Austral Fisheries’ journey is one of adaptation to global forces.
LOOKING back on 50 years of Austral Fisheries or its various predecessors, it is hard to imagine founder Theo Kailis knew with any precision the course his business would chart over the subsequent decades.
While there are some constants in the successful Leederville-based seafaring company–significant Kailis ownership, fishing at its core and, for almost all that time, the employment of now chief executive David Carter–there has also been considerable change.
Enough to suggest that surviving on and off water in the rugged fishing game is about adapting to new conditions and being able to navigate the unknown.
Starting as a consortium in 1972 to take advantage of opportunities with the opening of the northern prawn fishery in the Gulf of Carpentaria, Austral, as it is now known, has undertaken operations from lobster processing to broader food production.
It has partnered with the great and the small of the industry, opened new fisheries with previously unexploited species, built brands in a largely commoditised industry, and pushed hard for the adoption of strict environmental standards (in contrast to many of its peers).
The business it is today–50 per cent owned by Japanese fishing giant Maruha Nichiro Corporation, selling premium-branded Patagonian toothfish into New York restaurants, an early adopter of the Marine Stewardship Council, and the first seafood business in the world to be certified as carbon neutral–is significantly different from its rough entrepreneurial beginnings.
“It has been a journey that I think we would not have gone down in the older generation,” said Austral executive director Theo Kailis II, grandson of the founder.
Mr Kailis credits Mr Carter, who joined the firm 44 years ago as a deckhand after studying at university, as steering Austral through the modern age.
“He is very forward thinking,” Mr Kailis said.
“He is very good at convincing myself and the board and shareholders what should be the right thing to do.”
And there is no doubt the company is making waves in the sector, pushing for scale to overcome the capital-intensive nature of the industry at the same time as driving for stricter conditions to govern fishing which make it harder for some traditional participants to keep pace.
Permanent employees have doubled to around 50 in just a few years, although the company has many more people who go to sea on a contract basis.
“We have invested in people, which makes a big difference when you are trying to grow,” Mr Kailis told Business News.
“It is new ideas and younger people.
“We were a bit of a skewed business; fresh blood is coming through.”
Mr Kailis said the consolidation of the industry reflected the fact many smaller companies lacked the capital and human resources to remain competitive in the longer term.
Austral has no such restrictions.
Backed by the patient capital and special banking relationships of its partner Maruha Nichiro, which has more than $9 billion in annual sales, Austral has unique buying power beyond its already strong balance sheet.
The latest annual report filed by Austral shows net assets at $157.2 million for the year December 31, up slightly from the previous year.
Revenue was $129.8 million, down about 10 per cent from the year prior, leading to net profit of $8.2 million, down almost 40 per cent from the 2020 calendar year, which was reflected in the dividends paid: $6.3 million last year compared to $10.6 million in 2020.
Austral has spent around $30 million in the past five years becoming a major player in the northern demersal fishery, acquiring quota and boats operating out of Darwin to go after snapper.
It has four vessels in the area with a fifth due to enter service shortly.
The recent purchase of 46-year-old Brisbane-based Moreton Bay Seafoods added some capacity in that field.
Looking at a timeline of Austral and the companies that went before it, this kind of expansion via acquisitions and joint venture is hardly new.
For instance, as early as 1973, Theo Kailis and his son George bought a tuna and Australian salmon canning operation known as Tropical Traders.
A year later, Murray France joined to create the Kailis & France partnership, a food processing business that now trades as Vesco Foods after majority ownership was acquired by private equity CHAMP Ventures and Foundation Capital, which backed a management buy-out in 2004.
At that point, Austral returned to focus on its fishing roots.
The group also expanded its lobster operations, which included processing facilities under the Lobster Australia name from the mid-1980s, the start of a heyday for that specialist business as live exports to Asia became very profitable.
In the 2000s, Lobster Australia formed a joint venture with Craig Mostyn Group and that business, called Westar Lobster, was subsequently sold to Geraldton Fishermen’s Cooperative, which became the state’s major crayfishing player.
In tandem with the increasing interests in lobster, Austral’s founders had become more deeply involved with a major partner in the fishing space.
In 1983, Kailis & France formed a joint venture called Newfishing Australia with Spain’s Pescanova, a global player led by second-generation owner Manuel Fernández de Sousa-Faro.
The Austral name first entered the lexicon of the business in 1987 when a separate business was established with the Spanish to fish for orange roughy off south-eastern Australia.
In the late 1980s, Austral went even further afield, acquiring an 83-metre deep-sea trawler to fish in international waters, and gained licences to operate off Macquarie and Heard islands in the Southern Ocean.
Under the captaincy of two Icelandic natives, Austral developed, grew and helped protect the fisheries around these islands from which it exploits toothfish and icefish.
Mr Kailis, now 42, recalls the passion of the Spanish for fishing and even spent time working with the Fernández de Sousa-Faro family in Europe during an early part of his 17-year career with Austral.
“I lived in Spain and worked with Pescanova for four or five months,” Mr Kailis said.
The relationship ended abruptly after 30 years when Pescanova, by then a listed company but still dominated by the family management, collapsed under an opaque debt structure and expensive failures in aquaculture.
Austral’s Australian ownership found out about the trouble in the news. Administrators recognised Pescanova’s half share in Austral as a saleable asset, although the Kailis family had the right refuse new partners.
As it happens, they approved the acquisition by Maruha Nichiro in late 2013 for a reported $44 million, recognising an alignment with the Japanese giant that has persisted.
Mr Kailis said there were many synergies in the relationship beyond the powerful financial clout that Maruha Nichiro brings to the table.
In late 2020, Austral spent a reported $50 million on the acquisition of technologically advanced, hybrid electric-powered deep-sea trawler the Cape Arkona, which made fishing more efficient and sustainable.
Developing high-end brands such as Glacier 51 Toothfish and Skull Island Tiger Prawns, which can be found on the menus of top restaurants such as Nobu and Rockpool, requires very patient owners, especially as Austral has doubled down with efforts to incorporate providence tracking technology to enhance the power of the story it has created around its produce.
During this time, Austral has also engaged in major efforts to ensure better governance of its fisheries, not just via formal certification through the Marine Stewardship Council but also active involvement in the pursuit of poaching vessels, even assisting Sea Shepherd, once regarded as an extreme anti-whaling activist.
At Austral’s 50th anniversary event held this month at Leederville’s Kailis Bros outlet, run by a separate branch of the Kailis family, Mr Carter acknowledged the presence of a representative of Sea Shepherd as he recounted the company’s milestones and recognised many others from that journey.
“There is a risk in looking back,” Mr Carter said.
“But the benefit of the past is it helps inform our values and respect the legacy of those who have gone before us.”
