). Annualising current revenue gives $540.3m, tracking below FY25's $584.1m, so revenue is the soft variable. On NPAT, H1 of $42.4m has already exceeded the implied H2 NPAT contribution of $29.7m from last year, so even a modest H2 result would deliver a record full year — but the cash question, not the P&L question, is what governs the FY read.

No non-recurring items were flagged.

However, the durability read is weakened by two items. First, the $28.5m inventory build absorbed most of the cash that the earnings improvement should have produced; inventory days rose 22 to 76. Receivable days actually improved (55 from 59), so this is an inventory issue specifically, not broad working-capital deterioration. Second, capex at $6.7m versus $15.8m flatters the leverage trajectory. If the inventory does not convert in H2 and capex normalises, the deleveraging pace will slow even if reported earnings continue to grow. ROE at 5.7% on the enlarged equity base is modest relative to the headline profit growth.

This briefing cannot assess pricing, volume, and biological-asset assumptions inside each segment, nor management's intent on capex phasing and inventory normalisation in H2.